The hospitality industry began to digitise before the COVID-19 pandemic, but global lockdowns accelerated the process. Suddenly, years of digital innovation happened in a few short months.
Hospitality businesses that embraced digitisation now benefit from increased revenue and lower costs. The Restaurant Readiness Index 2022 found restaurants using digital order channels (to a moderate or great extent) generate c.48% of their revenue from digital sales[i].
In this article, we’ll look at three types of online ordering: order to table, click and collect and on demand delivery. We’ll demonstrate how these digital ordering channels provides cost savings and drive revenue increases.
Order to table
Digital table ordering provided a hygienic way to reduce social contacts during the pandemic. Since then, hospitality businesses have found that an order to table feature provides fiscal and intangible benefits to customers.
Financial benefits include:
- Less front of house staff required
- Customers spend 30% more on average when ordering via a digital menu
- Sales that include upsells increase by 32%
- 60% less menu printing provides cost savings. [ii]
Customers benefit from:
- Complete elimination of human error mistakes from wait staff when ordering
- Calmer environment on the restaurant/café floor with less foot traffic
- Improved hygiene from less social contact points
- Convenient payment process-in app.
WatchHouse’s order to table service increases transaction value per order
Speciality coffee business WatchHouse used 5Loyalty to launch an order to table feature at St Mary Axe, one of its twelve London sites. Since the launch, WatchHouse has seen an uptake in plates and sides sold per order.
Damon Conn, operations director at WatchHouse believes that giving people the time to make a choice, rather than having a waiter present, increases basket size because people better read and take in the menu. Dwell time has increased but so has average transaction value per order – by 47%.
Transaction value per order increased by 47% on average.
Click and collect
Click and collect appeals to customers who prioritise their time and convenience. Allow them to collect their food and/or drink at a designated time within your restaurant with no delivery fees.
- 32% increase in click and collect orders pre-pandemic with growth of market continuing to expand[iii]
- Pizza Express attribute a 5% increase in sales to click and collect[iv]
- No delivery fees
- Improves ability to cross- and up-sell in store.
Launching click and collect through a personalised application can support your marketing campaigns. Use data gathered in-app to push click-and-collect ordering with personalised notifications. Vapiano had success with a similar data-led notification campaign for click and collect orders and drove £18,000 of sales in one weekend – for an ROI of 2900[v].
Value add-on for the time-poor and tech savvy
“Click and collect is an incredible feature. It’s brilliant for our time-poor customers as it doesn’t matter how long the queue may be in-store, ordering ahead allows them to be in front of it.”
- Damon Conn, Operations Director of Watchhouse
Click and collect is a critical value add-on for WatchHouse’s time-poor City of London customers. WatchHouse’s cafés in the financial district have seen the highest volume of advance orders placed of all its sites. Engagement with this feature is distinctly highest on Tuesday to Thursday, which are the usual commuters in-office days now.
Users order their coffee through the app while at their desks, and then head to the front of the queue when they arrive at WatchHouse to interact with the barista, knowing they have sent their order straight to the WatchHouse QSR system. Operations director Damon Conn sees this as a perk of WatchHouse’s offering that particularly appeals to its tech-savvy consumer base.
On-demand delivery
Delivery is expected to grow to a 21% share of the restaurant market by 2025[vi]. As such, owning your delivery service is an intelligent tactic to diversify and maximise revenue.
Not only will first-party delivery benefit your margins, but it also helps improve your customer relationships:
- 63% of customers prefer to order directly from the restaurant.
- First-party delivery increases the value per order by 15%-30% that you would pay third-party delivery providers.
Let’s look at this fictional restaurant to see how much you can save establishing your own in-house, on-demand delivery service, rather than using third party apps.
| Summary of March deposits to third-party delivery service | ||
| 46 Prepaid orders | £1,042.63 | |
| Commission | – £206.51 | |
| Delivery commission | -£94.99 | |
| Processing fee | -£38.52 | |
| Promotions | -£231.00 | |
| 7 order adjustment | -£131.19 | |
| Commission | £9.75 | |
| Delivery commission | £4.88 | |
| Processing fee | £1.49 | |
| Promotions | £20.00 | |
| Pay me now fee | -£0.00 | |
| 46 Orders in March | £0.00 | £376.54 |
| 42 third-party delivery | Paid directly by your customers | Distributed to you by third-party delivery service |
| 4 third-party click and collect |
- The restaurant received 46 orders totalling £1,042.63 but only made £376.54 for a return of only 36%.
- If this restaurant had launched an in-house service with a white-label application built by 5Loyalty, they’d have a return of 90%, making £937.80 from sales of £1,042.63.
Conclusion
Some hospitality businesses may be concerned that moving ordering online means losing the personal touch that makes customers consider hospitality a worthwhile ‘little luxury’.
However, applications entirely adapted to your brand like those 5Loyalty provide, allow your digital ordering channels to provide an extension of your in-store experience. You can communicate your brand’s aesthetics and personality while harnessing the revenue-boosting power of digitisation.
[i] https://www.pymnts.com/news/payments-innovation/2022/businesses-can-now-embed-payments-through-nuvei-for-platforms/
[ii] https://www.lightspeedhq.com.au/blog/5-ways-online-ordering-drives-revenue-and-boosts-profits/
[iii] https://www.mypos.com/en/what-is-click-and-collect
[iv] https://www.hospitalityandcateringnews.com/2020/05/the-click-collect-opportunity/
[v] https://www.mryum.com/blog/how-vapiano-uk-achieved-a-2900-roi-through-connect
[vi] https://www.publicissapient.com/insights/how-restaurants-can-be-a-model-for-digital-transformation