The food behaviour of consumers has evolved drastically over the pandemic years. As dine-in options became more limited, more people turned to online ordering than ever before.
The global crisis made restaurant and takeaway businesses struggle to survive. And with a plethora of digital options now available, consumers are becoming more aware of delivery costs and have higher expectations for the entire delivery experience from start to the end.
According to a report on the Restaurant Industry and Market Evolution, restaurant operators said that they received 43 percent of online orders via direct channels. Still struggling to make ends meet in the current climate, many businesses have discovered that shifting to direct online ordering has been a real lifeline.
According to Statista, global revenue from online food delivery is projected to reach €274,805 million in 2022, an increase of 11% year on year. Restaurants that were initially happy with aggregator platforms for food ordering are now changing their minds due to some downsides of it. Third party aggregators like food order and delivery service partners charge a huge percentage of the order value (as large as 30%) which the restaurant can save up in a ‘direct order’.
The online food ordering model which used to represent 15% of total orders suddenly accounted for 90% of them post first lockdown, and the low contribution margin of online orders drained the profitability from restaurants. Although third party aggregators improve discoverability by running discounts on their app to attract more users, these discounts bleed revenue from restaurants and push them into a perpetual price war. The dominance of these aggregators in the digital space has reduced the restaurants’ bargaining power with delivery aggregators in return. Moreover, working with such aggregators also means the risk of losing consumer loyalty, lack of accountability and oversight.
To save their economics and customer relationships, more and more restaurants are now taking help from food tech start-ups and establishing their own online portal. Multiple food tech start-ups are helping restaurants gain operations autonomy and offer integrated solutions.
These combine and include QR-based table ordering, loyalty programmes, payment solutions, social media engagement, inventory management, and delivery management. This helps create a direct connection between the restaurant and consumers at a low cost, saving the restaurants’ profits and resources.
When restaurants partner with third-party delivery services they lose all customer data to these platforms. With restaurants taking control of both sides of the experience – ordering and delivery, they can engage customers with their brand experience and increase direct business, allowing them to become self-sufficient in order fulfilment and thus build consumer loyalty.
Knowing how to make the entire system to work to your advantage is what will set you apart in the market. To start with, implementing a strong online ordering system can position you for long-term success. It completely makes sense to say that ‘direct ordering’ is the future of the restaurant industry as its key benefits are letting restaurants have complete control over the customer relationship, the quality of the experience, better order management, earn more profit, and have access to customer data that allows them to make personalized marketing and retention decisions.
Restaurants are better off with an in-house service system than with third-party partners, which can increase revenue by up to 30%. In the era led by technology, Artificial Intelligence-powered food tech start-ups are giving restaurants new ways to monetize their online presence, and it’s time for restaurants to recognize and capitalize on this opportunity by moving beyond third-party aggregators.
