70% of Americans Order Food Online at Least Once a Year. How is the Restaurant Industry Adapting?

I recently had the chance to catch up with Mike Jacobs, former COO of Ordermark, to learn about the trends he’s seeing in online ordering for restaurants.  Ordermark is a Los Angeles based startup that offers:  

“One printer anddashboard for all online orders. A single screen to manage all of your onlineordering, and a team of experts to help you succeed.”

Despite today’s consumer expectations, the hospitality industry (where restaurants participate) is a laggard in digital. The following chart shows hospitality near the bottom of the studied industries. 

Online ordering is a rapidly growing area, with considerable room for growth.  Mike elaborates:

“Last year, 70% of Americans ordered food online at least once or twice. Restaurants arediscovering that people are ordering food online for different reasons than fordining in, so the business is often incremental.” 

The concern for the industry is that those restaurants who lag behind may not survive this new market reality:

“Historically,restaurants knew how to select real estate, create a menu, and turn tables. Butthis is a digital, visual business. Operators in the top areas for delivery have to reconfigure theirkitchens, solve the last mile delivery problem and understand the differenteconomics of online vs. instore. Ordermark can help them with those challenges.”

Understanding the Online Order Customer

According to a recent McKinsey estimates, 26% of traditional delivery orders are made online today. Online food delivery is projected to grow globally at 15% between 2018-20, while offline is projected to decline 8% during the same period.    

It’s important to understand the customer segments within online ordering. As Mike mentioned, 70% of Americans have at least tried online ordering. While these consumers are just getting started, there is an online ordering restaurant heavy user who is much more involved. In 2017, Statista reported that 20% of Americans ordered online once a week or more frequently. Within that group, 10% order daily.   

Mike highlights three trends to look out for in meeting customers’ hunger online.  

Online Ordering Trend #1: It’s for All Ages

All ages are ordering online, though the bulk of the market is still with people under 40.

“Whereas five yearsago the ordering online demographic was under age 40, today that range hasexpanded to pretty much everybody. The consumer expectation is being able toget anything that you want, whenever you want.”

Online Ordering Trend #2: Building Infrastructure

Restaurant 2.0 infrastructure is being developed to meet digital demand. Restaurants begin with online ordering, and build the infrastructure from that point.  Two examples that Mike cited are Kitchen United in Pasadena and Cloud Kitchen in DTLA (downtown Los Angeles).

Online Ordering Trend #3: Commissary Test Markets

Larger restaurant chains are opening commissary-only locations to test new markets. Mike explains how this concept prevents the risk that building out full restaurants poses:

“A chain can put in acommissary location and see how it does. They can see if they have a fan basein that city. If they do, then it’s up to them to decide whether it makes senseto put another brick and mortar or just put multiple commissaries in.”

It’s clear that online food ordering will eventually dominate the restaurant industry. It’s surprising to me less than 20% of restaurants offer this feature today, showing that the hurdles to implementing and marketing online ordering are considered significant. It’s important for many restaurants who can move into this area, and providers like Ordermark take a lot of uncertainty out of the process.

For more information on Ordermark, please visit www.getordermark.com.