Small chains get online with online ordering

July 14, 2011

Laura Hansen had a hunch that offering online ordering would increase sales throughout her six-location chain, Pizza Lucé, in Minnesota.

The chief operating officer was right.

"While we knew folks would be excited about the Web, we underestimated how quickly our customers would shift to Web-based ordering," Hansen said. "We turned the system on with no fanfare and buried the link to online ordering on our website. Within three months, 7.4 percent of deliveries were taking place on the web. Our guests proved to us that they wanted it."

Pizza Lucé's online ordering system went live in its largest delivery store in May 2010. The second location went live that August, followed by the other four stores in November and December.

In January 2011, the company began advertising Web ordering via its website and social media sites. By March 2011, 21 percent of the chain's deliveries were coming via the Web, and the figure continues to grow.

"Online ordering has helped drive our delivery sales, which are up significantly over the previous year," Hansen said. "People appreciate the convenience, ease and speed of Web ordering. The customer feedback about this has been hugely positive."

Online ordering will nearly always increase the average ticket size, said Marla Topliff, president of Rosati's Pizza, which operates 170 restaurants. "People like to take their time when ordering online, instead of not being hurried by the sound of phones ringing in the background or the impatience they hear in the voice of the order taker. They can take their time and that promotes impulse buying."

Letting the big guys work out the kinks

Although large chains such Domino's have been offering online ordering for several years, smaller chains such as Pizza Lucé and Old Town Pizza Company in Illinois are recently discovering the service.

Husband-wife owners Brianna and Jonathan Cowman expect to launch online ordering in all six of their stores within a month.

"We decided to implement it because it would provide the ultimate convenience for our customers," said Brianna Cowman.

And because they only have six stores, the setup was relatively inexpensive and they split the cost among all their operators.

"Knowing how great this will be for business in the end truly outweighs any hardships that we have encountered or may encounter," Cowman said. "We certainly expect it will grow our business."

Setting up an online ordering platform can be challenging, so it's helpful to understand what it takes to pull it off. Below are 10 tips from people who have done it successfully.

1. Partner up. Pizza Lucé relied heavily on the experience of its point-of-sale vendor, Foodtec, to customize its Web-ordering page. Hansen then set up the system at each store.

"We get a ton of positive customer feedback about ease of use," she said. "We were concerned that it would be difficult, but the system is straightforward and works like a charm."

2. Detailed menus increase sales. Topliff said that putting a detailed menu online with lots of pictures is a must for a successful online ordering system.

"That makes (customers) even hungrier, so they are enticed to order more, and those add-on items really add up," she said.

Hansen found a similar outcome and she even created new menu items for vegan and vegetarian customers.

"Typically, our over-the-phone guests would ask what was available in vegan or vegetarian, and we could tell them and place their order, usually modifying an existing item in the POS," Hansen said. "With Web, I had to create the item, so they could easily order it or know how to do so."

3. Remember, it's still your brand. The online ordering experience should look and feel like the rest of the restaurant's website, not a template online ordering form, said Noah Glass, founder & CEO of OLO Online Ordering.

"Use colors, logos, food images and well-written descriptions to keep your online ordering menu on-brand," he said.

Hansen worked with Foodtec to do just last.

"Their system's ability to customize our Web-ordering page fit with our brand, and how easily it integrated with the store's system was a big help," she said.

4. Get in bed with embedding. It's important to make sure that any local customer searching for the food a restaurant serves is one click away from placing an online order, Glass said.

"That means embedding online ordering on popular restaurant search websites like GrubHub, Yelp, Citysearch and Urbanspoon," he said. "Pick an online ordering provider who has developed these relationships already, so that you can both better serve your existing customers with online ordering and drive new customers to try your food instead of your competitors.'"

5. Integrate online ordering. Operators should think carefully about how they want to process orders to avoid customer and employee confusion.

"This may include point-of-sale integration, so that orders arrive on the prep line printer or kitchen display system just-on-time, without the extra step of rekeying orders, which can result in manual errors," Glass said.

6. What about timed orders? For Hansen at Pizza Luce, implementation difficulties still lie with deferred orders, where guests place orders online but request specific delivery or pick-up times.

"Over the phone, these time slots are easy to control," she said. "Online, not so much, so our POS company is trying to offer us a solution."

7. Know your costs. The costs will vary depending on which Web-ordering solution the restaurant chooses, said Carmen Vogel-McCombie, marketing coordinator for SpeedLine Solutions Inc. Speedline specializes in POS systems for restaurants and has developed an open integration toolset that allows any Web or mobile ordering service provider to integrate.

"Setup costs can vary from a couple hundred dollars to several thousand, depending on the provider and what customization is being done," Vogel-McCombie said. "Some providers charge a set monthly fee for unlimited transactions -- most between $70-$100 per month. For high-volume stores, that can be most cost-effective. Others charge a percentage or set fee per transaction; setup costs tend to be lower with these companies, making them a good choice for a lower-volume store that wants to test the waters without a big upfront investment."

The bulk of the cost usually comes from getting the POS service in place. Pizza Luce's set-up costs were about $300, not including the countless hours Hansen spent implementing the system. A $35 monthly fee and a small percent of sales also go to Foodtec.

8. Pay upfront. Glass advises his clients to be 100 percent prepaid for online ordering.

"Select a provider that can securely bill credit card transactions online through your existing credit card merchant account, so that you can protect yourself from no-show customers and (its) resulting wastage and from credit card identify theft," he said.

9. Work the system. A successful online ordering system should have up-selling components, said Courtney Kurdziel, director of marketing for Straw Hat Restaurants Inc. The pizza chain has 84 stores. Of those, 22 have online ordering and the rest will offer the service by the end of the year.

Although online ordering only makes up about 4 percent of the chain's total sales, Kurdziel expects major growth in the next 18 to 24 months.

"For the franchisee the orders are significantly more profitable," she said. "The average phone-in order for delivery is $22.50 and the average online order is $33.10. Our online system constantly does suggestive selling of additional items – 'Would you like Coke? Would you like a dessert? 'We are having a special on wings.'"

10. Be prepared for Challenges. Most pizza operators usually say the benefits of online ordering far outweigh the challenges, but it helps to know what you're getting into.

For Straw Hat, getting older franchisees on board was a bit of a tough sell, Kurdziel said.

"Since Straw Hat has been around for 53 years we had franchisees that are 30 years in the business and are less technology savvy and didn't appreciate the benefits of online ordering," she said. "But once we did get them implemented they were excited."

A major challenge for Pizza Lucé was getting its "managers to manage differently," Hansen said.

"They had to pay attention to a new method of ordering and (do) some troubleshooting," Hansen said. "Tickets would just 'magically' print out without the phone call, and some of them required a call back. The staff didn't really notice much. The cooks kept cooking and the drivers kept driving."

Topics: Domino's Pizza , Equipment & Supplies , Franchising & Growth , Online / Mobile / Social , Online Ordering , Operations Management , Systems / Technology

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