How to Convert Customers to First-Party Ordering Using Restaurant Marketplaces
Now that we’re in the post-pandemic era, many restaurant owners are ready to consider alternative ordering options to third-party marketplaces like DoorDash and Uber Eats, which was the quick-fix bandaid to revenue that helped bridge the gap between diners and in-house dining opportunities during lockdowns.
Marketplaces certainly have a value for restaurants. Many guests will begin their food discovery experience at a marketplace. It is a robust marketing tool that gets more eyes on your restaurant and a digital open door to start earning a customer's loyalty.
However, these partnerships are costly — up to 30% is taken from every order — but there are other factors at play, including putting customer relationships at risk, branding challenges, risks to reputation, and customer data ownership.
That’s why many QSR and fast casual restaurants are now taking a closer look at how to convert third-party customers to a first-party customer. Not only for the cost savings (which is significant) but also for the opportunity to connect and get to know customers in a more deeply and engaging way.
It’s a worthy goal, especially for high-volume restaurants.
What is a restaurant marketplace?
Restaurant marketplaces like DoorDash, UberEats, GrubHub, and others manage three sides of food delivery transactions: delivery, customers, and merchants. Multiple restaurants are listed on each service’s app — those that officially partner with the third party enjoy benefits like higher placement on the app and the ability to participate in third party promotions.
Successful restaurant marketplaces are able to competently manage the individual requirements of every order, taking into account the type of order (individual vs. group, for example), order complexity (how food should be handled door-to-door), and the availability of drivers.
By design, these services are not in the business of advocating much on behalf of individual restaurants. They have to consider customer preferences while keeping hundreds of restaurants happy.
An important distinction for restaurant owners that we should make here is that a marketplace (e.g. DoorDash and Uber Eats) is different from a delivery service provider (i.g. DoorDash Drive and Uber Direct). The marketplace is all encompassing marketing, ordering, and delivery. Many of the marketplace companies also have a delivery service provider (DSP) arm that can be utilized separate of marketplace features.
Restaurant marketplace benefits
The biggest advantage of partnering with a third-party marketplace (or multiple marketplaces) is potentially casting a wider net to drive in more orders. Because so many other local restaurants are included on marketplace apps, those that opt out are less likely to be on customers’ radars. These users are interested in ease and convenience and are less likely to connect with a restaurant by phone or in person when they can just pick something else from a long list.
These services are also convenient from a management perspective. Outsourcing tasks like driver dispatching and order-taking frees up time for other valuable pursuits. Food delivery apps can streamline the ordering and delivery process or allow restaurants to enter the delivery market for the first time.
Restaurant marketplace disadvantages
Marketplaces are expensive.
While different marketplaces offer different features, there’s one thing they all have in common: They’re expensive. Restaurant owners can expect to see up to 30% of order totals go straight into the (very deep) pockets of third-party marketplaces. Especially in an industry with infamously narrow margins, it’s a big hit.
Marketplaces are impersonal.
Opening up online ordering through marketplaces like DoorDash is a double-edged sword. Customers can easily order from a given restaurant. However, restaurants relinquish “ownership” of customer relationships. There are no opportunities for restaurant operators to engage their customers directly with customized rewards and offers like you could with a first-party ordering site.
Marketplaces introduce operational challenges.
Restaurants rarely go with a single marketplace. Instead, they have to manage orders across several, disparate systems, often juggling a sea of tablets. Restaurants take the risk of disconnects all along the ordering, fulfillment and payment pipeline. It can also become overwhelming to manage in-store operations alongside a complex network of competing marketplace providers.
Turning a third-party customer into a first-party customer
Today, technology and solutions like Onosys, are now widely available to make first-party ordering much easier to execute natively, at a much lower cost to restaurants. The biggest benefit of course being that with first-party ordering, the restaurant owns their customer and the entire experience.
Onosys President Chris Anderle suggests leveraging the third-party marketplaces to cast a wider net for digital ordering and then convert customers to direct, first-party ordering. Essentially, restaurants can use marketplaces as a marketing tool. The restaurant name and menu items can be included in customer feeds for consideration to start building name recognition. They can also examine simple data like volume of orders, timing, and what types of items are ordered. However, this information is not easy to get through marketplace orders and there is not much else gained from marketplace participation.Anderle also suggests developing marketing messages that highlight first-party ordering capabilities and cross-promoting other dining options and products — for example, print advertising on packaging and cups, offer flyers, and menus that can be included in the bag with delivery orders that promote restaurant first party ordering sites. Because the connection is more direct, restaurants have much more control over ongoing customer relationships.
First-party ordering with Onosys
Onosys makes it easy for restaurants to offer first-party ordering through websites, call centers, and apps while integrating with third-party marketplaces and making it easier for restaurant operators to work with third-party marketplaces. The platform makes it possible to stay connected with their online diners - whether they come through marketplace awareness or directly to a restaurant’s first party app.
Onosys restaurant partners get the best of both worlds:
Integrated connections to delivery service providers (DSPs) like DoorDash Direct and Uber Direct
Streamlined order management including point-of-sale integration
Improved customer experiences for digital-forward diners who want the convenience of online ordering
Regaining the ability to build customer loyalty through frequent diner programs and other initiatives that aren’t practical when outsourcing ordering to restaurant marketplace apps
Brand building that isn’t possible with third-party apps
With an owned app and first-party website ordering, restaurants can offer customers loyalty rewards, personalized communication and exclusive offers — all which helps build longer, more profitable, relationships with guests.
