I know online ordering can be very profitable. At Canter’s Deli in Los Angeles, we’ve spent thousands of hours researching and testing new ways to make it successful. As a result, over the past two years we’ve managed to grow online ordering to more than 30 percent of our business.
But figuring out online ordering can be confusing and expensive. Today there are more than 180 online ordering companies. How is any restaurateur supposed to know which ones make sense for their restaurant? Here's some advice on how to choose online ordering services.
TIP #1: Learn from Others and Do the Math
Over the past few years nearly 200 online ordering services have launched across the globe and not all of them are created equally. They each charge different fees to restaurants. Some offer delivery services; others don’t. Some require special technology and processes be followed.
The key to choosing the right ordering services is doing your homework, talking to other restaurant owners and operators about their experiences, and understanding the impact that different online ordering services may have on your top and bottom lines.
How will changes in processes and technology required by different services impact your restaurant’s operational efficiency and expenses?
How will fees charges by ordering services impact your unit economics and profitability?
TIP #2: Think Big
Once you’ve finished your homework it’s important to consider using multiple online ordering services . Some services excel in specific geographies or locations. Others specialize in niches like catering and special dietary concerns. Some will be willing to negotiate favorable rates. Some online ordering services may be willing to offer valuable promotional services and perks. The largest services may have the biggest reach to potential customers but you may be competing more for access to those customers.
The bottom line is that layering multiple online ordering services is almost always the best strategy. It allows you to extend your visibility and reach to potential new customers; it gives you more leverage to negotiate the best deals with services; and it hedges your risk should one or more services not work out. Even if an online ordering company is only sending one order a week to your restaurant, that is one order you would not have received without it. At the end of the year, that one order a week can add up to a couple thousand dollars in additional revenue per year.
Also, don’t forget that online ordering services invest money to reach new potential customers for you and the potential lifetime value of those new customers may be tremendous -- so you need to understand how each service will market and promote your restaurant. Deciding which services to use requires research and some negotiation and you will learn through trial and error but it is important to expand your horizons.
TIP #3: Negotiate Everything You Can
Like everything in life, you can negotiate most things, but not everything. It’s the same when it comes to online ordering. You should be able to negotiate everything from the rates you will pay online ordering services to the perks and promotional opportunities they will offer you. You can even negotiate which new technologies and processes you are required to use.
Different services have different things they’re willing to negotiate, but with a little effort and conversation you will be able to learn what is possible. Another advantage of using multiple online ordering services is leverage in these negotiations. With multiple online ordering services on board you can use the terms you’ve negotiated with one service as bargaining power with new ones. Plus, when you’re using multiple services you can always decline or walk away from a deal knowing you don’t have all your eggs in one basket.
Things to negotiate:
● Commission fees (how much you pay each service for orders) ● Promotional opportunities (web marketing)
● Activation/Onboarding Fees Peripheral rental/data costs
TIP #4: Use These Negotiating Techniques
1. You catch more flies with honey than vinegar so try to build a genuine and friendly relationship based on courtesy and trust with the online ordering salesperson.
2. Don’t be afraid to ask for a bit more than what you need. That way after negotiating you may end up closer to what you actually wanted all along.
3. Don’t get too emotional or upset. Remember it’s just business and if an online ordering service refuses your initial request it may just require more creativity or time, so don’t spoil the relationship.
4. Do your research. Before you negotiate, know what other restaurant operators are paying services and know how they negotiated terms and what their experience with each ordering service has been.
TIP #5: Prepare to Handle Multiple Services
If you sign up with one online ordering services they will probably give you a dedicated tablet computer to use for their service. If you sign up with 10 online ordering services you’ll probably get 10 tablet computers. That’s a lot of technology your employees will need to use. You’ll want to make sure you have a way of keeping all those devices secure, available, and charged. You’ll also want to make sure that all of your employees are properly trained to use each device and the website ordering system associated with each one.
The key to handling multiple online ordering services is to document detailed standard operating procedures for each online ordering service in simple and plain language everyone can follow. Use that documentation to train all employees and be sure this documentation is available (printed and laminated) and visible in the same location as your tablet computers.
