In a Downturn, Don't Neglect Direct Ordering

Steve Buryk, Senior Director, Strategy & Operations, Olo [NYSE: OLO]

As macroeconomic indicators hint at a recession in the near future - GDP shrunk for two consecutive quarters and inflation remains high—restaurants should be readying their playbook, once again, to adapt to evolving guest behavior and preferences. Early data indicates that some guests are already responding to rising menu prices by ordering lower cost items on the menu or dining at less expensive restaurants.

“Fortunately for restaurants and guests, direct ordering cansolve this pain point by offering guests the ability to get the same food they would via a marketplace at up to a 30 percent discount.”

When online ordering and delivery became the primary methods of restaurant dining at the height of the pandemic, many brands saw third-party marketplaces as a lifeline and signed up in droves. In many cases, marketplaces proved to be strong engines of growth, boosting brand awareness and convenience for guests.

While marketplaces are a strong and important growth channel, their benefits can come at a price, which is generally borne by guests.

Marketplaces add premiums on guest orders in the form of service and delivery fees—typically 10-15 percent of the order total, or more depending on the marketplace. Restaurants are also charged fees by marketplaces, which they typically pass on to guests through higher menu prices. As record inflation eats into consumer budgets, the additional costs could deter guests at the margin.

Fortunately for restaurants and guests, direct ordering cansolve this pain point by offering guests the ability to get the same food they would via a marketplace at up to a 30 percent discount. Additionally, guests can take advantage of brand loyalty programs and other incentives offered to those who order direct. Thus, instead of having to “trade down” to a lower cost menu item or brand, a guest has the option to “trade across” channels, from a higher cost channel (marketplaces) to a lower cost one (direct ordering).

But perhaps the greatest benefit ofoffering direct ordering is the ability to collect, analyze, and act on guest data. When marketplaces don’t share this data, it’s difficult for restaurants to make every guest feel like a regular and ultimately maximize their lifetime value to the brand.

Guest data can (and should) be leveraged to personalize every guest interaction.

As restaurants revamp their direct ordering channels, they should focus on enhancing the guest experience in the following ways:

1. Ensure the direct ordering website and app is easy to discover by adding links to local listings and optimizing for search engines (SEO)

2. Invest in a delivery platform that can offer convenience to guests who are willing to pay for it

3. Create a frictionless drive-thru, curbside, and in-store pickup flow for guests

4. Enable guests to securely speed through checkout with a streamlined menu, data-driven suggestions and upsells based on order history, and multiple payment methods

5. Keep guests engaged with personalized marketing communications, loyalty programs, subscriptions, and other retention strategies

While optimizing a direct ordering channel or building one from scratch can seem like a daunting task, many turnkey and cost-effective solutions exist to enable restaurants to create their own branded ordering experience. There’s never been a better time for restaurants to enhance the guest experience, built an actionable database, and maximize revenue through direct ordering.