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Pizza driving restaurant industry into digital revolution

Pizza leads all other restaurant industry segments in digital ordering adoption, but the digital ordering and delivery landscape is in the early stages of a major evolution.

September 30, 2015 by Noah Glass — CEO, Olo

It was 17 years ago when I got my first hands-on experience with delivery operations. As a pizza delivery driver for Pizzaman in my hometown of Newton, Massachusetts, I began to notice all the parts of the analog ordering experience that could be improved to benefit both the customer receiving their delivery and the restaurant staff preparing it. This was, of course, before the days of digital ordering as we know it today.

At Pizzaman, we waited for orders to come in within a limited radius — stacking orders together where possible to make things efficient for the restaurant. We had limited knowledge of when other orders would come in, sometimes waiting with only guesswork as a guide on whether or not we’d receive another order in a given route.

Just a few years later, the Big Three pizza players began to embark on a digital journey by introducing online ordering around the turn of the new millennium. It took 15 years for the Big Three — Papa John’s, Pizza Hut and Domino’s — to go from 0 to 50 percent digital. Now, all three of those brands have over 50 percent of their sales coming through digital ordering versus customers calling in over the phone or coming in in person.

Today, pizza leads all other restaurant industry segments in digital ordering adoption, but the digital ordering and delivery landscape is in the early stages of a major evolution. Over 64 percent of American adults are armed with smartphones and the new habits of being used to having everything at our fingertips. It has become our remote control for life. With services like Uber, we can hail a car to come get us with a touch of a button.

The on-demand mindset is really the game-changer for the non-pizza side of the industry. By 2022, seven years from now, I believe that we will be in that world where 50 percent of most restaurant sales will be coming from digital because of the convenience of being able to have food at your fingertips, to skip the line at the restaurant, or to get food that you crave delivered to you. Digital ordering leaders are enjoying larger average order sizes, increased visit frequency, and guest satisfaction.

The industry is well on track to get to 50 percent digital market share in half the time that it took pizza to get there. And so, if you think about what that entails, a shift in that non-pizza limited service base, which is around a $200 billion annual sales space, to 50 percent digital means that $100 billion is going to shift from where it is today to brands that are doing digital ordering well.

We've seen that when consumers make this shift from analog ordering (from a person ordering over the phone or ordering in-store from a person) versus digital ordering (from their own device, and can then skip the line at the restaurant). We’ve seen a 32 percent lift in that customer’s visit frequency. So, that guest who came in three times a month is now coming in four times a month. When you combine these two things and you think about someone coming in extra times per month and in all of those visits spending 25 percent more, you have an incredibly powerful platform there — where you’re taking a very loyal customer who’s already one of your high-value customers.

The democratization of technology is good news for all operators in every segment of the restaurant space. In order to do online pizza delivery in the year 2000, pizza companies had to build their own proprietary system. There was no buy, there was no subscribe option. Similarly with delivery, if you’re thinking about delivery, brands can now basically rent the delivery fleet or have customers subsidize the cost of deliveries. The next few years will prove to be an exciting time in realizing how operators continue to offer better service with the digitally-connected, mobile customer.

Noah Glass is the Founder & CEO of Olo. Since 2005, Olo has helped restaurant brands increase revenue per square foot by delivering faster, more accurate, and more personal service through digital ordering. Today, over 14 million consumers use the Olo platform to order ahead and Skip the Line at the restaurants they love.

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