Online ordering is a really important part of the revenue mix for some restaurants.
This is the first part of a 2 part podcast on the economics of online ordering and how small restaurants are dramatically increasing profitability with a few simple tweaks.
Menulog, Just Eat, Grub Hub and Delivery Hero are charging 13% commission and not giving the restaurants the email addresses, so it is very difficult to build a sustainable take out business with those platforms.
We look at why restaurants do take out. Often the bottle neck for a restaurant is the number of tables in a restaurant and the number of times you turn those tables. Take out moves spare capacity in your kitchen past the bottleneck of the tables that you have, allowing for significantly higher revenue if you have a big mismatch between kitchen capability and in house consumption.
We discuss the profitability of take out orders. There is very little front of house costs associated and Restaurants used to offer a 10% discount for take out orders to reflect the decreased costs associated with take out, but increased commissions from Online Ordering companies have seen these offers all but disappear. (They are starting to come back as restaurants move to commission free platforms.)
What problem do you solve with in your restaurant? Take out offers convenience, the ability to have a few drinks without worrying about an Uber home. For us, take out allows us to Netflix and Chill, rather than the issues associated with going out. It offers flexibility and convenience, and it dramatically opens up your target market when you offer take out.
One of the big things that Uber has done is that they have increased the calibre of restaurants that are now offering take out, with customers now increasing the amount of take out that they are eating, which goes hand in hand with the increasing number of customers who are time poor.
What are the problems with Take Out? For delivery, the synchronisation of getting meals out of the kitchen becomes a lot more complicated because rather than relying on front of house to get the meal to the table, now a delivery driver needs to be organised and synchronised with the food coming out of the kitchen to get it to the customer in a reasonable time.
Using UberEATS removes some of the logistics issues, but it also means that you are losing 35% of revenue as well as not getting the customers email address.
We look at some of the statistics around Online Orders. We discuss the average order value and anecdotally, Thai has a lower average order value than Indian.
The spread of the number of orders that a restaurant takes is incredible. Some restaurants take 1 order a week. Some are doing $2,000 – $3,000 a week! This means that some restaurants have an extra $150,000 a year in revenue. If they are using a delivery service that charges, they may be paying $20,000 a year in commission and NOT getting any of their customers email addresses.
We have some restaurants saving over $1,000 a month in commissions using the Free Restaurant OnLine Ordering system.
What is the product that you offer through take out? Often the menu is exactly the same as the dine-in menu without any thought to the issues with delivery. How is it packaged? What can you do to make a better experience for your customers when they unpack their food. What branding do you do for your restaurant?
Do you have online ordering online specials?
We look at how Qantas uses online only specials to drive passengers to pre-order their meals. It makes it easier for them to cater for everyone. They offer online only special meals, which are using pretty epic – this drives people to pre order, meaning they have a much better idea of the number of meals that they will need for each flight. Remember, they can’t just go out to the supermarket and pick up a couple of extra steaks when they are at 30,000 feet.
How are you driving phone orders? Companies like Menulog, Just Eat and Delivery Hero will not publish your phone number because they don’t want any phone orders because they don’t make any commission on it, but there are still a lot of people who want to order over the phone.
Are you running “Order direct from the Restaurant and save!” campaigns. These can be very effective for local restaurants.
We discuss Giodana’s Pizza and their Deep Dish Pie and how it is almost the perfect product for Restaurant delivery.
We talk about Sam Panopoulos and the international storm he created by throwing some pineapple on a pizza.
In the next episode we will look at Domino’s Pizza and the economics underlying the way they cost their menu.
If you are looking to increase your online orders, if you want an email database of your customers who order from you, try using the Free Restaurant OnLine Ordering system. It’s free, supports printing dockets, feeds into our Free Restaurant CRM system and processes payments in just 3 days. This is one of our most popular products with restaurants saving thousands of every month in commission. Not only do we have a platform for taking orders commission free, we have a process for building your online ordering business.Right click here and save-as to download this episode to your computer.