Online Ordering NETWAITER. Multi-Restaurant Portals vs. Individual Sites What s Your Strategy?

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1 A Restaurant Industry White Paper from NetWaiter / August 2014 Online Ordering Multi-Restaurant Portals vs. Individual Sites What s Your Strategy?

2 Table of Contents (click a topic and go directly to that section) Executive Summary...1 Benefits of Online Ordering...2 Types of Online Ordering...4 Why restaurants use Portal Sites...6 Why restaurants use Individual Sites...6 What to look for in an Individual Site...7 Why should restaurants have an Individual Online Ordering Site if they are also listed on a Portal?...10 Conclusion...12 For further information, contact NetWaiter: (call or click to connect) www.

3 Executive Summary 1 Online ordering represents a huge opportunity for restaurants. There is, however, uncertainty among independent and small chain restaurants about whether to use an individual site, specific to their restaurant, or join one or more of the many multi-restaurant portals. Both methods of online ordering have their benefits, but in the end, the perks and control of an individual site, specifically branded to a restaurant s website, far outshine those of a multi-restaurant portal. Online orders, on average, are 15% to 20% larger than traditional phone orders, and some restaurants report even larger increases. One of the most important reasons to use an individual online ordering site at your restaurant comes from a Cornell Hospitality Report. It states nearly half of the consumers [47%] on multiplerestaurant sites [or portals] said they clicked over to the restaurant s own website to order their food, once they found a restaurant they liked. If your restaurant has a customized individual ordering site, you can capture that business directly and at a lower cost. This white paper discusses what restaurant owners should consider when using each method of online ordering and how they can contribute to your profit margin, especially when using a combined strategy of portals and an individual site. Customers prefer ordering online vs. over-thephone for the convenience and control it provides.

4 Benefits of Online Ordering 2 For over ten years, online ordering has been one of the leading drivers of growth in the restaurant industry. Customers, using their computer or smartphone, access a restaurant s menu online, make their selections, and place an order. By the time a customer arrives at the restaurant, their food is packaged and ready for pickup, or they can sit back and wait for it to be delivered. In more recent years, the increased use of mobile devices has significantly benefitted restaurants as more customers embrace the ability to place orders on the go. The growing popularity of online ordering is boosted by some very obvious benefits for both restaurants and customers. With online ordering, restaurants no longer have to pull an employee away from other duties to answer the phone and take orders. Customer Convenience / Survey after survey reveals that customers prefer ordering online for the convenience and control it provides. The ability to order online from their home, office, or cell phone reduces their wait time at the restaurant and eliminates the possibility of being placed on hold. Furthermore, with the menu in front of them, customers don t feel rushed like they do on the phone. Larger Ticket Sizes / Online ordering gives customers the freedom and control to place orders at their own pace. Because they aren t rushed and they are inclined to order more. Additionally, many ordering systems have built-in upselling features. Online orders average 15% to 20% larger than traditional phone orders, and some restaurants report even larger increases. Efficiency / Online ordering creates tremendous efficiencies for a restaurant. With a sizeable chunk of takeout and delivery orders processed online, restaurants no longer have to pull an employee away from other duties to answer the phone and take orders.

5 Accuracy / As any customer or restaurant knows, a hazard of traditional phone-in orders is the likelihood of getting an order wrong. Restaurant employees are fighting background noises, bad phone connections, and other distractions all of which cause errors. A wrong order is a lost meal, and a blemish on the relationship with your customer. Online ordering eliminates the possibility of an order being received incorrectly. 3 Market Trends / Customers demand online ordering. According to the National Restaurant Association, more than 63% of restaurant customers have used technology to interact with a restaurant - including reviewing a menu, checking nutritional information, and placing an order. These figures will continue to rise. As noted in an article released by NetWaiter, 52% of customers said they would use a smartphone or tablet for delivery or takeout if the restaurant offered that option. That s over 50% of your customers who would likely increase the frequency of ordering from your restaurant if they could order online. The increased use of mobile devices has significantly benefitted restaurants as more customers embrace the ability to place orders on the go.

6 Types of Online Ordering 4 Online ordering can be largely categorized into two different methods: Multi-Restaurant Portals and Individual Online Ordering Sites. Multi-Restaurant Portals Portals are websites that list hundreds, if not thousands, of restaurants together. A customer visiting a portal can search and view restaurants based on a variety of criteria - by geographical location, cuisine, price point, etc. If they see a restaurant that interests them, they can click to view more information, including the restaurant s menu. From there, the customer is taken to a generic looking page that shows the restaurant s categories and items. After making their selections, the customer pays online, and then goes to the restaurant to pick up their order, or waits for delivery. a Cornell Hospitality Report states nearly half of the consumers [47%] on multiple-restaurant sites [or portals] said they clicked over to the restaurant s own website to order their food Payments are collected by the portal and then distributed to the restaurant. Depending on the portal, the funds may be held for as long as 30 days, although some portals disperse money weekly or every two weeks. If a restaurant needs to make a change to their menu, they are normally required to or fax the change the portal. Changes could take up to a week to complete. While portals share all relevant information regarding each order, restaurants normally have very limited or NO access to customer information and ordering statistics. Portals charge fees that range from 10% to as much as 20% of each order. The average fee with some of the larger portals is about 14%. Portals subtract their fee from each order and then submit the balance owed to the restaurant.

