Every restaurant owner I’ve met, especially small to medium business owners, are aways looking to cut costs. After all, cutting costs is part of the process of growing revenue and profits. Thing is , when it comes to online ordering systems for your business, is free really the way to go? If we’ve learned anything, it’s that nothing is every truly free. Let’s take a deeper look
Free Online Ordering System – You Sure?
I wrote a review of one of the popular online ordering systems for restaurants out there called Menufy. Their business model is simple. You pay a $0 setup fee, and a $0 monthly fee. The fee that you’re paying is a per transaction basis of $1.25. Sounds simple with a small amount of risk right? Factor in that you can have you’re customers pay the $1.25 fee , it can literally cost you $0 as a restaurant owner. What’s the catch. Well it’s two fold.
First off, passing off a convenience fee to your customer isn’t very customer friendly is it. How many millennials and families do you know that will be ok with paying that fee? Exactly. The proper thing to do hear is to absorb that cost and enjoy the benefits having online ordering for your restaurant.
Secondly, $1.25 sounds low, but is it really? If you do 200 transactions a month in online ordering, that means you’re paying $250 / month. There are a few other solid providers that are significantly lower than that cost
So I Shouldn’t Be Using Any Free Online Ordering Systems?
My answer to this is always no, besides this one exception. If you’re a new restaurant with a small amount of foot traffic with cash flow issues, free online ordering systems can be great. Just keep in mind as your restaurant grows, you want to be able to switch to your own restaurant online ordering system. The benefits here are enormous.
Keep in mind there are tons of software and ecommerce companies out there that will try and pitch you their solution. Running your restaurant isn’t some “e-commerce” site. As a result, the technology to support your restaurant needs to come from a solution that truly understands the restaurant business. As new features and technologies come out, you want them built with an eye to understanding the restaurant business. Otherwise, you’re just some restaurant that has a stale old online ordering solution. You and your customers deserve better, all without sacrificing price!
The restaurant business has evolved in ways that many owners are not adapting to. For instance, why are you not on GrubHub? Oh yea, the fees are insanely high. That in of itself it not a good answer. You should be able to pay those GrubHub fees to get a new customer. The trick, is being able to take the new customer and move them over from GrubHub to your own restaurant online ordering system. Every repeat customer who enjoys online ordering should be ordering from your own system, not a different one. Pizza places I’ve found to be the most resistant to this – particularly those in very competitive markets.
What every pizza place restaurant needs to realize is the value that online ordering brings. Sure, most restaurant owners complain about the fees, but there’s MUCH more to it that this. Who cares if you have to give a couple bucks to a different provider. The key, is getting that customer over to your system. Constantly market to them with promotions, with a rewards program, and how involved you are with the community. These are features the big guys like GrubHub (on the stock market mind you), do not offer.
Customers today prefer ease of ordering and getting exactly what they order. This is the huge draw with your own restaurant online ordering system. Customers can reorder within a click, never have to re-enter their credit card details, all from their smartphone. This portion of the marketplace is growing and is nowhere near the peak. What’s fascinating is how many restaurant owners are not taking advantage of the huge upside here in the long run. Don’t be short sighted by looking at the fees, look at the overall profit you’ll make in the mid & long run.
There’s been a surge in demand online ordering for restaurants. While various businesses are rushing to get on GrubHub, those that have been on GrubHub for a while can tell you they HATE paying those obscene fees. Think about it. GrubHub takes 20-25% of the order for most new restaurants businesses. Granted, your restaurant is in front of a new audience, but that is a really REALLY high rate. Add to that, you still pay that fees on repeat orders. Now you can see why many restaurants are looking to online ordering systems to see if it’s a fit for their business. Truth be told, this field can get complicated. Some of this technology is very old, reskinned for restaurant online ordering. Some charge you a flat monthly rate, while others change you per transaction. Today, I wanted to dive deeper into Menufy. Below is my Menufy review.
Menufy Reviews – Is this Online Ordering System Right for My Restaurant
There are a ton of benefits with Menufy. From the customer side, it is very easy to use and incredibly user friendly. Menufy allows a customer to place an order for pickup or delivery, with a multitude of payment options. It’s pretty straight forward for a restaurant. In actuality, most of these modern restaurant online ordering systems are rather clean for users. The sticky part the functionality and costs associated to these systems. Here are further Menufy reviews and details from the business side.
