Some Pizzerias Lagging in the Shift to Online Ordering: the View from Pizza Expo 2016

By Jennifer Wiebe

Nearly every operator we met at the 2016 International Pizza Expo was looking for ways to increase sales from web and mobile ordering, and reduce the associated costs.

Some were looking for new online ordering options; others, a more seamless user experience. Some pizzerias had already experienced a shift of more than 40 to 50% of their phone orders to web and mobile—but a surprising number of operators were just getting started online. Overall, these numbers represented a surprisingly small shift from our benchmark study results in late 2014. But with the restaurant operators who had embraced the online ordering model, the conversations at the 2016 Pizza Expo were different.

The move to online ordering has resulted in real reductions in labor costs for most restaurants, but a number of operators commented that it introduces new challenges as well.

Integrating Third Party Ordering Sites

Operators in urban areas are now accepting orders from third-party ordering sites like GrubHub and Eat24. In some cases, they regularly receive orders from five or more of these external sites. The upside, of course, is that these orders bring in new customers. But the associated costs are high, both in terms of fees, and in the labor required to re-enter these orders into the point of sale system.

The recent announcement by SpeedLine and Chowly Inc. of a new integration that delivers these orders direct to the POS system was met with much rejoicing at the show. More than one customer told me that integrating these orders with the POS would save thousands in labor.


Prescription not a Panacea

Moving to online and self-service was a major focus for many restaurant operators, seeing dollar signs in the reduced labor requirements, and appealing to a “digital generation” of millennials who prefer to do business through a digital device. For most, web and mobile ordering is an obvious priority to increase sales and cut costs.

But more than one operator noted that web ordering has not been the panacea they had hoped for when it comes to order mistakes. Mistakes still happen—but now they are most often made online by the customers themselves. That’s a situation that requires new processes for handling errors and complaints.

Payment Security

With EMV and end-to-end encryption a big focus in-store, many restaurant companies are looking to take online payments out of scope for PCI. A number of restaurant operators came to the show with questions on tokenization and handling of payments online. The upside to tokenized online payments is the increased security, but we heard mixed opinions on the value of settling payments online, as many online sites do, versus passing the token on to the POS system to allow for last-minute add-ons at pick-up time.

The Growing Digital Sales Gap

The interest in online ordering was far from surprising. In a recent LinkedIn blog post on the subject, “How Tech is Killing Off Independent Pizzerias,” restaurant consultant Aaron D. Allen comments, “Despite the fact that chain pizza shops only account for 48 percent of all pizza restaurants, they’re pulling in 61 percent of the revenue.” And that gap is growing.

One of the key reasons is that digital ordering is growing 300 percent faster than dine-in ordering. And while everyone was talking about web and mobile ordering at the Expo, the reality is that independent pizza companies, and even many chains, are failing to keep pace with the big guys.

The result is this growing sales gap: During 2015, Allen notes, pizza chain sales rose 3.38%. But sales at independent pizza companies declined 5.01% from the year prior.

New Online Horizons

The good news at this year’s Pizza Expo was that restaurant operators of all sizes were paying attention to this online landscape. Just a year ago, we were still hearing from many operators that they weren’t doing much online. That’s completely changed.

Their focus today is on promoting their online presence. Exploring new mobile ordering options. Streamlining and integrating multiple third-party online ordering channels into their POS systems. There’s a sea change in the pizza industry, and it’s an exciting time to be a technology provider.

Posted on Thu, Mar 17, 2016 @ 14:03 PM.
Updated on April 15, 2019 @ 9:15 PM PST.

Posted by Jennifer Wiebe

An occasional contributor to On Point, Jennifer led the marketing team at SpeedLine from 2002 to 2018. She loves books, yoga, playing at the beach, and commenting on bad TV with her family.

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Tags: Online Ordering, Pizza Industry, Trade Shows

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