7 Individual Online Ordering Sites An individual site provides online ordering capabilities for only your specific restaurant and can be linked to the homepage of your website. 5 Not all individual sites are the same. Some are very basic, while others provide a variety of features and benefits. The best systems, like NetWaiter, allow your online ordering site to be branded to your restaurant, making the ordering process smooth for customers and tailored to your restaurant s look and feel. Unlike a portal, when a customer views your online ordering site, your site and menu is all they see. They cannot click to view another menu or place an order at one of your competitors - your site is customized with your menu and settings. With an individual site, you should be able to receive online payments directly. In addition, you should have access to a management console that allows you to edit your menu and control your settings. Good systems will also provide you feedback and statistics on ordering trends and customer data. Good individual ordering systems allow you to make changes to your menu online. Portals often require you to or fax in changes, and you can wait as long as a week for them to be completed. In contrast to using a portal, the cost of an individual site is significantly less. Due to the customization process, many companies will charge a nominal fee to set up an individual ordering site. Some companies, however, may offer to waive the set-up fee. We have had some restaurants report that a particular portal was holding as much as $20,000 of their money at one point. Don t be that guy.

8 Why restaurants use Portal Sites 6 Most restaurant owners choose to list their restaurant on a portal in hopes of receiving new business from new customers. Portals like to position themselves as a risk-free service We advertise your restaurant and you only pay us when you get an order. (The reality is they advertise for themselves, not for any specific restaurant.) Although the fees are very high, restaurants only pay when an order is received. Some restaurants place a link to their portal listing on their own website. This is NOT advised. Customers can easily navigate away from their portal listing and order from a competitor s restaurant. In addition, the purpose of a portal is to bring restaurants new customers, not the other way around. If a customer comes to your website, don t send them back to a portal to order and pay their huge fee. Why restaurants use Individual Sites Restaurant owners choose to use an individual site to maintain full control over their business and provide their customers the best online ordering experience possible. Smart restaurant owners recognize that their customer base is the most valuable asset they have and want to make sure their online system provides them the most convenience possible. Restaurants also use an individual online ordering system for additional benefits, including the ability to capture valuable information about their customers so they can better serve them online. In addition, restaurants can leverage the built-in features that certain high-end systems offer to boost their business. Restaurants use individual ordering sites to help create a stronger bond with their customers. The ability to receive payments directly and instantly is an important difference for many restaurants. Waiting a month or more for payment is not acceptable. The cost of an individual site is significantly less than a portal and many restaurants want to avoid paying high fees to a portal for sending repeat business from the same customers.

9 What to look for in an Individual Site 7 As mentioned before, not all online ordering systems are the same. This is important to recognize, because your restaurant should certainly have one and you want one that provides the maximum benefit for your customers and your restaurant. It s critical that customers are provided an easy and convenient way to place orders. At the same time, your restaurant needs the features and functionality that will maximize your online opportunity and success. The perks and control of an individual site, specifically branded to a restaurant s website, far surpass those of a multi-restaurant portal. There are a variety of things to consider when evaluating a good online ordering system for your restaurant. Make sure it has the features and benefits that will maximize your profits, such as: Branded Online Ordering Site / One of the detriments to a portal is the lack of individualization. Likewise, not all individual systems provide the ability to customize your online ordering site. As a restaurant owner, you know the value of your brand. Not only do you need to maintain it, you need to enhance it as much as possible. An online ordering site branded to your restaurant provides customers a smooth transition from your website to your online ordering site and maintains your brand throughout the ordering process. Simple and Attractive Customer Interface / While the majority of the site design should be specific to your brand, there is still the need to have an easy ordering process for customers. At NetWaiter, we measure the ordering process by the number of clicks it takes to complete an order. The fewer the better. Stay away from clunky looking systems that don t offer customers an attractive and easy way to order. You could lose business and damage your reputation. Processing Payments Directly to You / When a customer places an order using your NetWaiter site, the money is deposited directly into your bank account. This is not the case with portals and is also not a guarantee with all individual online ordering systems. You want your customers to see your name on their credit card or bank statement, not some third-party company. Not only should deposits go directly to your restaurant, you should be able to control those payments, with the easy ability to processes a refund or charge additional amounts, if needed. We have had some restaurants report that a particular portal was holding as much as $20,000 of their money at one point. Don t be that guy.