Create a simple dashboard for yourself that includes the following information:
- number of orders places by each online ordering services each day
- total dollar value of orders placed by each service
- average ticket order for each service
- time of day of orders placed
- number of errors, missed orders, or customer complaints for each service
- and percentage fees paid to each ordering service.
You may not be able to easily obtain all of this information automatically for each online ordering service but gradually over time you should be able to obtain much of it. You will be able to use this information to make better decisions about which services to keep, which to discontinue, and how to improve the performance of each one.
TIP #6: Start Slow and Adapt as You Go
Often, restaurateurs are too worried about running out of food or not keeping up with online orders, so they choose not to sign up for any, or stick to only a few. What they don’t realize is that the way restaurants are getting discovered is transforming, and lack of a strong online presence is much more threatening to them than anything else. Start with a number you are comfortable with, keep track of your logistics, and modify as needed.
Once you are comfortable again, consider what other services could bring further value to your restaurant, and begin the process again. Before long you will be able optimize your processes, increase awareness of your brand, and see sales number you wouldn’t have thought possible.
TIP #7: The Three P’s of Menu Building
Your goal is to build an online ordering menu that drives profit and delights customers. The three main factors to consider when preparing and revising your online ordering menu are: popularity, profitability and packaging.
Initially you can assess popularity or demand based on in-store sales. Over time you will discover which items are most popular for online ordering. It can be challenging to determine which items are most popular by monitoring each of your online ordering systems. Your POS system can help achieve this task if you specifically associate each online order with payment records. Review online sales monthly to understand which items are most popular and consider ways to expand upon this popularity. Perhaps you can offer different versions of the popular items or volume-based pricing for popular items. Similarly you should periodically analyze the profitability of your most popular online orders.
Are profit margins sufficient for these items?
Should you adjust pricing?
Can you produce these items at a lower cost?
Finally, adequate packaging is essential to delight online ordering customers.
Are your items arriving intact?
At the right temperature and quality?
Is the packaging secure?
Is the packaging safe?
Is the packaging appropriate for the items being delivered?
Your success with online ordering will depend on your ability to master these Three P’s. Failure to do so will result in dissatisfied customers, online complaints and damage to your restaurant’s reputation.
TIP #8: Learn to Do Packaging Right
Some food travels well, some food doesn’t. Before even thinking about packaging, it is important to realize that your entire menu will likely not work online. Menu engineering is a vital component to ensuring online ordering satisfaction.
Once your menu has been tailored down to exclude items that won’t hold up in a car for 30-60 minutes, it is important to actually run a test on the food that is on the online ordering menu.
I have actually gone to the extent of ordering every item from my restaurant through delivery to see how food quality holds up. This process has helped me realize that I needed to reconsider packaging for items like french fries. My personal recommendation is to use a resource like IFS to consult with for better packaging solutions.
TIP #9: Promote Your Online Ordering Program
Signing up for multiple online ordering services is just the beginning. To succeed at online ordering you must partner with online ordering services to promote your restaurant through direct marketing and special offers -- both online and offline.
Depending on the popularity of your restaurant you may be able to leverage free or discounted promotional services offered by the online ordering services. However you should also be prepared to invest and promote your restaurant and most popular menu items on a saturation basis via direct mail and via digital advertising.
One-time saturation mailing is rarely effective. Once you have optimized your menu you need to experiment with small batch saturation mailings and location-based digital advertising to see what promotional investments work best for your restaurant and target customers. There are agencies that specialize in this type of promotional advertising. For any promotional investments be sure that you account for the delay or lag in response rates so that you do not negatively impact cash flow. In other words, don’t invest in large promotions that require sizable up-front payments. You need to spread your promotional investments and payments over a longer period of time.
TIP #10: Actively Manage Delivery Drivers
Not every online ordering service offers delivery drivers so you need to make sure that you have contracted with a reputable delivery service so you can handle all orders. There are many different courier services that specialize in food delivery and their availability varies by location. Be sure to interview courier services in your area to understand and compare their services and pricing.
Will they accept tips from your customers?
Will they integrate with the online ordering services you are using?
Do they guarantee a minimum delivery time?
Be sure to speak with other restaurant owners and operators about their experiences with courier services before making any decisions. You should establish a process, even basic to start, for collecting customer feedback in order to determine whether courier services are performing as expected.