Online ordering and delivery via third-party marketplaces offered restaurants a much-needed lifeline when pandemic lockdowns began in March 2020. And with widespread consumer adoption, the trend shows no signs of slowing down.
"The off-premises market — carryout, delivery, drive-thru and mobile units — is where the majority of industry growth is going to come from over the next 10 years," the National Restaurant Association concluded in "Restaurant Industry 2030: Actionable Insights for the Future."
But joining an online marketplace brings more than just online ordering and delivery to the table. Restaurant operators should think of third-party marketplaces as a tool for customer acquisition and retention and driving increased sales and profitability. Here's how:
Expanding the customer base
Joining a marketplace increases a restaurant's exposure to new customers beyond its local area and outside its established customer base. Consumers who use marketplaces to search for delivery or takeout options may discover restaurants that they were previously unfamiliar with but were listed in the marketplace.
Madame Vo, for example, a New York City restaurant specializing in Southern Vietnamese cuisine, built brand awareness, expanded its reach beyond its East Village neighborhood and drove incremental revenue by partnering with Grubhub to offer takeout and delivery
"We were able to reach a broader range of customers," said Yen Vo, who owns the restaurant with her husband, Jimmy Ly. "A lot of customers who had never heard of our restaurant are now frequent customers."
With the closure of dining rooms during the pandemic, Vo and Ly knew they would have to expand their customer footprint to stay in business.
"That's why we turned to Grubhub," they said.
Leveraging promotional expertise
Besides expanding the geographic and demographic reach of a restaurant's customer base, third-party delivery marketplaces also provide marketing and promotional tools that help operators target new customers or drive loyalty with existing customers with unique promotions such as free delivery or $5 off their first order.
Hillary Sterling, founder of Cayenne, a virtual restaurant offering Nashville-style hot chicken, teamed up with Grubhub because she wanted to provide a high-quality delivery service to go with her high-quality food offerings. She has since leveraged its other tools to help drive sales, including Grubhub's Smart Promotions.
"Grubhub has an amazing promotions program that has allowed us to increase our customer volume during lunches," she said.
Adding new revenue streams via virtual restaurants
One of the rapidly growing platforms for expanding delivery and takeout is through the addition of virtual restaurants, which can allow operators to leverage their fixed costs by adding an established delivery-only concept to their own operations. Several virtual restaurant concepts have emerged during the past year, and operators can choose from a wide range of virtual options to find one or more that fit neatly into their existing facilities.
Or operators may choose to create their own virtual restaurant concept that leverages their existing menu ingredients and kitchen equipment. Yet another concept involves creating a virtual restaurant to operate out of a ghost kitchen, which can help operators expand to new geographic markets, experiment with new menu items and generate incremental revenue with minimal investment.
Take, for example, King Wangs, a virtual restaurant in New York City offering classic sandwiches influenced by Japanese, Korean and Chinese cuisines. Owner Kevin Shin built a cult following by working with an established chef to create a crave-able menu, partnering with social media influencers to promote the concept and designing his operations around the capabilities of food-delivery apps, such as Grubhub.
"As I opened King Wangs, I knew I wanted to tap into Grubhub's user base and tools to get instant exposure for my virtual restaurant and drive orders," said Shin, adding that he has generated 80% of his business through Grubhub.
Flexibility and POS integration
Other benefits of third-party marketplaces include their flexibility in allowing operators to choose whether to leverage their own in-house delivery drivers or use the marketplace's fleet of contracted drivers.
Restaurants can also enjoy flexibility in their order operations by choosing a tech device from which they would prefer to manage online orders. At Grubhub, for example, restaurants have the option to receive orders and operate on a free tablet. However, they also provide seamless integration options with various POS systems, so operators can manage their online orders through the device they already have.
Delivery key to future success
It is clear that online ordering and delivery will be integral to restaurants' basic offerings going forward. Partnering with third-party online marketplaces offers operators benefits beyond delivery, however. Restaurants can leverage online marketplaces to drive customer acquisition, reach different geographies and new demographic groups and elevate promotional and marketing capabilities.
Online marketplaces also offer a platform to open new revenue streams through takeout and delivery, such as through virtual restaurants. They additionally provide more options for executing delivery, whether via a third party or in-house, and can optimize workflow by integrating with existing POS systems.
The bottom line is that the online ordering marketplace landscape is rapidly evolving to support the unique needs of every restaurant. This flexibility empowers restaurants to work more efficiently with their third-party partners, leveraging only the resources they need to succeed.