While COVID-19 vaccines are potentially great news for people who like to dine inside restaurants, the same can’t be said for companies that facilitate online ordering and/or delivery.
But online ordering/delivery is still booming -- at least for now.
According to a recent report from Paytronix Systems and PYMNTS, consumers sourced $486 billion worth of food from restaurants in 2020—with 89% ordered using websites, mobile apps and aggregator apps. Orders placed online yielded a higher ticket size of 50% more for restaurants.
Meanwhile, Deloitte’s Global State of the Consumer Tracker survey indicates that 40% of U.S. respondents said they plan to order takeout and delivery more than they did prior to the pandemic.
They will have no shortage of options.
Among the latest online ordering platforms planning to go public to fuel growth is Olo Inc. (short for “online ordering”). Founded in 2005 as Mobo Systems Inc., Olo filed for an initial public stock offering on Feb. 19.
Olo says it represents some 64,000 restaurants and 400 brands—among them Applebee’s, Cracker Barrel, Denny’s, Jimmy John’s and Shake Shack.
One of the more succinct descriptions of the restaurant business—even without a pandemic—comes from Olo founder and CEO Noah Glass in the company’s Securities and Exchange Commission filing. “Restaurants are an incredibly complex type of retailer,” Glass wrote. “They are a mashup of a showroom and a factory, making on-demand commerce for restaurants more difficult than typical on-demand commerce.”
Olo says its orders totaled more than 1 billion in calendar year 2020 and, while it generated net income of $3.1 million, the company had an accumulated deficit of $69.3 million.
In 2020, Olo doubled its sales and marketing spend—which includes sales force commissions—to $8.5 million compared to 2018. To generate awareness among restaurateurs, the company sponsors marketing events and trade shows while leveraging YouTube, with messaging that reflects many pandemic-related restaurant ads.
Online ordering platform Foodie Card—which initially integrated with restaurants to facilitate takeout and dine-in orders—has just added Foodie Card Delivery to its app. To help restaurants deal with third-party delivery fees that can reach 30% or more per order, orders generated by Foodie Card Delivery cost restaurants 5%, and the eateries pay any applicable credit card and delivery processing fees.
Foodie Card charges consumers $29.99 annually and gives members 10% off their dine-in, delivery or takeout bill plus gift-card rewards at major retailers.
“For every membership purchased and renewed, we donate a full day of meals to people in need,” Foodie Card CEO Jared Katz tells Marketing Daily. “We’ve donated over 25,000 meals.”
On the third-party delivery side, research from Edison Trends shows that DoorDash held 53% of the food-delivery space in January—up 18 percentage points from the prior year.
Nonetheless, having ramped up its marketing and sales in the fourth quarter ended Dec. 31, DoorDash lost $312 million compared to a loss of $134 million in the same period of 2019.
As part of its marketing efforts, DoorDash recently launched the Main Street Strong Accelerator Program, part of which provides $20,000 in grants to 100 restaurants owned by women, immigrants or people of color in five cities.