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'Movin' on up': The gifts of the 3rd- to 1st-party ordering shift
What kind of benefits do brands realize when they shift to or just add first-party ordering?
February 18, 2021 by S.A. Whitehead — Food Editor, Net World Media Group
It's a given that online ordering is the path to customers hearts, and third-party delivery companies have made that as simple as tapping their apps to access a dizzying assortment of brands, cuisines and service categories.
It's also a fact, however, that restaurant brands make more on each online order that takes place on the brand's platform as opposed to a a third-party aggregator. Still, many brands lack the employees, vehicles and infrastructure needed to offer "first-party ordering," which is why so many rely on the third-party companies.
Also, many customers were introduced to online ordering through third-party delivery apps and are now "trained" to go to these aggregators to find "something for dinner." But, if the restaurateur and customer stand to make and save more green, respectively, through first-party channels, it would make sense for restaurants to start "retraining" customers to order directly from them.
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| Auntie Anne's app. |
Auntie Anne's Vice President of Marketing Cynthia Liu, agreed, saying that the brand has seen exponential growth in all digital sales, but those made through its first-party platforms have reached a whole other level of popularity.
"Across the board, Auntie Anne's is experiencing triple-digit growth in digital ordering, so we understand how important convenience is for our guests," Liu said in an interview with QSRweb. "While digital ordering is growing overall, our first-party ordering platform is actually seeing 5-times (the) growth year over year, outpacing our third-party delivery growth.
"We know many guests begin their food delivery experience with third-party delivery apps, so we will continue to build our presence there to help engage new guests and boost customer acquisition."
Keeping online ordering in-house makes financial sense, since it allows brands to keep commission fees associated with third-party orders. It also gives the brand more control over the customer experience, but despite those advantages, the pandemic has been a driving force toward third-party ordering, said Chris Lybeer, chief strategy officer of Revel, a POS provider.
"For restaurants surviving the constant challenges of the pandemic, efficiently executing off-premise dining and delivery have been major factors in their ability to weather the crisis," he said in an interview with this website. "Many restaurants initially turned to established third-party vendors to assist with online ordering and delivery. The immediate onset of the crisis left operators little time to consider different approaches to off-premise solutions, and third-party options were appealing as turnkey solutions that required little effort to implement. However, third-party solutions are exceedingly costly. Technology is now widely available to make this much easier to execute natively, at a far lower price to the restaurant. In addition, the restaurant owns their customer and the whole experience — yet another benefit of a native solution."
He expects more merchants to make the shift as off-premise dining outlasts the pandemic spike — meaning delivery, drive-thru and online ordering options are here to stay.
"In order to stay competitive, restaurants will need to prioritize those solutions within their overall operations, and will want to integrate native technology solutions into their tech stack," he said.
Auntie Anne's leaders have given some thought to the idea of going all-in with first-party ordering, but Liu said leadership is not sure the majority of their customers are there yet.
"Most (customers) begin their food delivery experience with third-party delivery providers. Knowing that we need to be in the consideration set while a guest is browsing those apps, it's critical that we meet our guests where they are and maintain that third-party delivery provider presence," Liu said. "Our hope is that once a guest experiences the joy of getting Auntie Anne's delivered straight to their door, we can convert them to our first-party ordering platform and drive greater value through our customized rewards and offers. Third-party delivery providers are a great customer acquisition tool that can work in partnership with our owned platform."
While Auntie Anne's has discovered the joys of a happy marriage between both third- and first-party ordering, such may not be the case for many other brands. In fact, Lybeer sees an opportunity for some of the smaller (not the Domino's and Papa John's of the world) pizza brands to make more money and customer connections through entry into, or extension of first-party ordering. And that holds especially true for many pizza operators.
"Pizza is a space that actually adopted online ordering and delivery long before the pandemic," Lybeer said. "However, other than the big three players (Domino's, Pizza Hut and Papa John's), who recently built great technology around online ordering and delivery, the technology for most pizza chains around the customer journey has been light.
"That no longer needs to be the case. A 10-site family-run chain can now operate more like Domino's, and stay competitive while fully controlling the consumer experience. … To achieve a healthier economic model, restaurants need to own and manage their online ordering platforms and data, allowing them to stop relying on third-party delivery companies. This will also allow them to regain control of their branding and customer data as well as simplifying the order channel and reducing customer confusion."
In Lybeer's view, third-party involvement can muddy the waters and increase the likelihood of disconnects all along the ordering, fulfillment and payment pipeline. He used the example of Smyrna, Georgia-based MTH Pizza, which he said has had great success since switching to his company's cloud-based platform early last year.
That kind of success was echoed at Auntie Anne's when Liu told us what she sees as the brand's greatest benefits from its first-party ordering capabilities.
"Through our owned app and website ordering, we can offer loyalty rewards, personalized communication and exclusive first access — all helping build longer, more effective relationships with our guests. We regularly offer Auntie Anne's Pretzel Perks members unique offers, first looks at new products and limited time menu items, and rewards points through the app that they would not receive through third party delivery services. …" Liu said.
"First party ordering offers us the chance to connect with and get to know our guests in a deeper, more engaging way, which has been incredibly valuable. As far as a challenge, we know that a majority of apps don't get used after the first day of download, which requires us to be heavily focused on ensuring our owned ordering platforms and app offer compelling benefits to justify holding space on a phone and drive regular usage."
About S.A. Whitehead
Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.
Included In This Story
SkyTab
Revel Systems is an open cloud order management platform at the heart of our clients’ business. Through flexible architecture and open API, Revel ensures brands have the freedom they need to design a full tech stack that meets their needs, enabling them to provide an unmatched customer experience, diversify revenue streams, and scale with ease.
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