Internet ordering was both a novelty and a nightmare when Fisher Pizza first tried it in 1999. The six-store Domino's Pizza franchise company's operations manager, Ramon De Leon, said the new system complicated rather than complemented its tried-and-true call-in system. Customers logged on and keyed in their orders, which were collected at a data clearinghouse. Staffers there then phoned the orders in to the appropriate Domino's store.
The net result was a low-tech bottleneck. Domino's staffers were still busy answering phone calls, plus the clearinghouse staff was getting busy signals at the stores and couldn't place the orders quickly enough.
"The system was not integrated with our point-of-sale (POS) system," said De Leon, who works in Chicago. "We still had people calling the store, and we still had the busy signals we were trying to stop."
Today the phones ring a lot less at Fisher's stores, yet the pizza makers are busier than ever.
About a year after the company's initial Internet venture, it contacted Web order provider QuikOrder, also based in Chicago. QuikOrder claimed it could deliver orders directly into the pizza stores' POS systems, even into their make-line monitors.
The once-burned De Leon was slow to believe it would work as well as promised, but now he's convinced it does.
"Last year for Super Bowl, 30 percent of our orders were from the Internet," said De Leon. "Why? No busy signals, baby. Call anybody else in town at halftime and see if you don't get a busy signal."
On average, 11 percent of Fisher's sales now come through the Internet.
Even in 2003, few operators other than the largest chains offer online ordering.
Nearly every store in Papa John's 2,700-unit U.S. system offers it, but not all Pizza Hut or Domino's stores accept Web sales. Pizza Hut's corporate stores do, while only select Domino's franchisees accept Internet orders. (A large number of international franchisees of both companies offer Web ordering.) Donatos Pizzeria, a 171-store chain headquartered in Columbus, Ohio, offers online ordering through San Francisco-based Food.com.
QuikOrder president Jim Kargman wouldn't specify how many pizza stores use his company's service, but those that do include all 1,754 of Pizza Hut corporate stores and some of the country's largest Domino's franchisees (an August 2002 story on Web ordering on Hostingtech.com put the number at 1,000 Domino's stores). He also said some mid-size chains are venturing in as well.
"The length of time you promote your (Internet ordering), to a certain degree, is even more of a factor than how wired the community is."Ramon De Leon
Fisher Pizza, a six-store Domino's franchisee
Beyond that, the handful of other pizza operations offering Web ordering are doing so with the help of third-party providers such as Waiter.com, in San Francisco. According to Marissa Panlilio, the company's director of marketing, about 200 Bay Area pizza operations use her company's online ordering service, including several Little Caesars, Amici's East Coast Pizzeria and Tony and Alba's Pizza.
Much like the system Fisher's stores once used, Waiter.com receives a customer's Web order and faxes or phones it to the proper store. Alex Biliouris, co-owner of MVP Pizzeria in Woonsocket, R.I., uses a similar service called geomerx. He'd like to have a fully integrated system that directs the orders to his POS terminals, but the cost is prohibitive.
Meantime, he said the current system is working well enough, and it helps him build an online marketing database affordably.
"This way I can continue building my database without spending a fortune on a new POS system," said Biliouris.
Bill Nicholson, Dallas-based Pizza Hut's director of virtual store and e-commerce, said reducing the demand on store staff was a chief aim his company sought when it launched its online ordering program.
"Basically, we did this to reduce phone calls and busy signals," said Nicholson. "If we could alleviate that with a lot of business on the Web, that also would help customers who are calling and ordering from our stores."
Before Pizza Hut rolled out its QuikOrder-based system nationwide last year, Nicholson said the company tested it in Columbus, Ohio, the year before to ensure it would mesh with its own POS system. Further tests in Kansas City, Mo., and Dallas followed before all its corporate stores logged on.
Count the cost
Nicholson wouldn't specify what Pizza Hut corporate paid to get the system going, but it's likely less than the investment made by Papa John's, whose entire custom-engineered data-center is held and managed at its Louisville, Ky., headquarters. (A spokesperson at the company could not be reached for comment before press time.)
