Portals vs. non-portals: Which is best for online ordering?

Aug. 8, 2013

By Jared Shimoff, senior director of NetWaiter

Portals offering online ordering have been in the limelight recently. This past spring, Seamless and GrubHub, two large restaurant portals that offer online ordering for restaurants, joined forces. These companies list thousands of restaurants on each of their sites. The question closely follows: How will this merger impact restaurants and their customers? While it may be too soon to tell, there are still plenty of options for restaurants.

Online ordering, ordering from a restaurant via computer or mobile device, is a huge technological frontier for restaurants. A 2010 Technomic study of 1,000 adults showed that 43 percent had ordered online. Younger consumers were more likely to order online, with 60 percent of respondents between 18 and 34 years old stating they had ordered online, as opposed to 35 percent of people 35 and older. Three years later, these figures have certainly grown. Users cite convenience and accuracy as the chief benefits of ordering online. For restaurants, it's larger ticket sizes and takeout customers who return more frequently.

There are two ways restaurants typically use online ordering: Portals — or multirestaurant sites that list restaurants alongside their competition —and full features sites, like NetWaiter. Seamless and GrubHub fall into the portal category. I'm a realist when it comes to the options restaurants have, and we, as a company, always try to communicate that to clients. Using a site like NetWaiter and a multirestaurant portal can help maximize a restaurant's exposure to potential customers.

So, why would a company that markets customized ordering sites for restaurants talk about portals for online ordering? Because it makes sense for the business plan of your restaurant. Companies such as NetWaiter, and multirestaurant portals, can both have a strategic purpose in a restaurant's marketing plan.

Jared Shimoff

In today's competitive marketplace, restaurants need to get in front of customers, and portals help restaurants accomplish that. Portal sites typically list a restaurant for no charge and take a cut when orders are placed. While that cut may be big, it's a way restaurants can reach new potential customers. When customers surf for restaurants on a portal, they might stumble across your restaurant by accident. If that's the case, you may get a new customer you didn't have before.

So, why should restaurants have a customized online ordering site if they already have a portal presence? There are four reasons.

First, according to a Cornell Hospitality Report, "nearly half [47 percent] of the consumers on multiple-restaurant sites said they clicked to the restaurant's website to order their food, once they found a restaurant they liked." Why would customers leave a portal to go to the restaurant's website? Accuracy and reliability. Restaurateurs often lose track of where they are listed and menus don't get updated. A customer can order something and, upon pickup, discover the item is no longer offered or now it's $1 more. That's an uncomfortable situation. Non-portal solutions give restaurants 24/7 access to their Management Consoles. Changes take seconds. Delete offerings, add new ones, adjust prices, etc. It is all at their fingertips. Customers will always trust the information coming from the restaurant before they trust a third-party.

Second, portals are great for putting up a bare bones menu, but a full feature site with custom branding and the ability to collect and manage customer information is superior. In addition to making real-time changes on your site, restaurants can collect information about customers, run email campaigns, and launch promotions directly from their NetWaiter Management Console. With most portals, a restaurant doesn't know anything about the customer, because it's technically the portal's customer, rather than the restaurant's customer.

Third, restaurants that link to their portal listing from their website are really sending their customers to become the portal's customer, which could cause them to lose business to another listed restaurant.

Finally, the price restaurants pay for orders coming from a portal is steep. Portals charge from 10 to 20 percent. If a customer finds a restaurant on a portal and orders, the restaurant pays dearly. Some restaurants should be willing to pay those higher fees because, in theory, it's new business. But, what about the 47 percent of customers that find a restaurant's listing on a portal and then visit the restaurant's website? If a restaurant offers online ordering from their own site, then they can capture that business, saving significant money. The same is true for repeat business. You don't want your restaurant paying high portal fees for the same customers to order again and again. By engaging customers directly through NetWaiter, restaurants realize greater profit and all of the ancillary benefits by working directly with customers.

Like many businesses, restaurants get a large chunk of their revenue from a small group of customers. A recent figure I saw said that 72 percent of a restaurant's business comes from 20 percent of its customers, so almost the standard 80/20 rule. Give those customers a more convenient way to order and they'll increase your business.

Listing your restaurant on a portal site can be part of your strategic mix for new customer acquisition, because it's a low-risk way to get your name out there. The bigger part of the strategy, though, needs to focus on the customers that use your site, as well as converting third-party portal customers into regular users of your own online site.

The bottom line — any way to get customers into your restaurant or ordering online is a good thing — portal or otherwise.

Read more about online ordering.

Topics: Online / Mobile / Social , Online Ordering

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