Popular June 24, 2021 5 min read

Online Ordering: A Basic Cost-Benefit Analysis

Online Ordering: A Basic Cost-Benefit Analysis

Online ordering has become the new norm in today’s world, with service just a click away as more restaurants get hip with the times, using more of their digital resources to reel in customers. From food delivery services to encouraging users to order on social media, restaurants are pulling out all the stops in the touch-and-go world that exists.

For restaurants, online ordering can bring in a new wave of customers. On the other hand, you may be giving yourself more work and expenses to make online ordering fully accessible. It may also require a re-examination of your tip distribution and tip management strategies once you introduce online ordering elements to your restaurant’s makeup. Here’s a basic cost-benefit analysis of online ordering.

The Pros

Millions of people are using online ordering, with this method of service becoming increasingly dependable over time. After food delivery sales constituted just seven percent of restaurant sales nationwide in 2016, that number has increased significantly in the pandemic era, with sales numbers for some restaurants reaching the 20% mark.

Restaurants benefit in terms of finances, resources and time management with the full advent of online ordering. Plus, there’s more chance that a restaurant tip is automatic for your employees as they could potentially interact with more customers.

More Efficient Operations

You can streamline your restaurant’s operations more efficiently, allowing you to focus more on certain business aspects you may not have given enough attention to. By accepting online orders, your front-of-house staff won’t be tied to the phone or having to process orders. They can serve more customers and improve their tip distribution once it’s time for tip pooling or tip sharing to commence.

Faster Processing

Because online ordering involves increased automation, you can fulfill more orders and make more money, processing multiple orders each minute. This means more tips for your employees and more use of your tip distribution software. It also means that repeat customers will have easier access the next time they log in to order and try to pay for their food.

A Broader Consumer Base

Because of increased automation and being able to take more orders, you’re more likely to boost your consumer base. Online ordering helps you reach consumers outside of your regulars or the neighborhood. You can expand your outreach, reach out to consumers in urban or rural areas who may not have access to vehicles and so on. The increasing use of third-party apps by restaurants is helping them reach out to consumers who aren’t necessarily mobile while making your menu easily accessible to a host of people.

You Gain a Competitive Advantage

Having online ordering as a convenience is huge for your restaurant gaining a competitive advantage in the market. Technology has increasingly been a determinant for consumers and even more so for millennials with 32% of them spending on quick-service restaurants regularly. The customers of today like ease-of-use and love customization. By introducing online ordering, you meet these increasing needs and help your restaurant stand out from the competition.

The Cons

While online ordering may make things easier for consumers, there’s quite a bit of work that has to be put in so it works like a charm. Plus, depending on your resources, you may end up spending more than you bargained for.

Potential For Reduced Profit Margins

Whether you use your own fleet or third-party apps, you’ll have to account for delivery costs ranging from gas to insurance. To really see the benefit of online ordering, especially if your budget is tighter than others, you need a high volume of orders. In some cases, restaurants have spent 40% of their revenue on courier services. This can also lead to headaches when you are working out how to calculate tips because if more revenue is going into these services, you’ll need the orders to be coming in at a higher rate. If those orders aren’t coming, then tips won’t be as frequent and tip allocation becomes a headache.

More Resources Needed

On that point, if you’re going to integrate online ordering services into your framework and do in-house delivery, that means you’ll have to spend extra money on hiring staff as well as vehicles to make the deliveries. An entire new process might be needed and some budget reworking will be needed. You might need to adjust your tip pooling software or tip sharing software accordingly to factor in the new staff who’ll be driving those delivery vehicles from door-to-door.

You Won’t Have As Much Control

You’ll be relinquishing some control over customer experiences when you go to online ordering. If there are delays with delivery, the food is poorly presented or is cold, it reflects poorly on your brand. You also aren’t there to massage customer egos if they feel like service is unsatisfactory. It’s safe to say when you decide how to fairly distribute tips, those employees won’t have much to look forward to from the tip pool.

Despite those potential issues, there are several benefits you get out of adding online services to your restaurant. Especially in these times, it’s good to capitalize on increased demand for online takeout and dining experiences. If you’re looking for another addition to your restaurant, getting top-tier tip management software can help take the headache out of tip pooling and tip sharing at a moment’s notice. Contact us today for more information!

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