Nearly every week, I see another news story about a third-party online ordering site or app, such as GrubHub and DoorDash, expanding ordering and delivery services across the country. Even so, I was blown away to hear from operators at this year's International Pizza Expo that their restaurants receive orders daily from as many as five or six different third-party ordering services.
The third-party sites generate sales — and often new customers — so they don't want to shut off the tap. But they're pulling their hair out over the transaction fees, the labor costs and the loss of control over the customer experience.
Are you in that situation?
It's a Catch-22. There is no integration, so orders come in to a tablet (or five or six separate tablets) in the restaurant. Or maybe you get them by email, so you're assigning staff to read the orders off the tablets, then re-enter each of them into the point of sale system. But, all that takes time, and sometimes you don't see an order right away. As a result, deliveries get delayed and customers lose patience.
If you're like some of the restaurant operators I met you may be handling enough of these third-party orders that you have full-time staff dedicated to re-entering them into the POS. But then, your labor costs skyrocket.
Likewise, all that manual re-entry is prone to error, so mistakes happen and customers get burned. On top of all that, these third-party sites can charge 10 percent or more of the order value in fees. It is, in short, a recipe for late deliveries and spiraling costs.
So what do you do?
With this three-step approach, you can regain control over your costs and the customer experience without giving up the added revenue that makes this order channel so attractive.
If GrubHub, Seamless or Doordash (or other third-party sites) are popular in your area, take advantage of them to ensure you are winning your share of the local online business. A 10 percent fee is not so bad if you consider it to be a marketing expense necessary to win new customers.
This marketing strategy is going to cost you some money, so negotiate the best rates you can and recognize order fees are the cost of doing business with these third-party sites.
However, extra labor costs, manual entry mistakes and late deliveries are costs you can avoid by having third-party orders feed directly into your point of sale system. The most significant way to reduce those costs is to bypass the tablet or email order notifications by integrating directly with the POS.
Chowly recently announced the first service directly connecting leading third-party restaurant ordering sites, like GrubHub, with the point of sale system. This type of integration eliminates the manual re-entry of third-party orders so you don't need dedicated staff to do such work which not only avoids labor costs, but puts order into production, avoiding delays and losses associated with missed orders.
While third-party sites can attract many new customers, the transaction fees eat up a lot of margin. So, for sustainable profitability, it's critical you give new customers a strong incentive to use your own branded web and mobile ordering channels instead. This shift helps you build stronger ties with your new customers, and eliminates the distraction of competing restaurants online. Likewise, it can substantially boost your net revenue per customer.
Of course, this is by far the hardest step. Third-party sites are popular for a reason. They're easy to use and easy to remember, which makes them sticky. But the right incentive can persuade a customer to break the habit and use your branded site instead.
So consider perhaps, box-topping new third-party orders with a $5 coupon code valid only on your website. Invite them to sign up to your text or e-club. Send a promo mailer to customers who ordered through third-party sites each month.
How are you using third-party ordering sites today? These sites can be an influential marketing channel with a direct, easily measurable income stream. But without control over the order handling process, service levels and profitability can suffer. This strategy can help you control both costs and customer experience while you take advantage of third-party ordering services to grow your online market share.