Even before the COVID-19 pandemic, emerging technologies and changes in consumer behaviors were leading to a rise in online ordering. The introduction of lockdowns and stay-at-home orders only accelerated this trend, especially in the restaurant business. This led to companies scrambling for solutions to keep their doors open. The industry reacted, and new technologies and services were introduced to address the situation. Online ordering, delivery apps, and curbside pick-up became a requirement of consumers rather than an extra convenience – and a necessity for business owners to keep from shuttering their doors and laying off employees. However, many solutions today require the restaurant to use one system for online ordering and another for in-store payments.
The biggest question for the industry now is, what solutions will meet the needs of both business owners and consumers?
The Growth of Online Ordering
According to a recent study from PYMNTS.com, the past year saw consumers spend upwards of $770 billion on food orders, over 60% of which were for delivery or pick-up. This represents a 46% increase from the previous year. Of those takeout orders, nearly 90% were received through a website or app, either operated by the restaurant or through a third party. While consumers and business owners quickly adapted to CDC guidelines, online ordering increased in popularity, requiring restaurants to suddenly pivot their operations. In fact, 60% of these online orders were placed at restaurants that had previously not offered much in the way of takeout services. This change in consumer behavior continued throughout 2020, and ultimately, by year’s end, around 70% of consumers had increased their usage of drive-thru services, in-store pick-up, and curbside pick-up. While restrictions are now easing and restaurants are opening for dine-in service, it is expected that this segment of the industry will continue to maintain growth, with 33% of surveyed consumers indicating that they are planning on ordering more online in the next year.
Independent Businesses vs. Third-Party Services
A hyper focus on supporting local businesses has been one of the emerging trends with a preference to order directly from restaurants rather than through third-party services. 41% of respondents to a recent survey from Buyer’s Edge reported that they have increased their purchasing from independent restaurants over the past year. Consumers are also becoming more aware of the limitations of third-party services, from higher prices and excessive fees to the poor customer experience. In a recent survey from Preoday, 70% of consumers said they would prefer to order directly from a restaurant, 50% indicated that they used restaurant-specific apps and websites at least twice a month, and over 35% told researchers that they avoid third-party services altogether.
The Importance of the Customer Experience
The reluctance to use third-party services stems partly from increased publicity of their negative aspects, such as the revenue businesses might lose through the disproportionately high cut taken by such services. However, a large portion of this reluctance is due simply to the poor customer experience offered. Customers ordering through a third-party service often face higher prices, excessive fees, and unreliable delivery time estimates. In a recent survey by First Orion, 50% of consumers said that their most significant issue with online ordering was late delivery, 36% said their food arrived cold, 33% complained that the driver needed too many directions, and 26% said that their food did not arrive at all. When an order is placed through a third-party service, such as a delivery app, the independent driver relies on preparation time estimates and often plans for bulk deliveries for multiple orders. As a result, a customer’s order might sit ready to be picked up for far too long, leading to them receiving a cold and unacceptable meal. This problem is made worse by out-of-area drivers not knowing their way around communities and those with no stake in the transaction delivering orders to incorrect addresses, not delivering them at all, or providing a poor customer experience.
Ultimately, when issues arise with third-party services, it is the restaurant that receives the blame. In a recent study by Raydiant, 38.5% of restaurants surveyed said that they had received negative reviews because of issues caused by the usage of third-party services, mainly revolving around cold meals, late delivery, or no delivery at all. In a survey by Zion & Zion, 35% of consumers responded that they blame the restaurant if their food arrives late or cold. The best way for restaurants to combat this situation is to control the entire customer experience.
Control the Transaction, Own the Experience
When restaurants offer their own in-house online ordering system, they can take charge of their brand, avoid excessive fees, and ensure an experience that is positive for consumers and satisfactory for the business. Ass more restaurants welcome back patrons, having a solution that handles both the in-store and online sides of the business has become more necessary than ever. With such a system in place, restaurants can ensure that their menus are up-to-date and accurate, provide a fast and convenient ordering process for consumers, and accept all secure payment methods. Most importantly, restaurants control the dining, pick-up, and delivery experience, from placing the order to the customer being handed their products.
A Recipe for Success
Online ordering often results in a lower average order value. In fact, research from PYMNTS.com indicates that the average value of an online order is $35, while an on-site order is worth $43. Therefore, any additional fees charged by third-party companies will continue to cut into the restaurant’s profits. While online orders may result in less revenue, restaurants can control the experience and continue to build or keep their reputations. Reducing excessive third-party fees, improving customer satisfaction, and maintaining an excellent reputation are all ingredients in a recipe for success.
The Fastlane to Online Ordering
Restaurant/Retail Online Ordering Management (ROOM) from PAX Technology, Inc. allows companies to have a cohesive, branded online ordering system where consumers can customize their order and enjoy the benefits of all-in-one automated ordering – where orders are placed online and transmitted directly to the payment terminals in the restaurant. This means they utilize the same system for both their online and in-store business, with no need to have multiple software solutions. The consumer receives direct notifications when their order has been received and is ready for delivery or pick-up. Payments accepted through ROOM are integrated with a business’s existing payment processor, providing consumers the option to pay in advance or when they receive their order. This also ensures a clean, safe, and contactless payment experience.
With ROOM, PAX Technology, Inc. supplies the hardware needed, ensures easy integration with existing systems, and provides the support to successfully run an online ordering and delivery platform. In today’s rapidly changing environment, merchants with ROOM can re-open their doors with the confidence to keep their business going better than ever with newer and easier ways to reach their customers.
To learn more about ROOM, or any other solution offered by PAX Technology, visit www.pax.us or email us at [email protected].