The restaurant marketplace is challenging at the best of times. As any owner of a small food business will tell you, it’s difficult to succeed if you haven’t thought carefully about all the things that will affect your margins and long-term viability, such as location, workforce, competition, and customer preferences.
And now there is the challenge of Covid-19, which is forcing many restaurants to revise their business models. We are seeing a big shift towards online food enterprises – a trend prompted by the growth of smartphones and apps. Covid-19 has underlined the value of going digital because it has created a dramatic change in the marketplace. For example, consumer data from Statisa shows that the percentage of restaurant diners in the UK as of 5 September 2020 was nearly 80% lower compared with the same time last year.
Moving your business online could be a sensible step in the current climate. If you want to develop a successful ‘virtual restaurant’, here are 10 tips to build your customer base and manage payments.
What area do you think you can cover comfortably and effectively? A bigger area doesn’t necessarily mean a bigger slice of business, nor will it guarantee happy and loyal customers who will come back for repeat orders.
Consider all the logistics. Can you meet customer demand if you target a large area with lots of potential customers? How will you distribute and what are the transport costs? How long will it take you to deliver food? Will the distances mean that some food may arrive cold/spoilt?
Far better to start small and encourage repeat business from a core of satisfied customers. Only scale up once you’ve tested the market and are sure you have the capacity to match demand with a fast and high-quality service across a wider area. As with a physical restaurant, customers won’t thank you if they have to wait ages for food that is sub-standard when it arrives.
The easiest way to handle deliveries is to use a ready-made solution such as Uber Eats, Deliveroo or Foodhub. These food-ordering apps connect with drivers who can deliver food prepared by restaurants that have signed up to the app.
Although outsourcing gives you immediate access to drivers and the marketplace, it’s often expensive (typically 10-30% per order) as well as restrictive. Not only will these services take a cut of your sales, they also own the relationship with the customer. That means you may not have access to sales/accounting data that can help you to run and build your business. Outsourcing is a convenient way to move online with little effort, but the cost and lack of control may not by appeal to every restaurant owner, so compare the advantages and disadvantages of each provider before making a decision.
As an alternative, consider hiring your own drivers and staying in control of your marketplace. Although the upfront cost will be greater, you may achieve a better long-term return on investment.
When moving your business online it’s important to offer customers a variety of ways to pay. While some people are wary of digital transactions and still prefer to use cash, Covid-19 has certainly accelerated the trend toward a cashless society. If you use a payment service provider like Safenetpay, which offers a comprehensive payment service, the financial side of your business will be much smoother. As a minimum you will need to accept card payments, but you should also consider alternative payment methods such as digital wallets and decide which payment options will be required to serve your customer base.
As well as offering customers a variety of payment methods, you should provide a high level of security for online transactions. Fraud has grown in parallel with e-commerce and mobile communication, so you must use up-to-date security and work with a payment service provider who has the latest anti-fraud techniques and is fully compliant with industry standards.
When accepting card payments, you should comply with the Payment Card Industry Data Standard (PCI DSS). Also, as part of the Second Payment Services Directive (PSD2), there is now a new security framework for online transactions. Known as strong customer authentication, it is the requirement to use at least two out of three possible data points to validate transactions. This is achieved through 3-D Secure. Payments that use this framework will have much greater protection, while payments that don’t use 3-D Secure may not comply with strong customer authentication and could be declined.
Not all meals are suitable for a delivery service. You need to think about heating (i.e. will the food stay hot and is it suitable for reheating?), what dishes work best with containers, and whether the food can be presented in an appealing way. There are quite a few food options that are presentable, ideal for transport, and are popular and provide a good margin.
Your website is your menu, so make it appetising and appealing. If you sell through your own site, you won’t have to pay commissions and you’ll stay in control of your business. But the website build will take time and investment, and you will lose out unless you make it user-friendly and attractive. The good news is that website builders such as WordPress and Wix make it easy to create a stunning restaurant website.
If you’re not confident to build your own site, you could operate through a third-party. However, while this means a quick set up and easy operation, the charges can be high and you’ll be operating under someone else’s brand.
‘Social proof’ refers to endorsements and approval ratings. People are influenced by the experience and views of others, and if your restaurant is generating good reviews, you need to showcase all the positive feedback on your website and in other channels such as social media, TripAdvisor, Trustpilot or Google reviews. Recommendations lead to orders.
How you present your food is all part of the consumer experience. Shoddy packaging and poor presentation will undermine your reputation and threaten repeat orders. Create a strong brand identity to make your business memorable and stand out from the competition, and don’t forget the simple things such as including a printed menu and contact details with every delivered order. If the food and the presentation are both good, customers will come back for more.
Effective use of social media will do wonders for your restaurant’s profile and will encourage online orders. But to maximise the power of social media, you need more than just a Facebook page. You should explore all the channels available to you, including Twitter, Instagram, blogging, sites such as Yelp, and YouTube. Use these channels to list promotions and discounts, and to showcase your dishes with photos and videos.
This is another aspect of social media marketing, and because Instagram is image-based, it’s ideal for promoting and showcasing food. If a food blogger with a large following posts about your restaurant, you’ll benefit from a huge amount of exposure.
Learning how to move your business online will help you to thrive in the digital economy and cope with the impact of Covid-19. Thankfully, there are many services to support restaurants. For insights on payment options and how to build a successful online business, see Safenetpay’s guide to online payment systems.