New order '... off the Web!

 
July 20, 2004

Angela Lawson is a busy wife and mother employed outside the home. She's also a pizza consumer like so many others: desirous of good food delivered fast, order accuracy and customer service.

Telephone ordering, Lawson said, rarely delivers all three simultaneously, but Internet ordering nearly always does.

"At some places where I call in, whoever answers the phone acts like they don't have a clue," said Lawson, a Web site editor in Louisville, Ky. "But when I order online, I log into a personalized account, and I can see any coupons or specials right there. ... I like that I can pay by credit card and can add the tip in online. It'll even calculate 15 percent or 20 percent for you."

Even though Lawson's family isn't fond of the brand of pizza she gets via the Web, the e-service is so good that she orders it anyway.


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"Being able to see the whole menu when I order is great, and I don't have to ask somebody to tell me what they have ... and act irritated that I even called," she said. "It also seems to get to the house faster than if I called it in."

Lawson's love of Internet ordering is bonafide proof that Web commerce has a place in the pizza business. But what's clear to pizza operators and online ordering providers is that just a small percentage of pizza customers bypass the phone to place their orders. Hitting speed dial for one's favorite pizzeria likely will always be faster than ordering online. But some believe that over time, more customers like Lawson — who prefer ordering at their own speed and paying with credit cards — will convert. How many will do that and when are questions that remain unanswered.

Mani Sidhu, director of business development for CoolOrder.com, a Los Angeles-based restaurant Web ordering company, said online pizza ordering is definitely in its infancy. Reports he's read claim restaurants offering Web ordering reap only 3 percent to 7 percent of their transactions that way.

Domino's Pizza spokesperson Holly Ryan said about 1,000 of the chain's 7,450 stores offer Web ordering, but that even in those units, the phones still bring in most of the business. She expects that will always be the case, but in communities where customers increasingly ask for the online option, they'll add it.

Sidhu and representatives of several other companies like his don't view Web ordering as a replacement for traditional ordering; rather they see it as an added customer convenience that works to drive incremental sales. Research shows, they claim, that customers who linger longer over a Web-based menu will order more.

Others add that the chief benefit for pizza companies is targeted e-mail marketing. Linking customers' purchasing habits with e-mail promotions is incomparably effective, said Stephan Steiner, president and CEO of PizzaOnline.com.

"The real value to online ordering is in that e-mail address," he said. "Once operators get those, they can quickly send out an e-mail to tell those customers they have a special going on."

Technology at all levels

Neither Papa John's nor Pizza Hut will reveal how much they've invested in their Web ordering systems, but it's likely a staggering sum. Customers of nearly every U.S. unit of both chains can log on, place an order and receive it without ever speaking to another human. The systems are fully integrated with participating stores' POS systems, allowing orders to go straight to the makeline without a phone ever ringing.

Other Web ordering systems aren't quite so high tech. The customer does go to a Web page and place an order, but the completed order is relayed to a fax machine at the desired pizzeria. Such Web order companies typically follow up with a phone call to confirm the fax was received.

The cost for those services — plus the variety of value-added services each delivers — is wide ranging. Most providers charge a set-up fee, which gets the pizza operator's menu online and order-ready. Revenue comes either from monthly fees, a percentage of the total cost of transactions through the site, or some blend of both.

* San Francisco-based Waiter.com charges a $399 set up fee, a $9.95 monthly fee and a per-transaction fee of 5 percent to 10 percent of the order.

* CoolOrder.com, which will launch in August, charges a monthly fee of $20 to $30, but no set-up fee.

* PizzaOnline.com charges $299 to $699 a year, but its packages include unique domain-named Web sites, Web hosting, 10 e-mail accounts per customer, e-mail marketing services and much more.

All three companies rely on Web-fax-relay systems.

CoolOrder.com's Sidhu said the technology is now affordable for any operator who recognizes the value of an online ordering presence.

"There's not really much of an excuse not to do it now," he said. "Also, if Domino's, Pizza Hut and Papa John's are doing it, it's important. This is a way for small businesses to stay competitive."

Who's using it?

Customers who use Waiter.com most often are those placing large orders for office functions or ordering in advance of the time they need the actual food. According to the company's president and CEO, Craig Cohen, being able to place a lengthy order via the Web is simpler than trying to dictate it over the phone to a busy order-taker.

"Some say the reason their customers use the online system is because they can't get through on the phone," said Cohen, whose company serves around 100 Bay Area pizzerias and 900 general restaurants. "This is about offering an added convenience for customers that can generate incremental sales for the business."

Pizza Hut spokesperson Julie Hildebrand believes busy mothers looking to feed their families are using the service as much as any other computer-loving customer.

"We can't just say it's one type of user of online ordering," said Hildebrand, who declined to say how many Pizza Hut units accept Internet orders. "People in general are on their computers more all the time, so (the service) is being used more."

People like Lawson.

"I like the fact that, if it's late, I get a time-stamped e-mail that tells me when I've ordered it," she said. "But when I call, I rarely remember when I ordered it. That's just another nice feature of using the computer."


Topics: Marketing


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