The Two Types of Restaurant Online Ordering
“Soon, restaurants that don’t allow customers to order online will be unable to compete and — ultimately — survive.”
Those prescient words were written in Modern Restaurant Management in 2018, back when online ordering was still just a portion of restaurant sales. Now, for many restaurants, online ordering isn’t a way to make money. It’s the way.
Coronavirus has caused — or forced — many restaurants to adapt to a non–table service business model. As a result, online ordering and delivery technologies are suddenly in the spotlight. You’ve probably seen headlines about them (not all positive, which we’ll get to), or maybe you’ve looked into trying them out yourself.
Yet understanding the differences between online ordering platforms can be difficult. For one thing, there are so many of them, from DoorDash to Uber Eats to Grubhub to ChowNow to yours truly, MenuDrive. Plus, it can be unclear which does what, where, and at what cost.
This article aims to provide some clarity to the world of online ordering and delivery. In particular, we’ll look at the two online ordering types: food aggregators and white-label platforms.
The Two Types of Online Ordering Platform
Every food online ordering software type falls into one of two general categories: food aggregators and white-label platforms.
You’re probably more familiar with food aggregators, aka online ordering marketplaces. Uber Eats, DoorDash, and Grubhub are all food aggregators. Hungry people visit them to order from a restaurant that delivers to their area, and a delivery person (employed by the food aggregator, not the restaurant) brings their food when it’s ready.
White-label platforms, on the other hand, allow the restaurant to “own” their ordering and delivery platform. A restaurant can feature their own branding, manage their online menu by logging in to the platform, and arrange delivery methods.
MenuDrive vs. Uber Eats
Two archetypes of the different online ordering types are MenuDrive and Uber Eats.
MenuDrive is a white-label platform. Restaurants that use MenuDrive can create their own online ordering space, with a unique URL and their own branding. A restaurateur logs in to the backend to make menu updates, set delivery hours and zones, and otherwise customize the online ordering experience to best fit their business.
The restaurateur can use MenuDrive’s marketing services to send out personalized emails, offer coupons, incentivize repeat patronage with loyalty programs, and make announcements to their customers. Whenever the restaurant owner logs in to MenuDrive, they can access important customer data and sales reporting.
Uber Eats, on the other hand, is a food aggregator. A restaurant owner signs up on the Uber Eats platform, uploads their menu, and then has access to a dashboard to track new orders. Diners find the restaurant on the Uber Eats website or app.
Restaurants can use either platform to add online ordering to their website. With MenuDrive, an “Order Online” button on their website takes the customer to their storefront.
With Uber Eats, restaurants can add a badge to their website, which takes the customer to their menu on Uber Eats. When an order is placed, a service fee is charged based on a percentage of that order.
Food Delivery Commission Fees
We want to take a closer look at that last row in the above table, commission fees, because they’re a major topic for online ordering and delivery. And with good reason.
A number of food aggregators got in hot water for their response to coronavirus’ devastation of the restaurant industry. Even when they did waive fees, controversy followed them. Here’s how San Francisco chef Christian Ciscle put it:
“It’s Time to Delete Your Delivery Apps,” wrote Food & Wine’s Khushbu Shah in April 2020, well into the pandemic:
“Their predatory practices include typically take a 20 to 30 percent commission from restaurants on each order, asking restaurants to pay for promotions the app is offering to customers, and adding restaurants to the app without the restaurants’ consent. Not to mention the several hundred dollars these companies charge restaurants to even sign-up to use their platforms.”
Over at TechCrunch, Jon Evans wrote that “GrubHub/Seamless’s pandemic initiatives are predatory and exploitative, and it’s time to stop using them.”
(Credit where credit is due: DoorDash did reduce their fees by 50% for independent restaurants, through May 2020.)
A Note on MenuDrive Fees
At MenuDrive, we don’t charge delivery fees. Like a credit card company, we charge a low rate at the payment stage to cover our costs, but that fee is around 4.5%, not 30%. We only make money when you do.
We believe that your earnings are yours and your staff’s to share.
Getting Down to Brass Tacks: The Pros and Cons
Let’s look at the information in the above table again, from a slightly different angle:
What does all this mean for your restaurant?
Here at MenuDrive, we recommend that restaurants use both types of online ordering and delivery service. Here’s why.
Because the pros outweigh the cons, we think a white-label platform is your best bet for online ordering. (Caveat: We’re obviously biased, as fans and employees of MenuDrive. However, we also really love restaurants, want them to succeed, and think white-labeling is most likely to enable that success.) A white-labeled platform gives you more control, period. You control everything from order receiving methods to what your online storefront looks like. And the savings in commission fees can really add up.
However, we also recommend having an online presence on food aggregators. They’re a great way to attract new customers and increase name recognition.
Uber Eats, for instance, had 91 million monthly users as of April 2019. That’s a much larger user base than any one restaurant can expect to have.
Using a white-label platform for online ordering and having a presence on food aggregator sites benefits both the restaurant and the customer. Let’s say Kate is at home watching TV, and she suddenly gets a craving for something tasty. She goes on Seamless to search for pizza in her area, and your pizzeria pops up. Maybe she orders from Seamless, or maybe she Googles your restaurant and finds your own branded online ordering site. Either way, you’ve made a sale, and Kate has gotten her food easily and quickly. (If she does order through Seamless, the next time she’s craving pizza, she might go directly to your website.)
Whatever you decide to do, please do offer online ordering. We want your restaurant to be around for the long haul.