Different restaurant brands – one campaign. An insider look at how Order Direct evolved from a campaign to a warcry for restaurant and QSR brands, with the ongoing food aggregators v/s restauranteurs feud and the increasing reliance on ecommerce. Here’s how the D2C movement is brewing.
A few days ago when we ordered food through an aggregator app, along with one portion of Chicken Hakka Noodles and Kung Pao Paneer, was served a small pamphlet, urging to Order Direct from the restaurant for better discounts. And this wasn’t a one-time occurrence. With the ensuing battle between food delivery aggregators and restaurants, #OrderDirect has been a war cry, encouraging restaurants to build a D2C model, reducing the dependency on these apps.
Earlier this year, DotPe coined #OrderDirect. Conceptualized by All Things Small, the blanket campaign essentially focuses on capturing the challenges plaguing restaurant owners and urging consumers to order directly from the restaurant.
In the last few weeks, however, Order Direct has evolved as a common communication and product development theme among restaurant brands.
Rise Of #OrderDirect
While restaurants and aggregator apps have been at loggerheads for the past few years, the post-COVID-19 dependency on e-commerce for all businesses alike has added fuel to the fire. Mounting frustration of the restaurant community has led to Order Direct taking a more active approach.
“The aggregators have been disruptive in creating high valuations for themselves on the backs of every restaurant that’s made them reach where they are today. We don’t expect them to arm-twist the restaurants which has happened in this case hence the industry went into survival mode, implying the old school models that work,” Rahul Leekha, Director, Coffee By Di Bella India.
The other prominent reasons for friction between the two parties include a high commission by food aggregator apps and denying access to ethical consumer/purchase data. As of now, the food aggregator apps charge a commission somewhere between 15% to 25%.
“When a customer orders directly from us instead of an aggregator app like Swiggy or Zomato, we save a big chunk of money that would otherwise have gone as commissions to them, sometimes as high as 25-30%,” explains Joy Singh, Co-partner, Raasta & Yeti.
Staying consistently discoverable on the platform comes with an additional cost that when combined with commissions leads to a very small margin for restaurant businesses.
“Due to added costs of Commissions and increased spends on Discounts and Ads in-app, fighting for market share on these platforms, has only led to further margin erosion,” share Yeshwanth Nag Mocherla and Ashwin Mocherla, Co-founders, The Thickshake Factory.
Ramsai Panchapakesan, SVP, Media Buying, Zenith explains that restaurants are built keeping physical customer visits in mind and online orders account for a minimal portion of the dine-in business. Thus, when food aggregator apps charge a certain amount of commission or fees for other visibility and discoverability services, it upsets the cost ecosystem that restaurants have created, keeping in mind an entirely different setup.
“Food deliveries only make up about 10-15 percent of the business of the total restaurant market pie,” Panchapakesan quips. “While food aggregators give restaurateurs a good customer base and order volumes, in the current times, paying commissions to aggregators is taking away from revenues of dine-in restaurants. Primarily because restaurants are built keeping customer visits in mind. Their expenses include on-ground staff, kitchen staff, renting out a bigger place with seating arrangements, setting up a bar, and more.”
The need for first-party consumer data, generally not provided by aggregator apps is yet another factor that propelled the growth of #OrderDirect. “The endgame of course is commanding higher customer LTV once they have data to nurture customers with loyalty programs for repeat transactions,” says Anubhav Sonthalia, CEO, Merkle Sokrati.
The rise of Order Direct can also be attributed to the natural progression of e-commerce seen during the pandemic. The restaurants and businesses that never really felt the need for an individual online delivery system, now feel the heat of recurring lockdowns. “Pre-Corona, we never saw the need but post-corona, our parameters have changed significantly,” highlights Himaja Pillai, Executive Assistant – CMD, The Chocolate Room India.
