The Restaurant Community » Forums » Restaurant Business

[beedlebum]

I'm looking for some feedback from restaurant owners who offer takeout food. For years I have wondered why no one has implemented a successful online ordering system for multiple restaurants. I am a web developer and I have numerous ideas on how I would implement such a system, but only restaurateurs like you can tell me whether it is likely to be successful. Here is a very simplified summary of the key features as I see it:

1. Restaurateurs would sign up for free and enter their restaurant details and menu details (and can update them anytime, add daily specials etc.).

2. Customers sign up for free and enter their location, their preferences and their credit card information. Note that their credit card will only be charged when they have ordered and received/collected a meal.

3. The ordering process:

a. The customer enters an order online by choosing a restaurant, choosing menu items and entering any special instructions like "no olives", and submits the order.

b. A fax is automatically sent to the restaurant with all the order information and delivery information if it's not a pickup order. At the same time a text message is automatically sent to the restaurant so that they can confirm the order has been received. The restaurant replies to the text with a 4-digit time (the time the order will be ready for pickup, or the time the order will be delivered), e.g. 1330 means the order will be ready at 1:30pm.

c. An order confirmation email is sent to the customer which includes a unique order confirmation number.

d. The order is prepared. When the meal is collected or the delivery is received, the customer must give the restaurant or the delivery guy the order confirmation slip.

e. The restaurant can either enter all the order confirmation numbers online at the end of the day or he can reply to each original text message with the order confirmation number. The customer's credit card is then charged automatically.

f. At the end of the day, week, or month, the restaurant's account is credited with all the orders they have completed.

Obviously there are numerous bells and whistles that can be added to the system to benefit both restaurants and customers, but assuming this system was ready tomorrow, would restaurants and customers use it? Assuming it was a very slick system like when you order from amazon.com, here is my big question:

Would restaurateurs give up a percentage of the order to get orders and acquire new customers? There will be many other benefits to restaurants like being able to email customers with specials each day or week, but for the system to be successful it needs to be promoted by word of mouth. There need to be incentives to allow the word of mouth viral marketing to occur, so the restaurants need to give up some of the order value. Here’s why. While the idea of being able to order my lunch online in the office is great, I’m not really going to bother to take the time to pass it on to my friends and colleagues. But if I had an incentive, I would be much more likely to click on that “Introduce a friend” button and let all of them know about the service. Therefore some money needs to be taken from each food order so that it can be passed along to a customer who is promoting the service to his family, friends and work colleagues. Here’s an example of how that might work:

Let’s assume that the restaurants are prepared to give up 15% of each order. I can now offer customers a 5% credit for every order placed by someone they introduce (their first and all their future orders). And the invitation to their friends can also include a “10% off their order” offer to get them to sign up and place an order using the service.

It is obviously a tradeoff for the restaurants because they would rather not give up the 15% but they really don’t want to miss out on any new orders and new customers by not being part of the online ordering service.

Any feedback on this idea would be greatly appreciated. While I know my summary might give the impression of a clunky system with lots of steps, if it’s implemented well, it can be a very slick automated system. Please assume that when replying, because I am more concerned as to whether the economics and incentives would allow such a service to grow virally in terms of participating restaurants and customers.

Thanks

[justinkuo]

Hi Beedlebum,
I had the same thoughts as you and have actually started a company that not only does website ordering but also creates a custom iPhone ordering applications for each restaurant. I, like you, also come from a heavy software engineering background. Here is my experience so far and may answer your question.

I think as software engineers, we tend to undervalue marketing or not understand how difficult it really is. We charge restaurants $50/month for a custom iPhone ordering application for their restaurant + a website which allows online ordering. They can also use our service to gather all sorts of statistics on their customers.

While our restaurants are all very happy and do way more than the $50/month we charge in sales through our service, it just takes a lot of effort to sign up even 1 restaurant. Perhaps as we start to sign up more and more restaurants we will have to do less and less work for each additional sale, but that remains to be seen. Hope this helps.