Food and Money in 2020

| by Noah Glass
Food and Money in 2020

Eight years after launching my company OLO - the first of its kind to combine mobile commerce and food ordering - I found myself sitting on a conference stage in Las Vegas, addressing a crowd that had come to learn the future of mobile ordering and payments for restaurants. The "Order Ahead & Pay in Advance" panel was among a wide variety offered at the annual Money2020 -- the leading conference in commerce innovation. Think Woodstock for mobile payments nerds.

My fellow panelist Steve Sanger of GrubHub Seamless and the moderator of the panel, Rocky Agrawal, principal analyst at reDesign mobile and regular tech beat contributor, are dedicated to bettering the consumer experience through technology. So, courtesy of the digital age, we bring you the panel Q & A – no plane fare needed.

Agrawal led the discussion with the following questions:

1. How does online and mobile ordering help with yield management?

Online and mobile ordering means a better, faster experience for both the consumer and the crew. Like all innovations, this is about creative destruction — some old habits must go in order to make room for new practices. For example, delivery, the focus of GrubHub Seamless, is destroying the call-in order. Point-of-sale-integrated pickup, OLO's core business, is destroying the entire experience of waiting in line. Customers are embracing the opportunity, and we believe it won't take long until waiting in line to give an order to a cashier is much like using a telephone booth.

Operators are slower to adapt to the changes, but mobile ordering is a great tool for managing yield. OLO uses a functionality that we call "GoTime" to deliver orders to the point-of-sale (POS) just-on-time for the crew to prepare orders so consumers can pick them up both ready and fresh. Restaurants can control the percentage of yield dedicated to online and mobile orders, but using an "Order Throttling" feature that limits the amount of mobile orders the system can take at any time, and automatically notifies the end user. So, if a customer wants to pick up a dozen burgers at 6:15 pm — the restaurant's busiest time — the system won't allow the order, suggesting earlier or later pick-up times to the customer through the system. Just as EZPass gradually changed tollbooth operations from full service to self service, over time an operator can dedicate more and more "toll booths" (i.e., cooking stations/grill space) to online and mobile orders.

2. What's better: A flat fee or a transaction-fee model?

For white-label online and mobile ordering solutions that require the restaurant chain to market the online and mobile ordering solution to their end users, flat fee pricing is best. That said, the ideal is to have both the ability to pay a flat monthly fee and to pay for performance by paying a transaction fee to consumer discovery sites like GrubHub or Seamless that drive new local customers to you.

3. Is it a consumer problem or a merchant problem that online and mobile ordering is solving?

Online and mobile ordering solves both a consumer and a merchant problem because speed of service is a double-edged sword. Faster transactions mean a better guest experience and more throughput. That means more time for consumers and more money for merchants. Everybody wins.

4. What are the trends in online ordering vs. mobile ordering?

Mobile is taking over. Just 18 months ago, mobile ordering represented just 10 percent of the total orders for our company, with online ordering making up 90 percent. Today, mobile ordering is more than 50 percent of OLO orders for the hundreds of restaurants that use our service. And with mobile ordering (unlike online ordering) many of these orders originate from inside the four walls of the restaurant. That's a thrill. That's the future.

5. Where are customers when they place online and mobile orders?

This can very widely. Customers order from the office, from home, and we're seeing more and more in-store or en route orders when ordering for pick-up, which demonstrates the utility of mobile ordering to satisfy both the customer demand for convenience, and the operators need to manage yield. Customers don't wait in line to order — they pick up their orders when they want them, while restaurants have more time to prepare.

6. How is food ordering different from other kinds of e-commerce?

Food is an incredible product type, if you want to think of it that way. People are passionate about food. They trust restaurants enough to put their product into their bodies. That's incredible. There's a passion to food that doesn't exist with other product categories. And its production is special, too. Timing is critical. It's prepared just on time. It's consumed just on time. The synchronization of ordering, preparation, and pickup has to be perfect. That's a far cry from shipping a book from a warehouse to your front door.

7. How can online and mobile ordering support loyalty programs?

The amazing thing about online and mobile ordering as it relates to loyalty is the level of data restaurants can access. In addition to the standard metrics available such as store-level data, product-level data, or even transaction-level data, online and mobile ordering provides detailed data at the customer-level such as what loyal customers order and when, where they are when they order, and the offers they find most appealing. Based on this granular data, operators design smarter loyalty programs, designed to encourage loyal customer to try new products, visit during different day parts, explore new stores. That's a new way of thinking that greatly increases the value of a loyal customer.

8. What are the strengths of online and mobile ordering companies versus point-of-sale companies?

Customer-level data is one magic insight that online and mobile ordering offers that point-of-sale ordering cannot. Linking transactions back to the same customer is incredibly powerful, providing the kinds of insights that lead to "Recommended for You" and "Better Together" offers that are targeted/personalized, instead of generic upsells.

Location-based data (i.e., where customers are) is the other magic insight. This enables restaurants to geo-target their marketing communications. Imagine knowing that a customer who loves bacon is walking by one of your stores and being able to instantly send them a message right to their hip pocket about your new BLT sandwich. Online and mobile ordering enables this kind of real-time, location-based marketing.

9. What do chain restaurants require that independent restaurants do not?

Unlike most independent restaurants, restaurant chains interested in online and mobile ordering tend to require deep POS integration, payment integrations, and their own branding. Typically all of their stores offer online and mobile ordering for pickup and only a subset of their stores offer online and mobile ordering for delivery.

10. Do you recommend mobile web ordering or mobile apps?

The answer is "yes." You need both. Ultimately, a mobile app is the ideal ordering experience. Mobile apps can know who you are, where you are, what you want, and how you want to pay. That removes all extra clicks and all friction between the customer wanting food and submitting the order. But mobile web is the onramp for engaging the customer with mobile ordering - they can visit your online ordering website, get a mobile-optimized version, instantly place an order, and then see a prompt to download your app.

Noah Glass
Noah Glass is the Founder & CEO of Olo. Since 2005, Olo has helped restaurant brands increase revenue per square foot through faster, more accurate, and more personal service with digital ordering. wwwView Noah Glass's profile on LinkedIn

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