Menufy for Restaurants
Menufy has some amazing functionality and a very simple fee structure. In addition to that, the ordering process will look exactly like your existing website. Even if you don’t have a site, Menufy will create a site for you.
How Much is Menufy for a Restaurant?
Menufy promotes its service as a free service. Of course, any business owner can tell you that is never the case. So let’s look at this deeper. Menufy operates on a per transaction basis. So, you’re never paying a setup fee and technically, it costs you $0 to get started. You are only paying once you start getting transactions. This is where it’s important to put on your math cap.
In addition to the credit card processing (which I’ll get into shortly) Menufy charges $1.25 per order. That’s it. Now, that $1.25 can be paid by the customer or the business. So if you’re a business, you might be thinking “Great, I get an online ordering system for free while my customer pays $1.25. Win Win.” Not so fast
The issue with this line of thinking is the customer is NOT coming first. You’re passing on a convenience fee to a customer. How many customers do you know enjoy paying for convenience? If anything they expect it and for free. So what you just made the customer do, is abandon your online ordering system and play the order through GrubHub.
At 20-25%, that order is going to cost you significantly higher than $1.25. The best advice I give to anyone interested in Menufy is to have the restaurant take on the cost of the transaction. I’ve seen some do it where the customer pays the $1.25 for orders under $20, then the business pays for everything over $20. You “might” get away with this, but what you’ll never know, is how many customers you lost due to this fee.
How is Menufy With Credit Card Processing?
The credit card processing rates with Menufy are actually pretty good – at least when it comes to restaurant online ordering systems. Menufy charges 2.5% of the transaction plus .30
Is Menufy the Best Option for Me?
There never is a straight black and white answer to this. Typically, I speak to restaurant owners to understand their business, then can give you a true recommendation. The best way to answer this is by looking at to 3 math scenarios to support the conclusions.
Scenario 1 : Customer is Paying the $1.25 Fee
On the surface, this is a no brainer for the restaurant order as this entire system costs you $0. Please be VERY wary that customers are going to complain about the fee. I would avoid this at all costs. The negative attribution to save you actually will cost you in the long one – it really will.
Scenario 2: Restaurant is Paying the $1.25 Fee
This will bode best for your customers. With that out of the way, it becomes a game of numbers, so I will keep it simple. If you expect to do less than 150 transactions a month, i 100% recommend Menufy. Without any startup costs, you’re simply paying on an as needed basis. Only 30 online orders this month, your cost is $37.50. Had a better month at 100 transactions, you’re cost is $125 month. Since the goal is to grow your business, you need to re-evaluate your restaurant online ordering system if you start doing more than 150 transactions a month. I say there are better solutions that will meet your needs given your volume
Scenario 3: Hybrid: Customers pay for orders under $20. This option is tolerated, it could actually boost your overall average customer order. This only works if there aren’t additional charges (ex delivery fees). Under this approach, you can move that monthly transaction cap up another 20% (180 a month). I say this as I’ve seen data first hand where 20% of orders are paid by customers, with 80% to restaurants with that $20 min.
So there you have it, my review of Menufy. Menufy also comes with a ton of options for business such as: No contract (most operate in this fashion), mobile friendly, app option, SMS & email order notification, daily credit card deposits, and more. You’ll find that Menufy is rather modern and that it’s rather simple to use for the restaurant and the consumer. It’s a great platform if you’re a brand new restaurant in your first year of business, with a small amount of customers. In this case, I’d recommend you use Menufy until you start seeing your numbers getting to high. On the other hand, if you already expect to do over 150 transactions a month, I would not recommend Menufy purely from a fee perspective.
As I always state, marketing for your restaurant is more than about online ordering. However, online ordering for your business is the #1 “want” from business customers. Give the customers what they want with these outsourced solutions so you can focus on running your restaurant.
The evolution of online ordering for restaurants is in its infancy. Yet, the growth is phenomenal. A few years ago, restaurants didn’t even think about online ordering. Sure, there has been online reservation services such as OpenTable, but online ordering for restaurants was barely discussed. Fast forward to the present, you have a ton of options.
