The first six months of 2020 have made it clear that restaurants have to adapt to the new normal. Since the pandemic began, dine-in revenue has decreased by almost 70% across the US alone. This has made many restaurants either close or think about switching to online ordering. Online ordering systems for restaurants aren’t just a result of COVID-19, however. They appeared years before the outbreak. But due to our new reality, they’re now a necessity, not an option.
With new rules, food business owners need to adapt to new work and delivery requirements. In this article, we tell you about the advantages of in-house delivery software over working with third-party food delivery platforms.
Two basic approaches to restaurant ordering systems
When shifting to online orders, a restaurant has two options.
Use a third-party platform
Restaurants often choose to outsource their ordering and delivery logistics to an external platform. What does this look like?
After a customer places an order on a third-party platform, the restaurant is informed about the order details. When the order is ready, a courier associated with the third-party food delivery platform delivers it to the customer. In this case, a third-party company is a mediator between the customer and the restaurant and charges a fee for all orders placed and delivered on the platform. Working with a third-party platform has a few advantages for restaurants.
Advantage 1 — Popularity
It’s a long way from the grand opening to brand recognition. This journey can take months or even years. New restaurants need a quick brand boost. And third-party online ordering platforms help them get that. Aggregators like Uber Eats and Grubhub are already popular and have large audiences. If a small business is listed on such platforms, it can get recognized fast.
Advantage 2 — They’re ready to go
By choosing a third-party platform, a restaurant receives a fast solution. An aggregator’s technology can help a restaurant respond to a quick shift in consumer preferences. With a third-party platform, customers can receive easy access to a restaurant’s entire menu the same day the restaurant joins the platform.
Advantage 3 — Fewer administrative tasks
Restaurant managers can stop worrying about answering the phone and taking and canceling long orders, as third-party platforms deliver all order information electronically. Plus, since food delivery aggregators also provide their own couriers, restaurants don’t need to organize in-house delivery teams or buy vehicles and devices.
But delivery aggregators are gradually being squeezed out of the market by an alternative system. This is happening because of their obvious drawbacks like high fees, unavailability in certain areas, and poor user experiences.
In-house (internal) systems
Instead of relying on a third-party platform, restaurants can use their own online restaurant ordering software to process orders. In this case, a restaurant has dedicated couriers and vehicles to deliver food. This means the restaurant has full control over the entire ordering and delivery process.
Have doubts about the advantages of adopting an internal food ordering system? Below, we list five reasons why you should set up your own online ordering and delivery system.
Advantage 1 — It’s customizable
In 2020, restaurants don’t tolerate delays. With their own systems, restaurants can make real-time adjustments to their menus and daily specials, add images of food they offer, adjust wait times and prices.
Advantage 2 — Larger check sizes
Customers explore more menu options when ordering online compared to ordering over the phone or in person. And they end up paying more than they would have in person. But with third-party partners, it doesn’t matter if a check is small or big, as delivery platforms charge for all orders.
With an in-house system, a restaurant avoids fees and keeps 100% of the profit.
Check out some real-life examples of how much money restaurants lose when partnering with food ordering and delivery platforms.
Advantage 3 — Error-free order processing
Third-party systems unite dozens of restaurants under one roof. But system overload in poorly designed platforms leads to frequent mistakes. For restaurants, this means food waste and frustrated customers that don’t return. In-house software gives managers full control over order placement and processing, improving the customer experience and ensuring the stickiness of the brand.
Advantage 4 — Data insights
Third-party apps don’t provide restaurants with complete access to customer data. By incorporating their own ordering and delivery systems and synchronizing them with backend point of sale systems, restaurants can save all customer data (addresses, phone numbers, order history). This data can eventually help a restaurant run more successful marketing campaigns and offer a better ordering experience.
Advantage 5 — Fast and safe delivery experience
Food ordering and delivery aggregators need to handle orders for multiple restaurants and chains daily. But if they’re unable to properly control all operations, they will fail to provide fast delivery and closely control hygiene and food safety. With their own in-house ordering software, restaurants can reach their customers fast and be confident about compliance with health and safety standards.
