In-house? Third-party? Why Online Ordering Isn’t One or the Other for Restaurants in 2019

When it comes to online ordering, some restaurants will soon need to offer the functionality through their own apps as well as via third parties like Grubhub.

Restaurant-tech powerhouse Toast indicated that much in its recently released “Restaurant Success in 2019” report, which surveyed 1,253 restaurants and 1,030 guests across the U.S. In the report, online ordering plays a starring role, with both restaurants and guests calling it one of the most important technologies for today’s restaurant experience.

In and of itself, that’s not terribly surprising. Over half of restaurant spending will be off-premises by 2020 and will account for up to 80 percent of the restaurant industry’s growth over the next five years according investment group Cowen and Company. Unless every restaurant in America soon installs a chatbot to answer phones, online ordering via apps and websites will become a must for every eating establishment in the industry.

But according to the Toast report, what that looks like will vary from restaurant to restaurant, and businesses won’t necessarily have to sign their brands away to the DoorDash’s and Grubhub’s of the world to stay competitive. In fact, 51 percent of guests surveyed in the Toast report said they had placed an order via a restaurant website in the past month compared to 38 percent of guests who had ordered from third-party service.

That’s both good news and another challenge for restaurants. Customers ordering directly from a restaurant’s website can save the business some of the fees that stack up when customers order through a third-party service like Uber Eats. The flipside for restaurants is that if you don’t have your own delivery fleet, you still have to pay for drivers and, as the report rightly points out, developing an in-house online order system is expensive and probably not justifiable for independent businesses with only one or two locations. It’s a different story, though, for multi-unit chains, as the Toast report indicates:

Getting an app developed for your restaurant may not be viable for a small restaurant with one location, but if you franchise, it could be a boon to your business. The majority of diners are ordering online a couple times a month and looking for a variety of pickup and delivery options.

Even so, the Toast survey makes it clear that customers still want the option to order via third-party delivery services, with respondents having ordered most from Grubhub, Uber Eats, and DoorDash in the last year. (Postmates is completely absent from the list.) According to the report, it’s “extremely important for restaurants to be represented across multiple third-party delivery platforms.”

Despite the continued popularity of third-party delivery services, though, the litany of criticisms lobbed at them grows: commission fees, tipping policies, antitrust issues, and questionable profitability over the long-term. At the same time, companies like ShiftPixy and Olo are becoming more popular with technologies that actually make it easier for restaurants (chains, in particular) to develop and maintain in-house ordering capabilities.

Both those trends, coupled with the constant consumer demand for speed and convenience, will create a fine balance restaurants large and small must strike in the coming months