10 Mobile Site / Make sure your online ordering system has a mobile site. The rise of mobile ordering is profound. It is imperative your online ordering site provides customers an easy way to order from their mobile device. 8 Easy to Update / Restaurateurs often forget to submit menu changes to a portal. If a customer orders something and, upon Make sure your online ordering site offers an easy way for customers to order from mobile devices. pickup or delivery, discovers the item is no longer offered or the price has gone up, it will be an uncomfortable situation. Menus should be easy to update and accessible at any time. NetWaiter gives restaurants 24/7 access to their NetWaiter Management Console. Changes take seconds. Delete offerings, add new ones, adjust prices, etc. It s all at your fingertips. Customers will always trust the information coming from a restaurant more than they trust a third-party. Make sure updates are easy with your individual ordering system. Use and Control of Customer Data / An individual site should allow you to collect information about your customers and their ordering history. For instance, NetWaiter offers unlimited access to customer information - anytime restaurants want it. They can use it to identify trends, learn more about their customers, run reports, and launch promotions directly from their NetWaiter Management Console. With most portals, a restaurant doesn t know anything about their customers and has no way to access the information. Linked with Facebook / When a customer places an order from your restaurant s NetWaiter site, they have the option to use their Facebook account to login. It s an easy one-click process and it also triggers a Facebook post about your restaurant. Not only does this give your restaurant immediate promotion to all of a customer s friends, but there is also a link back to your restaurant s site so others can view your menu and place their own order. Group Ordering / This popular feature allows customers to invite friends to join their order. For instance, within an office, one employee can invite other employees to join an order (i.e. for a lunch meeting). The host can monitor who has ordered, and when ready, submit the order to your restaurant. It s an ideal way to increase social awareness of your restaurant and generate large orders.

11 Promotional System / Marketing / Having an integrated promotional system built into your online ordering site is an ideal way to generate traffic and increase business. With NetWaiter, restaurants can create promotional codes and them to customers using the integrated marketing system. NetWaiter s promotional system automatically tracks all promotions. In addition, restaurants can automatically send out birthday promotions to each customer around their birthday. NetWaiter handles everything creating the promo, distributing it, and tracking redemptions. 9 An individual site should allow you to collect information about your customers and their ordering history.

12 Why should restaurants have an Individual Online Ordering Site if they are also listed on a Portal? 10 The customer is coming to you anyway / A study released by the Cornell Hospitality Report is perhaps one of the biggest reasons you need to have an individual online ordering site through a service like NetWaiter: almost 5 out of every 10 customers that find a restaurant they like on a portal will visit that restaurant s website before placing their order. The Cornell study states that nearly half of the consumers [47%] on multiple-restaurant sites [or portals] said they clicked over to the restaurant s own website to order their food, once they found a restaurant they liked. It s good news for restaurants using a system like NetWaiter because they can capture that business directly and at a lower cost. Your menu information is always correct / With a management console, you can make real-time changes to your menu. Your menu will always be up to date and accurate. Studies show that 68% of people are not likely to visit a restaurant, café, or bar after encountering incorrect information about the business online. It s your customer / When a customer orders through a portal, they are essentially the portal s customer. Unless you give them another option, the next time they order online, it will be through the portal. You want your customers interacting with you, so they build a personal relationship with your restaurant, not a portal. It s okay to let customers discover you on a portal, but you want to capture their ongoing business directly. With an individual online ordering management console, you can make real-time changes to your menu so it s always up to date and accurate.

13 Greater profits / As we mentioned before, the cost of doing business with a portal is expensive - as high as 20% of each order. With a system like NetWaiter, the fees are much less. You can pay ten times as much for business that goes through a portal compared to a service like NetWaiter. 11 Some restaurants are willing to pay higher fees to a portal for NEW business; however, if repeat customers continue to use a portal to place orders, the restaurant owner continues to pay high fees for the same customers. That s money out of your pocket. The road to continuing success is paved with data, data, data / NetWaiter amasses data for you to analyze and interpret. You know who orders what, when they order it, and what they order along with it. For instance, if you wanted to increase sales of a particular item, you could craft a promotion to offer that item at a discount if ordered with one of your top sellers. All of those controls are at your fingertips. You can pay 10 times as much for orders that go through a portal compared with using a service like NetWaiter.

14 Conclusion 12 Online ordering portals can be a good way to generate more exposure for your restaurant. The cost can be considerably high though. Smart restaurant owners may take advantage of the exposure offered by portals, but there is no substitute for a custom-branded, individual online ordering site. Good restaurateurs recognize the The best branded online ordering systems create greater importance of providing customers the efficiencies in your restaurant, larger ticket sizes, and happier best online ordering experience. They customers. want to give customers the opportunity to order directly from them, capturing their information, and saving money. The cost is significantly lower and the benefits and tools available through an individual site will place you far ahead of your competition and on the way to greater success.

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