With 42% of consumers now citing the ability to place online orders as a factor in choosing one restaurant over another, and 34% having used their phones to pay for meals, online ordering appears to have reached a tipping point. But while consumers grow more comfortable with placing, managing, and paying for orders online, restaurant owners themselves are still grappling with how to maximize their use of digital ordering technology.
To that end, the team at Total Loyalty Solutions, a custom mobile app builder from Clipper Magazine and Valassis, used its own data to calculate the average online order values for restaurants. The team broke down its data, collected from March 17 to April 18, by category to give restaurateurs a clearer understanding of how they stack up against the competition.
“We routinely collect and examine anonymized data from millions of dollars’ worth of online ordering transactions,” says Liam Oliver, director of products for Valassis Local Solutions. “The result is that we’re able to see trends and discover best practices for each category of restaurant.”
Looking closely at the data, Total Loyalty found the highest average online ordering values for restaurants in the Thai, Indian, and sushi categories. The average order size for restaurants in the Thai category was $45.40. Perhaps unsurprisingly, the lowest average order value was found in the smoothie category, where the average value rang in at just $13.95.
Total Loyalty found a strong correlation between an increase in a restaurant’s average order value and an increase in profit.
“What increasingly separates top-performing restaurants from the pack is their ability to transform insights from data into strategies to grow,” says Oliver. “Savvy restaurateurs drive incremental revenue by designing promotions that raise the average order value. Comparing with benchmarks can highlight best practices of the competition and promote their adoption.”
According to a consumer survey by RetailMeNot, more than half of diners have at least one food and dining app on their smartphones. A separate survey, conducted by the online ordering software provider orderTalk, found that at least 45% of adults believe they will increase their use of online ordering in the next year. As that number continues to grow, restaurant owners will have to think more strategically about new ways to grow average order sizes.
Online orders tend to be larger in size and have higher values than orders placed by telephone, explains Oliver, in part because customers have time to look through the entire menu when they place orders on the web and mobile. People who place orders online are more likely to look at pictures, compare choices, and try different items than they would if they were ordering in person.
“Online ordering also makes it easy to have add-ons that generate incremental revenue. For example, if you own a coffee shop, you can show customers options such as espresso shots and syrups, which makes upselling easy,” he says.
Oliver says anonymized order value data can be used to project future revenue, and it can affect pricing and conversion rates.
“Say, for example, an entrepreneur is building their marketing plan for the grand opening of a new pizzeria,” he says. “They could project the revenue generated from a marketing initiative by multiplying the average order value of pizza restaurants by the estimated number of transactions generated by the promotion.”
Looking forward, Oliver believes online ordering platforms will provide more data and analysis to their restaurant clients, on top of the transactional data that businesses have historically collected from point-of-sale vendors and credit card companies. He says there’s a significant audience for the development of marketing solutions that provide solutions on top of transactional data, pointing to a hole in the existing marketplace.
“You’re going to find more restaurant marketers and products that leverage datasets that were traditionally only available in the annual reports of publicly traded companies or through expensive research reports,” he says.
Stephanie Miles is a senior editor at Street Fight.