Our Story Is About The Evolution Of Online Ordering SystemsBy Tarun Ramesh, founder of CloudWaitress
It All Starts With You
CloudWaitress was born from the problems faced by numerous small business restaurant and cafe owners. Towards the end of 2015, I had the opportunity to speak with many local restaurants. At the time I had been working for another company that was also in the food service industry selling a different product.
During this period, most restaurant owners were open enough to discuss the problems they were facing. I realised through my conversations with them that one of the biggest trends coming into the food space currently is online ordering. However, all the existing widespread solutions in the market were a nightmare for restaurant and cafe owners.
The Problem With Existing Marketplace Online Ordering Systems
Currently, the main players in the online ordering space for food service businesses run off a marketplace business model. This means that they provide a platform for you to put your menu online which they often do for you free of charge. They then promote your store through their marketing campaigns in order to generate orders for you. In turn, they take a % based fee and I've heard some people tell me they are paying upwards of 20%.
There are 2 critical problems with the model from the perspective of a small business restaurant owner. Firstly the obvious one is you lose a large amount of your profit from these orders. The restaurant industry is by far one of the most competitive industries out there. As Peter Thiel says in his book about business (youtube video summary) when you enter highly competitive spaces, the profits often get competed away as a result of trying to have an advantage over your competitors. Bankwest an Australian bank published a report on the Australian food service industry which you can find here (pdf download). The report shows how the average profit margin for restaurants in Australia is only around 7-10%. I'm sure its similar for many parts of the world. The fact is small business cafes and restaurants can't afford to lose a massive % of each sale with all the existing costs in place.
That's not it though, the story gets worse. The counter argument to the above point might be that these businesses bring you new customers that you might not have otherwise had. These customers may also end up purchasing something in store next time. From this perspective, paying a % to acquire a new customer seems worth it especially when repeat business is expected. The problem with this is that the reverse situation usually ends up occurring far more. Your regular customers soon realise that they can order online and they end up using it the most because it's more convenient for them. As a result, you end up losing a % on your most valuable customer base.
Then Came Self-Service Online Ordering System
So what's the solution to this problem? That's where self-service online ordering systems come in. These systems are ones that you can set up yourself and either integrate into your existing website or they act as a standalone site (such as CloudWaitress). The benefit of these systems is they are not based on a marketplace model. This means the cost is significantly cheaper usually involving a fixed monthly fee and potentially a setup fee. For restaurants doing many online orders, this is a great solution as you can save significantly and control the experience to align with your branding better.
This is not the first time this happened to an industry. Take online shopping as a whole. When things really began picking up in the early 2000's, marketplaces such as eBay dominated the space as they provided a platform of trust. This is something many people didn't have in the early days when it came to online shopping. Ebay, however took large fees on every order and within a few years, nearly everyone with a serious online business on eBay set up their own online shop using self service systems like BigCommerce and Shopify that just charged a monthly price.
So Why CloudWaitress?
Even though there are now numerous self-service online ordering solutions available, there is still a core problem with this new model. When you pay a fixed price a month for an online ordering system, you're not paying by the real value metric. That is the number of orders you get. What happens with businesses priced with a fixed price is that either you are overpaying or you are underpaying. What's wrong with underpaying you might say?! Well, how well do you think a business will treat you if servicing you is costing them money?
The reason CloudWaitress exists is simple. I wanted to build an online ordering system that provides an easy way for small business restaurant owners to start taking online orders in a way that only charges you for the orders you place. That means we are always motivated to help you get more orders and succeed. Further more, there is no underpaying or overpaying. That's not it though, more than anything I learned that small businesses want reliability and support. The price may attract you initially but partnering with us, it's the support, stability and constant improvement that will keep you around.
Where CloudWaitress Is Currently
Today CloudWaitress is fully functional and in open beta. This means we are still making major upgrades and actively monitoring the state of the system. Don't be afraid of this, it just means that we are always ready to make improvements or fixes, unlike many others. There is still a long road ahead and we have only developed about 30-40% of the total features we believe an online ordering system for restaurants must have. Compared to other products, we still come on top in many areas. Best of all you have nothing to lose trying us.CloudWaitress in an Australian company based in Perth