Everything comes with a price — and that applies to the digital world as well.
Consumers are waking up to the fact that all those free online and mobile services — email and social media among them — take in trade personal data that is chopped, diced, analyzed, bundled and sold to numerous third parties. Some consumers have woken up to the fact that all those credit card rewards can lead to higher retail prices for all. Will consumers next realize that the convenience of food delivery — all those digital operations that bring great restaurant food to people’s doors — tend to cause higher menu prices for all in the long term?
Chris Webb sure does.
Granted, that’s his job — he’s CEO of ChowNow, an online ordering platform for local restaurants that seeks to offer its services at lower prices than do larger third-party delivery aggregators. But Karen Webster from PYMNTS recently caught up with Webb to get a better sense of where online food delivery services are heading as a new decade dawns — and why, even amid the ongoing explosion of delivery services and meal kit subscription services and the like, restaurants will continue to have a solid role in mainstream consumer life. The story Webb told is as much about the progress of digital and mobile technology as it is a reminder of what human nature really means when it comes to the purchase of restaurant food.
We are entering a new age of digitally- and mobile-focused restaurant options, according to what Webb told PYMNTS. The big delivery players have done much to capture the market, but the smaller and independent restaurants out there are trying to figure out ways to control the expense of such third-party delivery services while also making a bigger splash online and attract more local customers. That provides ample opportunity for restaurant ordering service providers such as ChowNow.
“Most restaurants have been around a while, and have a built-in customer base, especially when it comes to takeout,” Webb said. Indeed, those customers often come back monthly, or even weekly, he said. That makes it attractive — or even vital — to set up better online operations for those restaurants to better capture that existing business, while at the same time doing better with upsells and reaching out to new consumers. And that’s where a white-label platform such as ChowNow comes in.
Price Factor
Price is a big factor that can move those restaurants away from those well-known third-party delivery aggregators, Webb said. According to the company, many of the big third-party delivery apps take around 40 percent of every order, and also get control and ownership of customer data. For local restaurants that have average profit margins of around 6 percent, that could harm rather than hurt their business. ChowNow is positioning itself as the third-party delivery platform operator that is foregoing the predatory practices seen in the industry.
“What has changed in the last year or so,” he told Webster, “is that restaurants are saying it’s very expensive to [go through] these delivery services, that there has to be a better way.”
And, as Webb told it, the costs for those delivery services are leading to higher menu prices for all — after all, there is a price for every convenience. One way restaurants are trying to get around that — and to encourage consumers to directly order from them in many cases instead of using those third-party delivery services — is to put notes to customers inside their to-go bags, sometimes offering discounts for direct ordering, other times just explaining why menu prices have increased.
That’s not all that restaurants are doing. They are trying other methods to further reduce the distance between them and their real and potential customers. That effort is starting to involve Google in a big way. After all, consumers have made Google a big part of their daily lives, and the search engine has enable direct ordering from restaurants on that platform by placing an order button next to the business’s name — an effort that ChowNow, through its own integration services, is certainly promoting to its restaurant clients Webb said. “The amount of orders it drives is amazing,” he said. “That’s just Google’s scale.”
Treasure Chest
Besides helping to facilitate direct sales and restaurant discovery (via Google), ChowNow also helps restaurants better engage with their existing customers — a trend that seems very likely to take on even greater importance in the coming decade, as evidenced by the focus on better loyalty programs, a trend documented by PYMNTS research. Email marketing can serve as the engine for that engagement, according to Webb.
“How do you get a customer to order twice a month if [that customer] is ordering once a month now?” he said.
All this is happening as consumer patterns change. Not only are more consumers ordering and consuming from home, thanks in large part to connected devices, but voice-assisted retail is exploding, and will probably be a prominent feature of the upcoming holiday season and the 2020s. But don’t get overly excited about the prospect for voice when it comes to restaurant orders and delivery, Webb told Webster.
To illustrate why, he offered an anecdote that even when he visits his favorite restaurant, he still checks the menu every time even though he is unlikely to find something new — most consumers do that. “Voice is really easy when you order the exact same meal,” he said. But the logistics of voice are much less effective when eaters want to try something new.
Perhaps more pressing than voice is helping restaurants capture the loyalty of consumers while working to keep those menu prices low via new platforms of other methods, or various methods in combination. Most consumers have no idea how digital factors can result in higher prices, but when you break it down to them, Webb said, they are responsive.
The 90-Minute Vacation
And that’s where human nature comes in — and where human nature can play a significant role in helping to keep those menu prices down, at least in his view. “If you can show customers that they are paying higher menu prices, that’s where I think you can start moving, and that’s where you get the feel-good movement of supporting your local restaurant,” he said.
In other words, don’t buy into some of the despair out there about the fate of those smaller, independent restaurants in this day of third-party delivery dominance, or subscription meal kits, or other such factors. Sure, delivery will continue to grow — after all, people like doing more of their commerce form the comfort of their increasingly connected homes. “I think delivery and takeout clearly are big, but they will continue to take market share from grocery,” Webb said. As for the real restaurant experience — visiting a location and taking the time to sit down and have a meal with others — that will not only thrive but perhaps take on even greater importance in consumers’ lives.
“We spend more time behind our iPhone screens and laptops and tablets and all that stuff, and we buy more of the generic stuff online,” Webb said. But, he added, we still have the human desire to spend time with each other, and restaurants offer that. “It can feel like a vacation for 90 minutes when we go out to dinner,” he said. “I’m very bullish on restaurants.”
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