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What’s next for mobile ordering?

5 min read

Restaurant and Foodservice

It took OLO 6½ years to reach 1 million users for its customers’ online and mobile menus, but only a year after that to hit 2 million and just four months later, it’s closing in on 3 million, a milestone that founder and CEO Noah Glass said is just the beginning. OLO recently announced a partnership with mobile tech provider CorFire to add more functionality to restaurants’ mobile apps, including the option of using mobile phones to pay with stored gift cards. That came on the heels of a $5 million investment from PayPal, which is working to expand its payment services to brick-and-mortar establishments.

And this week brought more good news. For restaurant chains with 30 or more units, OLO is the only way they can get their menus listed on GrubHub, a deal made all that much sweeter by the news that GrubHub will merge with New York City-based online ordering service Seamless.

The merger is a potentially big win for chains looking to build business with first-time customers — combined, GrubHub and Seamless work with 20,000 restaurants and fill 90,000 orders daily, or about 4.5 orders per restaurant per day, he says. That’s an average of $23,000 in incremental profit a year for each eatery, because the sales generated through online and mobile ordering don’t require investments in additional staff or infrastructure, Glass said.

Seamless and GrubHub are national operations, but the former is mostly focused on the New York City market where it started as a catering venture and still commands orders from regulars including major law firms, Glass said. The latter has grown from its Chicago roots into a strong national player.

“You can imagine that one of the very hot topics of conversation for us is ‘imagine if we could extend to the Seamless base,’ ” he said. “There’s a big opportunity there for chains to drive incremental large orders in New York City.”

I caught up with Glass on Thursday to hear more about how OLO has grown and the latest trends driving mobile ordering and what that means for restaurant operators.

On the CorFire partnership

CorFire specializes in building out custom mobile apps for large restaurant brands. Their main functionality is taking the ability to pay with a stored-value gift card and making that part of the mobile experience. CoreFire built the Dunkin’ Donuts app, which also lets customers scan a QR code or barcode to pay. A lot of brands are looking at mobile payments and having an app as a way of reducing the costs of transaction and engendering customer loyalty. If a customer buys a gift card as a way to pay, they’re going to come back. The big thing we’ve always believed at OLO is that mobile payment is really interesting as a first step. Then with a mobile app on the phone, it becomes a remote communications device to order and pay ahead of time.

Letting customers pay using their mobile phone at the register or place mobile order and pay online, and also doing other offers — I could send you a $10 Dunkin’ gift card that you would then have on your phone, for example — enables brands to do a couple different things that customers are starting to use mobile phones to do at restaurants.

On the Seamless/GrubHub deal

Some restaurant chains are hearing about GrubHub and Seamless for the first time. For a lot of the national chains, it’s big news. My goal is to try to make sense of it for them, help them understand the opportunities and limitations. We’ve tried to channel the power and the benefits so they make sense for chain restaurants, who get daily payments, integration with their POS systems and exposure to new local customers.

It stands to reason if you’re a customer and you’re in an unknown spot and searching for burgers, if you see local brands you don’t know and then you see Five Guys Burgers and Fries, it stands out. We’ll see over time, but I think in some categories, chains will do very well with brands that have consistency and are known entities.

On OLO’s future

As we’ve had a lot of success with companies like Five Guys, Noodles & Company and Dickey’s in the fast casual arena, we’ve been getting attention in the last few months from big QSR chains. They’re saying with capabilities like mobile ordering, these fast casual guys are now as fast as we are, and a lot of them are saying we’ve got to up the ante to compete with the same capability. They’re looking at how to allow customers to order ahead and have a faster experience at the drive thru.

A really intellectually interesting part of that goes back to what we’re doing with CorFire — maybe we would have a 2D bar code on the app that you would scan to trigger order and payment. The stuff coming down the line is really neat, it’s another stage of evolution for this whole thing.

Then, out of left field, we have convenience stores jumping into foodservice space. We’re starting to work with a lot of c-stores, and they’re seeing how the ability to have an order ready and waiting when the customer gets there is a way to offer more customized, made-to-order fresh hot food that today we don’t associate with convenience stores.