Sneh Jain, Co-Founder and Managing Director, The Baker’s Dozen too attributes the rise of a D2C trend in the restaurant and QSR industry to the pandemic resulting in a digital boom. “The primary reason behind this momentum is COVID-19 making all brand owners realize the importance of accentuating the consumer-brand relationship. Hence, there is increased emphasis on becoming a consumer-first brand for which every brand is putting their best interest in their own platforms (E-commerce/Delivery apps) to encourage customer loyalty as well as retention.”
The Logistics & Execution Of Building A D2C Model
Anyone who has interacted with food content on social media (even briefly) must have noticed an obvious increase in ads (on feed and stories) by restaurants offering a larger discount on their D2C services. Brands such as Social, Starbucks, EatSure, GoodFlippinBurger, and Burger King were seen advertising additional discounts on direct orders.
Social media marketing has been the cornerstone of the Order Direct movement.
Leekha explains that 80% of their footfalls are repeat customers giving them a good amount of customer data to engage with. The idea is to first reach out to the current base.
“More so with the want for a contactless dining experience, it is easier to convert the current footfalls into direct ordering at the store level (the lowest hanging fruit) which gets them used to the concept to at least get the comfort of ordering directly. Then is the next step where we push the same ordering experience online. Now there is some familiarity in the process.”
For Baker’s Dozen, it is about building on their existing e-commerce setup. The F&B brand first launched its website in 2015. “Our 2019-20 goal was to shift to a D2C-first model with an aim to build a strong omnichannel sales strategy,” Jain adds.
The brand intends to create a sustainable communication strategy and has been doing so through campaigns. For instance, their The Dose We Knead campaign offered complimentary baked goods to those who presented their vaccination certificate.
The Thickshake Factory on the other hand has been using better discounts as a CTA to drive audiences towards their D2C offerings. “We are aggressively promoting our D2C channel through different offline & online mediums, with a better discount call-out as the key differentiator and a clear #OrderDirectly CTA with QR Codes/WebLinks. We offer a Flat 50% off on the first order placed something that is exclusive and is not being offered on any other platform,” Yeshwant and Ashwin add.
On ordering directly, the consumer experience for their customers is simplified through WhatsApp updates on order status and reordering enabled through WhatsApp.
Sonthalia opines that while a WhatsApp business account is an effective way of creating a one on one experience, brands have to be very careful about not getting spammy. “There are many WhatsApp business API automations available, but a sound segmentation and personalization strategy is needed to ensure a pleasant customer experience,” he says.
Sharing their thoughts, a spokesperson from Spice Grill Flame, said, “We are familiar with how the aggregators work. We are on the verge of coming up with more simplified bill settlement technologies so as to safeguard our interest. #OrderDirect seems to be a good alternative. But at the end of the day, it’s still not direct business with our customers like it should be.”
Product Discovery and Catalogue Platforms are further enhancing Order Direct. Platforms like DotPe and RadYes allow brands to create a personalized e-commerce experience, at much lower commissions than food delivery apps.
“There are two specific apps that we have tied up with. One is DotPe and the second is RadYes. Both of them are direct delivery portals and share all the customer information with us so that we as restaurants have full control over the dashboards as well,” Singh shares.
The concept of such apps is on the rise. Recently, a Wayanad-based youth has created a social media platform called Foodoyes that will allow restaurants to set up an e-commerce channel at the subscription fee of INR 100 per day. The app has roped in Quikr as their delivery partner and will charge only the delivery fee on top of the cost mentioned in the menu as opposed to the taxes that are usually added by aggregator apps.
As of July this year, Swiggy has been testing out Swiggy Direct in Mumbai – a way to unbundle their services for restaurant partners. In simple terms, Swiggy Direct will allow consumers to place an order with only a delivery charge. On the restaurant front, Swiggy will charge a basic fee to cover the operational cost. In this way, the app unbundles its delivery service from its discoverability and ads offerings.
Further pick and drop services such as Dunzo and Swiggy Genie too have been contributing to this cause.