GrubHub is Only Part of the Puzzle
The first push into online ordering that restaurants dive into is GrubHub. GrubHub is considered a portal, one in which there are hundreds of thousands of customers using one app to place orders with restaurants in their system. From a customer’s perspective, the service is amazing. Easy to use, after a couple clicks, a user and can see and order from small to large restaurants. From the restaurant owner’s perspective, the service has it’s pros and cons.
GrubHub is Amazing At Getting New Customers
If you’re new to online ordering, or you’re a restaurant looking to grow, GrubHub is amazing. Instantly, you’ll get your restaurants in front of many many new eyeballs. While there technically is no up front cost, there’s something worse, ongoing costs! You don’t need to be a hardcore math guy to know ongoing costs that can be eliminated should.
On average, GrubHub takes 20% of your order (which includes credit card processing). 20%. Think about that. If you’re a business that does $5,000 a month in online ordering, $1,000 of that is going to technology. That’s insanely steep. GrubHub is a publicly traded company for a reason you know!
Now, for a new business you are willing to try this to bring in the growth. I guarantee you that once those deductions from GrubHub come in, you start asking yourself “Why am I using GrubHub again?”. It’s painful to give 20% or more to any technology service. So what’s a business to do?
Use Your Own Online Ordering Solution
I know what you’re thinking, my own online ordering solution. I have to hire programmers & deal with techies now? Add to that the insane costs I have to pay. No Way. I can barely keep my staff costs under 25% of revenue now I have to add technology costs?!?!?!
Well, this line of thinking would be 100% valid about 3 years. Fast forward to today, the entire restaurant online ordering process has been simplified. No longer do you have to take any sizable investments into technology. Instead, the online & mobile technology has already been built by several reputable companies. All you’re doing now is paying a service fee to use the technology. That’s it, a simply monthly fee allows you to add online ordering for your business.
By going this route, a whole new slew of marketing opportunities come your way. Did you know that GrubHub does not provide you your customer’s email address? Imagine what you could do with that information? When you’re using your own online ordering system, that information is rightfully yours.
Restaurant Online Ordering – How Much Is It?
Well, this part can get tricky. Some companies give you the solution for free, then charge you a couple dollars per order. If you do less than 75 online orders a month, this is perfect for you. However, if the goal is to grow your online ordering business, this solution is incredibly expensive.
The other option, which is my favorite, is to use a modern system. One in which the provider gives you a tablet and printer for your business. You pay a couple hundred dollars in setup fees (which includes the hardware), then pay a monthly fee averaging around $80-$150/month for unlimited orders. The unlimited part is key.
As you grow, and you will, the last thing you want to do is keep paying ongoing tech fees. That’s eliminated here. Additionally, you have a plethora of marketing options that will increase your repeat orders
There are other technology companies that provide online ordering for restaurants, but you need to be careful. You’re not looking for a tech company on it’s own. What you ideally what is a company that has a restaurant background that’s build an online ordering solution specific for restaurants.
So Should I or Should I Not Be on GrubHub?
The strength of GrubHub can not be compared. You will 100% get your business in front of a new audience that will at least try your business. The trick however, is to turn that GrubHub customer into using you’re own online ordering platform. There are multitude of ways of doing this through promos and specials, but that is the key. Let Grubhub take the 20%+ on the first order, but let you keep the report orders without GrubHub’s 20%. Think you can do it? I’m sure before reading this article you didn’t think it was possible, but now that you understand the landscape a bit more, the knowledge should allow you to navigate the marketing side of the restaurant business.
How Often Should I Update My Menus?
Your menu is your #1 marketing tool, I tell that to everyone. Think about it, if someone has your menu, chances are they are already a customer. Compound this with the fact that repeat orders are cheaper to acquire than new orders, use your menu as a way to communicate with your customers. New promos, new items on the menu, specials, the list goes on and on. Most platforms allow you to easily add your menu items.
What Should My Next Step Be?
Hopefully after reading this and doing additional research, you’ve come to the conclusion that you need a two pronged approach. Use Grubhub to get customers you might never be able to reach IN ADDITION TO having your own online order platform for your restaurant. The second part is critical, I can not stress this enough.
I’m hoping with this blog I can shed some additional light into this enormously growing trend in online ordering for business. Don’t let the technology scare you as some providers have made it very easy for you to use them. Additionally, they provide phone and online support to guide you the entire way. Think of it as you’re own little tech team waiting when you need them, without have to pay them an extra fee!