Third-party Web-order services do eliminate such large capital expenditures, but the costs still add up.
Biliouris pays a site-hosting fee of $100 per month for MVP Pizza, plus an average of 7 cents per fax to his store.
De Leon said each of his company's stores pay QuikOrder $250 annually, plus a transaction fee of 30 cents per order.
Waiter.com charges a $399 initial set-up fee that includes engineering a company's menu to work online within its ordering system. It then tacks on a 9.9 percent per-transaction fee, or a 28 percent per-transaction fee if it handles the food delivery.
Waiter.com's Panlilio said the company's clients typically don't balk at those rates because the company also helps market those pizzerias. It also relieves some clients of managing a delivery service.
Panlilio also said the majority of the customers who order food through Waiter.com restaurant clients are big-spending corporate clients.
"We find that those ticket prices are higher than average since many are ordering for group functions," said Panlilio, adding that checks range from $250 to $1,000 on average. "Our minimum order for delivery is $60, so we don't have a lot of residential customers."
Seven-store Amici's East Coast Pizzeria is a Waiter.com user. The service is pricey, but worth it, said Richard Allum, Amici's marketing director.
"We have a fairly small delivery area around each of our restaurants, and (Waiter.com) will provide delivery service to business and markets outside those areas," said Allum. "That's been a real benefit because we've often gotten exposure in areas where we later opened up Amici's."
According to Kim Proudfoot, marketing manager at PixelPoint, a POS company in Concord, Ontario, users of its system can add on the company's Web to Go online ordering software for a monthly fee determined with each POS contract. That system allows Internet orders to go right to POS terminals in restaurants as long as the restaurant uses a PixelPoint POS.
Like many Web-ordering products for foodservice, Proudfoot said the Web to Go product is catching on slowly, but she thinks this is only the beginning of greater activity in this evolving sales channel.
"It eventually will get to the point when everyone will use the Internet for this," Proudfoot said. "It's especially good for pizza since it's easy to do."
But not as easy as the old way, Allum insists.
"Even in a very high-tech area like (San Francisco), I still think customers see the phone as much easier," said Allum. "Only about 5 percent of our orders come through the Internet, and it's not like that's growing fast. ... Still, we think it's good to offer it."
Spreading the word -- the old-fashioned way
De Leon attributes much of the steady growth of Internet orders to standard print advertising: ads, box toppers, door hangers, all of it.
Online Ordering Resources
Want to be included in our resource list? Simply e-mail your company's name and Web site to firstname.lastname@example.org, and we'll see that your firm is listed.
"Every printed piece we send out says, 'Order online, it's fast and easy. No busy signals. See complete menu,' " De Leon said. "Too many people have Web sites out there that nobody knows about. You've got to promote this the same way you promote your business overall. Nobody's just going to find it."
MVP's Biliouris agrees that patience and reinforcement of the "we're on the Web" message is essential. But he recommends operators communicate with their customers regularly through Web channels to make them more familiar with the online experience.
"Over time customers will get used to seeing that message" and begin to look for new promotions in their e-mail," Biliouris said. "On the last e-mail I broadcast, the response was decent. But I think as my database grows, the whole thing will eventually snowball."
Operators say that purchase incentives help generate Internet traffic as well. First timers to MVP's site get a free pizza, and new Pizza Hut site customers can get a pizza of any size with up to three toppings for $7.99. (Nicholson said Pizza Hut is considering discontinuing the offer.)
De Leon said his print pieces include codes that must be entered into the Web site to get Internet-user-only specials.
"I've got a code they have to use to get a Monday night football promotion: a medium cheese for $3.99," he said. "The system allows me to do (deals) for specific days, specific times of the day and for specific groups. It's very efficient."
De Leon also believes Internet ordering has a certain caché that will help it grow in popularity; it's much more hip than ordering over the phone.
"It's just a cool way to order pizzas," he said. "Think about people being at your house for Super Bowl and they see you order your pizzas online. They'll probably go home and try it for themselves, and then the word spreads."