How Much is Saving Money Costing Your Restaurant

Online food ordering is a reality that every restaurant owner should easily recognize, however many don't. In this article we will explore why so many restaurant owners haven't set up a proper online food ordering system for their restaurant.
How Much is Saving Money Costing Your Restaurant

Jun 1, 2020

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Over my many years in tech, I have talked with a lot of small businesses and restaurant owners of all sizes. Some have revenue in the millions, some haven’t opened, and the rest are in-between.

Specifically with restaurants, I am always surprised that some owners are initially frightened at the cost of doing business with our food ordering system, versus: Doing nothing, relying solely on delivery apps like grubhub, ubereats, or using a lower quality food ordering systems that are provided by their current POS. However, using StoreGear’s online food ordering system over the course of just one month, can pay for itself in more ways than just financially. Sadly, many restaurant owners and managers do not initially see this value on first glance. However, if you give Menu by StoreGear a closer look, we’re confident you’ll easily discover how it will save you both money and time, as well as improve the accuracy of your orders.

Regardless if the online ordering marketplace platforms are profitable, a critical mass of the population ordering food online is a reality. 

Compared to Doing NOTHING New

Given what we have observed from working and talking with 1000’s of restaurant owners, the notion of staying Business as Usual is a tough pill to swallow when you are aware of the facts from a birds eye view. When I hear the words, “Online ordering is not our business model” I cringe. I literally need to bite my tongue and take a 4 second pause and deep breath.. 

Trying something new can seem challenging. We know this, because we hear it all the time. For example, some owners say, ” I’ve never done deliveries before and wonder why I should start now.” Our system will help those owners implement the changes necessary to remain competitive in this new era. Because our system is so easy-to-use and affordable, to us it should be obvious that directly receiving orders online would be a necessity instead of letting a 3rd party cannibalize that sales channel. Currently when doing nothing, 3rd party companies can still do take out delivery on your behalf and take over your google business page. Doing nothing will have consequences regardless if the restaurant owner is aware of them or not.

When compared to taking orders over the phone, Menu’s ability to accurately keep track of customers cannot be overstated. No matter how rushed the restaurant is, no matter how many phone lines are ringing or customers are on hold, or how loud the environment is, there will never be a mistake with the order when the order comes through Menu by StoreGear direct online food ordering system for restaurants. 

When comparing Menu versus taking orders with the phone from a time perspective, Menu can save you a huge amount time and focus, and time is money.  To accept an order with Menu, a restaurant employee simply clicks accept and types in the number of minutes when it’s ready. That’s it and there are no mistakes. 

Even with the time savings and accuracy of using our system versus business as usual, sometimes we still hear the words “we’re good.”

Reflecting, we believe that doing “nothing” is caused by four main reasons:

  1. Its possible that some restaurant owners aren’t necessarily business minded “first” people…they are creative artists…or somewhere in between. And that’s okay! Restaurant owners are creating flavors, experiences, and identities with their offerings that mold a city. Their passion keeps them going. Perhaps, though, from a pure business standpoint…there are better ways to make money with less energy but they still forge ahead. However, in this heightened competitive environment where restaurants are competing directly against the delivery apps, improving one what you have been doing before is now more important than ever.
  2. Change for some people can create anxiety. Anxiety can generate fright and inflexibility.  When someone is in a panic state, the idea of change is ridiculous and forces many people to “freeze” …even when a house is burning down and all common sense is telling you to change your position. 
  3. Many restaurant owners carry the baggage of being “burned” by a self proclaimed tech specialist. We have seen countless restaurant websites built by a brother, cousin, neighbor, fake it till you make marketeer, or a business claiming they are “tech/marketing” experts. However, many times if you actually check the work, the work is usually visually unprofessional or from a technological perspective has poor speed and SEO structure. Simply being able to set up a Wix / WordPress / square space site and making it look pretty do not qualify self proclaimed experts to build great business websites. Do these self proclaimed techies know what a site map is?  Do they know how to check their page speed or structured data, and do they even know why this matters?  Probably not, resulting in lost opportunities for the you the restaurant owner.  Luckily, not only are we real tech experts, but we have also created easy to understand resources to help teach restaurant owners exactly what to look for when evaluating people’s work or for doing the technical work themselves. 
  4. Whether venture capital tech investment companies (VC) have respect for the restaurant industry is an open question. In the world of VC, a VC company is measured as a success only if they can get a 10x return from the company they invested in within a specific timeframe. However, the problem with the VC industry standard of financial returns, is that these types of margins don’t exist in a family restaurant business that they are attempting to invade. As a result, many VC backed food delivery apps have been involved with deceptive tactics in order to squeeze out additional margins from the restaurant owners. Recently, these tactics have been more and more publicized as restaurant owners begin to understand what these VC tech investment companies are doing the hard way after becoming involved with them for a few months. Because the delivery apps take so much commission, restaurant owners are finding that in order to survive on the platforms restaurant owners are forced to change the value proposition they previously had with the customer by having to adjust portion sizes or use lower quality ingredients. As a result, because Menu by StoreGear works in the same realm of online ordering, many restaurant owners at first glance get confused with how Menu by StoreGear operates and mentally lump Menu by StoreGear into the same category as the predatory app companies. So…don’t do that, Menu by StoreGear is much much different.

