For a second, take your mind back to just ten years ago.
If someone told us the catering industry would experience this near-exclusive shift to online delivery, you probably would have laughed it off, right?
I never saw things moving this fast, so I’m guilty as charged.
But today, the reality is that online ordering isn’t something to take lightly. Not only is it no longer an option, but also a must-have, especially in our present economic times.
And how did we get here?
First, customers no longer want to go back and forth with you over email or phone before placing orders. Second, all they want is a simple, convenient way to order food online.
It’s the new reality we now find ourselves in.
As such, caterers must adapt (and are already adapting) to this new normal or risk losing customers to competitors.
Being the smart drop-off caterer, I imagine you are; I bet you’ve come across lots of software in your search to set up and automate your catering business online.
But how do you know which one is right for you?
First, if you dig deeper, you’ll realize these tools get classified as either online ordering software or third-party ordering sites.
What’s different between the two? And what’s best for drop-off caterers?
These are hard questions drop-off caterers must answer to transition and automate their catering operations online effectively.
To help you make an informed decision, I’ll shed more light on these platforms. You’ll also see the benefits of choosing an online ordering software over a third-party ordering site.
Without further ado, let’s dive right in.
Remember the first time you heard the word “online ordering software?”
For most people, the first thing that comes to mind when they hear it is building software from scratch.
While that is an option, it’s quite expensive to build and manage in the long run.
According to Endive, it cost between $15k to $30k just to build a basic ordering app. And that’s excluding its useful core features. Add those, and you could cough up well over $70k plus maintenance costs.
Now, this is where pre-built online ordering software comes in.
These platforms are designed to help you organize your catering business operations for a fraction of the cost of developing one from scratch.
As such, you only need to purchase a license of the software and set up your online menu without building anything.
Some examples of online ordering software are Caterease, CaterZen, FoodStorm, and HoneyCart.
On the other hand, third-party ordering platforms are built to connect multiple restaurants to customers on one platform.
Think of it as a marketplace where customers can browse millions of restaurant menus and have orders delivered to them.
However, unlike online ordering software where a license sets up the online version of your business for you alone, third-party sites house thousands of caterers and big restaurants at the same time.
In other words, you’re basically joining a crowd where it’s almost impossible to differentiate your offering.
So when setting up your catering business on 3rd party platforms, know you’re competing with thousands of other companies for customers.
Examples of third-party ordering platforms are UberEats, Grubhub, DoorDash, ezCater.
Now you understand how these platforms work; I bet you’re thinking: What are the downsides of using third-party ordering sites to set up my catering business online?
To put that question another way, are there benefits of using online software over third-party sites?
Well, there are.
Let’s take a look at some of them.
According to CNN business reports, restaurants pay 15 – 30% commission for each order placed through third-party platforms.
But the average profit margin in the catering industry is around 5%.
So unless they raise their prices, some restaurants and caterers may find themselves delivering food at a loss.
You may be enticed by the idea of paying nothing to set up your online menu and assume no responsibility for building or managing an online ordering platform.
But is paying crazy commissions on each order you get worth the sacrifice?
Of course, it isn’t.
Although going for an online ordering platform requires little monthly investment, not paying commissions can make it worthwhile in the long run.
Linda Estrada of MyTacoGuy discovered this when she started using HoneyCart.
In her words:
“HoneyCart really is the best investment you can make. The cost can be made back in as little as one order. So no more needing to give up any commission to third parties for EACH order.”
When you consider the fact that you don’t have to pay commissions on repeat orders, setting up online software for your catering is worth every penny.
Restaurants also need to consider future orders… Driving customers to their own websites instead of to an online aggregator or delivery portal can save restaurants approximately 12 – 23% each time a return customer orders.
If your business is restaurant-like, where you have to accept orders on demand, then using third-party sites makes sense because its design is well-suited for this purpose.
However, as a drop-off caterer, I bet you’d like to have 100% control over when you can accept or reject orders.
In this case, an online ordering system is a better alternative.
Because with online ordering software, you’re not under any pressure to deliver. You only process orders based on your availability.
For example, Jim Lenz of Two Unique Catering wanted to launch a prepared home meal delivery service during the pandemic.
So he needed a platform that allowed him to review orders before accepting them.
According to Jim:
“There are a bunch of online ordering platforms out there. However, all of them were geared towards restaurants. Our model is not executing an order in under an hour that it is placed. I needed the ability to review and approve orders as they arrived.”
From what Jim described above, his business model required software that isn’t restaurant-like. He needed something to allow him to operate without a turn-around time for approvals.
And after setting up his menu on HoneyCart, here’s what he had to say:
“The reason HoneyCart made sense for us was the fact that I could pick times that things were available for.”
Imagine you order food from a third-party site.
Hours later, your food gets delivered either cold or spilled. Who will you blame? The delivery guy? The third-party platform or the restaurant?