No matter the size and intensity of the movement, Order Direct, isn’t without challenges. How many separate restaurant apps is a consumer going to download? And more importantly, how are the restaurants planning to make up for benefits like last-mile logistics, technology, and user experience that food aggregators provide in abundance?
“Restaurateurs need to invest in their own web and app ordering platforms, customer acquisition campaigns centered on their brand differentiators, and if that’s not enough even exclusive direct-only discounting,” explains Sonthalia.
He adds that restaurants and QSR brands need to rebuild a powerful brand promise and match the ordering, payment, delivery experience to keep up. Clear brand differentiation is what will help them stand apart.
The Cost Factor
It all boils down to the monies and #OrderDirect or any D2C set up for that matter demands a lot of it, at least in the initial investment phase which includes the cost of technology capabilities, operations and logistic support for deliveries, a CRM unit for grievances, and an exhaustive marketing plan. Is the cost worth it? And is it a sustainable option?
“With aggregators, there is a platform to be discovered on with direct ordering a higher effort goes into discovery but even if one invests say 5% of the revenue into marketing v/s 15-25% aggregator commissions, it still makes sense to put in energies into Direct Order marketing. So in the long run I’d place my bets on Direct Ordering for both; being affordable & achieving the end sales objectives,” shares Leekha.
Similarly, Yeshwant and Ashwin point out that Order Direct will have a positive impact in the long term. They share that, currently commission paid to aggregators may seem more affordable, due to investment in heavy awareness building, limited top of the funnel from a non-intent driven media, and a higher discount outlay for better conversions, resulting in a poor ROI.
“However, in the long term it’ll be vice versa once you have a sizable customer base and profile info along with behavioral data to tailor offerings by individual/cohorts, with reduced spends on loyal repeats & zero commissions,” they add.
All in all, the aggregator model is a commission-driven one and not customer first which makes for the core difference. It also boils down to the fact that restaurants are anyway investing in marketing and logistics, which might as well add to the budgets to create a sustainable D2C setup.
Like any other campaign, Order Direct largely has two objectives – retargeting existing consumers with the CTA of connecting directly with the restaurant and bringing in new customers to the D2C delivery model. According to Sonthalia, it’s not just about ads or transactions. “It takes more to be able to retain the customers and turn your media investments profitable by ensuring your customer lifetime value (LTV) is way above your customer acquisition cost (CAC).”
Restaurant brands need to create a media plan basis their serviceable market. For multi-outlet restaurant chains or franchises spread across the city, you can plan for centralized marketing with broad targeting. However, if you run a single restaurant or the branches are spread far apart, it will need a hyperlocal approach where you manage promotions for each location separately based on demand and servicing capacity.
“For #OrderDirect the so-called ‘low-hanging fruits’ would be Search ads targeting your brand keywords and Social ads remarketing to your past customers based on their food preferences. Next would be targeting search keywords around your catered cuisines and popular dishes. A lookalike targeting campaign on Social would be equally important to expand your reach to new customers,” Sonthalia suggests.
Once brands have enough insights about their customers, they can also leverage targeting levers like Interest and Behavior on Social to explore new audiences beyond remarketing. For the same, Google has its own set of contextual targeting and in-market/affinity audiences that you can explore.
For brands that already have mobile-first ordering experience in place, Instagram Story ads, Google Discovery (feed) ads make for a good option.
Once order volumes on these ad platforms scale-up, brands eventually reach saturation or see your CACs (Customer Acquisition Costs) shoot up if you try to increase budgets. “This would be the right stage to consider investments in programmatic advertising platforms like DV360 (Google Marketing Platform) with their audience management capabilities that allow scaling up without incremental cost per new customer,” Sonthalia concludes.
Order Direct as a phenomenon while birthed due to many factors, its survival depends largely on sustainable and consistent marketing, investment in user experience, and smooth delivery service. Needless to say, with the array of challenges that aggregator apps bring along (for restauranteurs, delivery partners, and themselves), Order Direct is on the path to growth.