The only known disadvantage for restaurants of incorporating an in-house ordering system is that the process takes months. First, you need to come up with the idea of what software you need. Then, you need to entrust the entire development process to a reliable software development company. After months of design, development, and testing, you’ll receive a product ready to launch. If you need a spur of the moment solution, you can start working with an aggregator platform while building your own software.
Basic features of a successful in-house restaurant ordering system
If you’re a restaurant owner considering developing an online restaurant ordering system, make sure to include the following features.
- Customer profiles — A customer profile contains information like a customer’s name, city, delivery address, phone number, and payment information.
- A digital menu should showcase your restaurant’s offerings with mouth-watering images, tasty descriptions, lists of ingredients, and prices. The menu should also come with categories, subcategories, and chef’s specials.
- Order history — This feature lets customers quickly review their previous orders and is convenient for customers that often place the same orders. By checking their order history, customers can reorder without searching for and picking menu items again.
- Favorites — This feature allows customers to save orders so they can reorder them with one tap. While a customer’s order history shows all previous orders, the favorites section shows only orders favorited by the customer.
- Preordering is appreciated by busy people. With this feature, users can place orders in advance so their food is ready and delivered at the scheduled time.
- It's important to offer customers many online payment options. A mobile or web ordering system should connect to a user’s preferred method of payment. Credit/debit cards, Apple Pay, Android Pay, and PayPal are among the most popular online payment methods.
- A delivery tracker makes waiting less unbearable. With this feature, users can easily track the status of their orders and know when their food and drinks will reach them.
You can also go further and provide innovative online ordering solutions. With a technological touch, restaurant staff can process orders without mistakes.
How much does it cost to launch an in-house ordering and delivery system?
The advantages of online food ordering systems are loud and clear. The next item on the agenda is the cost of developing such a system and providing delivery. Restaurants should expect to pay quite a bit to get all online food delivery processes off the ground.
A fully functional in-house system features several elements. Among them are responsive web ordering software, native apps for Android and iOS, and an admin dashboard.
Branded paper and plastic products
Food delivery and catering bags, takeout bags and containers, packaging, and disposable cutlery are some of the most essential items needed for food delivery. If they’re custom designed, they’re more expensive. But customized paper and plastic products differentiate a restaurant from competitors.
To offer delivery, restaurants need to hire couriers. Couriers should wear a restaurant uniform to represent the brand in front of customers. Also, restaurants should recruit new in-house staff members responsible for online order management and packaging.
Restaurants can provide vehicles for their couriers or hire couriers with their own vehicles. In either case, vehicle insurance is a must. Another important detail is placing the restaurant’s logo on delivery vehicles.
Let’s do the math
Let’s compare expenses for third-party services and in-house software. Here’s a spoiler: with aggregators, a restaurant may lose as much as 30% of revenue on a single order.
|30% commission for small restaurants and less than 30% for chains||10% commission for orders placed on a restaurant’s site and 20% for orders placed on the Grubhub marketplace||10% to 15% commission|
Restaurants new to delivery find the startup costs of an in-house delivery system (staff, vehicles, and devices) too high. And at first glance, a third-party solution relieves a restaurant of the capital expenditure that in-house delivery operations require. But let’s see if that’s really so. The data presented below was provided to Moz by Miriam Ellis.
After Andy Salyards, a BBQ restaurant owner, shared his Uber Eats bill with a news station, here’s what was found:
- The restaurant received 22 delivery orders in a week and made $636.00.
- Uber Eats provided delivery for all these orders and charged the restaurant $190.80.
- The restaurant paid Uber Eats approximately 30% of their weekly delivery earnings.
What did Andy Salyards do? He decided to bring back a few employees full time to build an in-house delivery team. As the restaurant started doing their own delivery, Andy canceled his partnerships with third-party delivery companies. And even with new full-time employees in the house, the restaurant’s delivery expenses were reduced compared to the fee charged by third-party aggregators.
Thinking about developing an internal ordering system?
You may find it appealing to build an in-house online ordering system. If you want to build your own system, the first step is to hire a development team with skills and experience in restaurant software development. Having successfully completed software projects for big market players, we know all about ordering system requirements. We take a personalized approach to every project and will offer you a free consultation. Contact our sales team today to learn how we can help you realize the potential of your idea.