Well, 80% of customers say they’ll blame the restaurant rather than the delivery company if anything goes wrong, and the reason isn’t far-fetched.
Using a third-party platform means you’re at the mercy of their customer service team.
And if you check on review sites like G2, Capterra, or Trustpilot, you’d see how lots of customers complain about the poor customer service on these third-party sites.
So if your customers experience poor service, which may be the platform’s fault, do you think they would return?
Of course not.
They are more likely to look for alternatives. And this explains why 58% of restaurants prefer to use their own app or website for delivery.
Even customers want to avoid these kinds of ugly situations. 67% of customers say they prefer to use a restaurant’s own website or app for food delivery.
So the only way to ensure you deliver an exceptional customer experience is by handling customer service yourself. Or, at least, hire someone competent enough to handle it and still be in charge.
However, this is only possible when you use catering software.
This way, you have total control over your entire ordering policies like minimum order amounts, menu item prices, and delivery.
Also, you can communicate effectively with your customers. As a result, you won’t miss out on receiving essential feedback to improve your catering business.
Imagine you wake up one morning to realize your Instagram account has been suspended thanks to one of Uncle Mark’s policies.
The truth is, there’s nothing you can do because you are only a tenant on his platform. This means you must play by his rules.
The same thing can happen when you set up shop on a third-party website. Each one of these platforms has terms & conditions you must abide with.
So if you go against one of them, they can suspend or terminate your account. And that’s a double-edged sword.
First, you must play by their rules even when they are not favorable to your business. At the same time, you’re facing tough competition from thousands of other caterers and more prominent restaurants.
Sounds like a lose-lose situation, right?
But setting up your own commission-free catering software saves you from all these. You have the option to set up your ordering policies in a way that is convenient for you and your customers.
You may argue that third-party sites could promote your online menu to millions of people who visit their platforms. But remember, there are thousands of other caterers and restaurants all competing for the same customers.
So, relying on these sites to get customers while sacrificing precious margins is not a good long-term strategy.
Do you want to know why?
If you already do the hard work of promoting your catering business on social media or other digital channels, sending your customers to third-party sites exposes them to other restaurants.
Moreso, once they sign-up on any third-party site like ezCater, they are no longer your customers from ezCater’s point-of-view. So it’s only normal for ezCater to promote other restaurants to your customers.
After all, they get commissions only when restaurants make sales.
So, If you harbor any hopes of growing your catering business, you’re better off using online catering software.
This way, you can send potential customers via digital channels like social media, your website (SEO), email marketing, articles, and paid ads straight to your online menu, where they can only order from you.
Charlton Becker of Charlton Becker Catering knew this was the best strategy for his business. So, he pulled the plug on ezCater after four years and switched to HoneyCart.
In his words:
“Ultimately, we knew that ideally, we wanted people to come to our website and order directly from us…no 3rd party middle-man that would just send them emails to promote our competitors. “
As of the time of writing this article, Facebook has over 2.7 billion active users worldwide.
But do you think the platform is their most valuable asset?
No, it isn’t.
It’s the data of the 3.5 billion people it connects.
It may surprise you to know that companies spend billions of dollars to acquire consumer data because of how much it’s worth.
And according to research, by 2030, data collection and analysis will become the basis of all future service offerings and business models.
So it’s safe to say: “Data is the New Gold.”
Bringing it home, access to your customers’ data makes it easy to identify your ideal customers, understand their buying behavior, build rapport and promote targeted campaigns.
Unfortunately, this isn’t possible on third-party sites.
The highest you can get are the details needed to fulfill your customers’ orders. They hoard the data for their own marketing campaigns.
So it’s best to use online ordering software. And that’s because it gives you complete control over your customer’s data.
This way, you understand your customers’ demographics, identify their buying patterns, and research ways to improve the overall customer experience.
There’s no doubt a third-party ordering site is an upgrade on using a spreadsheet to run your catering business.
You simply create an account on any of these sites, set up your online menu, and wait for orders to flow in. Sounds pretty straightforward, right?
Well, it isn’t.
The reality is you must compete with thousands of caterers and restaurants for sales.
So there’s no predictable amount of money coming into your business. And the little profit you make is being sacrificed as commissions to these third-party sites.
But if you plan to run your catering business long term, then using a commission-free catering software like HoneyCart is the best investment you can make.
It is designed from the ground up for drop-off caterers who want 100% control over their ordering policies.
As a result, you can provide an exceptional customer experience, save more money long-term, and get complete access to your customer’s data.
The best part?
You get to keep all your profits.
Again, this is something Linda of MyTacoGuy found unappealing when she was using a third-party site:
“On top of feeling overwhelmed from wearing too many hats in the business, it killed me knowing we had to share our profits with ezCater even though it was OUR FOOD customers loved, and all they did was process the order.”
But after switching to HoneyCart, here’s what she said:
“But the BEST part is… now we get to keep all the profits from our return business!”
Ready to level the playing field in your catering business?
Start your free trial today. No credit card is required.