Compared to Using Delivery Apps

A fast way to enable online ordering and get eyeballs is by signing up with the delivery app platforms. The food delivery apps will get you an audience of customers, they will help take professional pictures for you, they will help digitize your menu, they will provide you a delivery network of drivers, and they will do all of this with no upfront cost. Exciting, tempting, quick, less to think about….and they will take your business from right under your nose. In this “partnership” as they like to call it, you have just given away your business. Once you sign up to be listed on a food delivery app, the takeover you signed up for is “sticky” and you will have to fight to get it back. 

Here’s a break down of what you did by signing up with a delivery app:

  1. You have just given a large percentage of your profits away. The delivery app account rep will claim to charge you a certain %, then quietly charge you higher rates depending on where the order came from. For example, if you place your affiliate link(what they call partner link) on your website to their ordering system that will be one commission cost, but if that same user finds your restaurant a different way, ie exploring food delivery app app, or clicking on an advertisement for your restaurant that they made on your behalf, or through a link on one of their partner websites (ie yelp/google maps)…then the commission can be higher.
  2. You have just agreed to let the delivery app companies “market” against you. That means they will actively perform advanced SEO tactics to compete with you on various search engines and advertising platforms to direct people to their website instead of yours in order to charge you higher commissions (as mentioned above.)
  3. Every customer that has ordered from your restaurant on their platform they now own. What does it mean when a tech company, with a team of marketing experts, owns your customers: they will track all ordering habits of your customers, set cookies, advertise to your customers on both their platform, on google, and all other places where ads are available. Because the app company knows the ordering habits of your customers, they will advertise other places to eat, advertise their loyalty programs, advertise their platform and give priority to the restaurants that participate in the delivery app promotions. Additionally, delivery apps are investing heavily in ghost kitchens, and in their next state of a revenue channel are most likely looking towards opening their own network of ghost kitchens primed to compete with your restaurant and the customers you gave them. 

Compared to Using a Cheaper Ordering System

Let’s say the cost of one ordering system is $129/mo (Menu by StoreGear), and the cost of the of another ordering system is say…free. To make this comparison even simpler, we will also completely IGNORE the fact that the “free” system is also keeping all the customer data and selling it for marketing purposes that will harm your business. We will also eliminate the idea of this free platform pushing you into any discounts or loyalty programs that make you have to discount your product. Instead of thinking about those two facts, for this comparison we will ONLY compare the immediate monthly bottom line return on investment.

For the $129/mo ordering system to be the better choice, it needs to make you more than $129. Let’s do the math of what would make a $129/mo food ordering system make more sense than a free ordering system. If the average online order is $42, for the $129/mo ordering system to make sense, it needs to be so much better that it would give you 3 more orders than the free system to break even and 4 more orders per month to surpass the free system. That’s the math. When reviewing the two ordering systems, let’s compare how one system would possibly receive more orders than the other. Compare the following:

  1. Pictures in the menu
  2. Customized branding
  3. Loading speed
  4. Menu ordering experience takes place on YOUR website
  5. Does the platform force, or even HINT at telling the user to create an account.

Just one of these options would most likely lead to one more order per week.

If the paid system can bring you one more order per week, then the paid system is making the restaurant more money than the free system. That’s the math that needs to be calculated to make an objective decision.

Doing Nothing is Hurting the Customer’s Experience

In todays world, the idea of doing nothing online to maintain your customer experience with your brand is a false reality. A large amount of dining customers are using online ordering. Lets review the common example of a customer doing a general search on Google maps or Google for a restaurant and the customer encountering your restaurant. If the restaurant does nothing, the customer will most likely see a listing on Google Maps or Google representing your restaurant but controlled by a 3rd party. If the restaurant is not controlling the online listings, these 3rd party companies will most likely be controlling the listings and funneling the customer to their ordering systems where they can set the prices and control the customer experience or re-direct the customer to another restaurant they have a relationship with. To re-iterate, if the restaurant does not properly edit their Google Maps business listing, a 3rd party company can do so without the restaurants permission and completely control your customer’s experience. While this is outrageous and it is completely unfair that a third party can use your restaurant for their marketing purposes and financial gain without the restaurant’s permission…this is the reality every restaurant owner needs to understand. Sadly most restaurant owners continue to blindly call themselves “old school” and do “business as usual” completely thinking that this is not possible because of how utterly unfair it is. Unfortunately, that attitude leaves them in a false reality to what is occurring behind their back, sucking away their customers and allowing somebody else to control the experience online with their brand. In todays world, things are evolving where the online experience can be just as important as the dine in experience. When done right, if the restaurant is in control, they compliment each other. However when doing nothing, they compete with each other.

Within any industry, change is inevitable. To be successful, you need to be aware of the industry changes, know what you are up against, and be able to adapt quickly. The concept of normalizing a significant segment of the population to order food online has reached critical mass and will continue to grow. It’s not speculation, it’s a reality. To not recognize this new reality is simply leaving your head in sand. Sometimes the idea of change can give people anxiety. But simply giving into the anxiety is not going to help your business gain, or at the very least, maintain your customer base. The new reality is not going to stop because you have been doing business for XX years. Hopefully this article helps you better understand the new reality of the restaurant industry and be better prepared to adapt. 

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