Sharing Success

Keeping Up with Technology

If your restaurant’s success depends on delivery and/or carryout (“delco”) orders placed by telephone and you do not already take “online” or mobile orders, you should seriously consider doing so.

The reason is simple. Five years ago, twenty-five percent of “delco” orders were placed via smartphone or computer. Today, fifty percent of all delco orders across all restaurant types are placed online. In other words, consumer demand for mobile ordering is growing about 15% annually. Meanwhile, telephone orders may be in gradual decline.

What does this mean for Independent restaurateurs? Restaurants that already accept mobile orders have positioned themselves to benefit from this growing demand. Those that do not may be preventing themselves from appealing to this large and growing consumer group.

In further evidence of this trend, PMQ Pizza Magazine reports that total sales within the independent pizzeria segment grew only 3% between 2011 and 2014. Meanwhile, sales among the biggest “delco” chains increased 12% during the same period, largely through increasing mobile orders.

By the way, it has been shown that consumers who order restaurant food online (vs. over the phone) tend to spend more money per order as a result of choosing additional items, like breadsticks, salads, desserts, sodas, etc. Hence online ordering can grow sales, even if a restaurant doesn’t add new customers.

The preference for “doing business” online is especially true for the “smartphone generation” which includes my two oldest sons (Kyle, 22, and Joey, 19). To better understand the situation, I asked them and many of their friends what they prefer about online ordering.

They find it more convenient, especially since it allows them to look at a restaurant’s entire menu at their own pace. When asked what they do when a particular restaurant isn’t “online,” they typically look for another good-quality alternative that is. In other words, while convenience won’t cause them to trade down in quality, it does influence which quality-oriented choices they make.

For that reason, I believe that quality-oriented “delco” restaurants wishing to continue to attract new, younger customers are wise to adopt mobile ordering.

I am not an expert in how to run a successful restaurant. But I see strong parallels between how Independent restaurants are reacting to online ordering and how the restaurant industry resisted and then eventually embraced payment by credit card.

When Diner’s Club charge cards were introduced in 1950, it was mostly exclusive, high-end restaurants that first accepted them. At the time, many restaurateurs considered them a costly “novelty” that appealed to well-heeled patrons.

By the 1980s and 1990s, most restaurants were accepting credit cards as a “convenience” to the growing base of consumers who preferred to pay that way. However, there were still a fair number of “cash-only” eateries, especially longtime landmarks with strong reputations and lines around the block.

But today, the vast majority of restaurants consider accepting credit cards as a necessary, unavoidable cost of doing business. Why? Because to many consumers, payment via credit card has evolved from a “convenience” to a “deal-breaker.” That is, a significant number of customers don’t just expect to pay that way, they will dine elsewhere if denied.

What does the evolution of credit cards have to do with online ordering? I believe that for a significant number of consumers, online ordering is following the exact same path from “novelty” and “convenience” to “deal-breaker.”

Because I am interested in better understanding this issue, I have asked several of our independent pizzeria customers who offer mobile ordering how it works for them. Additionally, I learned that the brother of one of our managers owns a local pizzeria, but didn’t take mobile orders. So as a favor to me (and his brother), he researched how newcomers can get started. In the process, he found multiple options which were affordable and easy to implement. With this information, his brother decided to “take the plunge” and his investment has quickly paid for itself.

Obviously, every restaurant’s particular situation is unique, so you will have to do your own research. However, I have asked Editor Steve Rouse to dedicate much of this and future issues of La Trattoria to helping you figure it out.