Olo on Food Ecosystem ‘Eats’ $ 1.6 Trillion
The restaurant industry is more digital than ever, as evidenced by Olofirst publication of results since its IPO in March. The ordering platform saw 125% year-over-year revenue growth, capturing growing consumer demand for increased digital ordering options. In a phone call with analysts on Tuesday, May 11 to discuss these results, Olo, founder and CEO Noah glass revealed an even greater ambition: to facilitate “not only… the 63% of sector transactions that are off-site, but all 100% of sector transactions”.
In a recent conversation with Karen Webster of PYMNTS, Glass expanded on this goal, discussing Olo’s desire to capture a greater share of consumer food spending, join the grocery and restaurant shopping experiences, and to develop an ultra-personalized platform.
“I’m really interested in understanding who is a consumer in all the different brands that they order from Olo, and if we could then get information on how they use the grocery store to enrich that profile,” Glass said. “We’re so close to taking the profile of consumers and delivering a personalized and dramatically better shopping experience for them in restaurants that use the platform, based on what we know about consumers.”
Own the deal
One way for Olo to build on this experience in the years to come is to take ownership of the payment process. During the earnings call, Glass mentioned that the company’s Olo Pay feature would likely be ready to go live in 2023, which piqued the curiosity of those who hadn’t heard Glass discuss the feature when. of the Olo IPO roadshow. He explained to Webster: “[Olo Pay] is our effort to have an Olo payment offering as a component of our product modules, so that things like mobile wallet, things like chargeback and fraud protection are built into the offer . “
This feature would replace Olo’s current system, guiding consumers to the restaurant’s existing credit card processor. Currently, Glass estimates that Olo is built into 18 or more credit card processors, adding that “it’s hard to be really nimble and innovative. [times] 18 against [times]1. “
Currently in its very early stages, Olo Pay aims to give Olo access to more information about its consumers and to give consumers “platform-wide credentials”. This would create a “more powerful experience to make the platform more valuable to the trader”.
Refocus the take-out order
“It’s interesting to me that the focus is so much on delivery and yet for us and for the industry the most important component of digital sales is takeout and not delivery,” said Glass. , adding that industry-wide takeout exceeds delivery two. -to one. These take-out orders are also more profitable for restaurants, avoiding the need to support an in-house delivery fleet or divert a significant portion of the sale to a third-party delivery service. By guiding consumers to a restaurant’s take-out channel, Glass noted that a restaurant can “effectively inspire the consumer to become their own delivery person.”
As third-party aggregators, restaurants and consumers battle over who will bear the delivery costs, Glass said “consumers are willing to pay for the delivery.” He added: “We have found that as shipping costs go up the shipping volume will decrease, but having optional shipping increases the cart conversion.”
Yet, Glass noted, the demand for delivery remains high enough that delivery-only brands of catering have a place in the post-deployment future of the catering industry’s vaccines. In a previous conversation with Webster, Glass discussed the effectiveness of the restaurant model during the height of the pandemic. Now, he explained, “There is enough consumer demand for digital delivery for you to be able to support one of these virtual brands … And what convinces us is that ‘it democratizes the ability to reach consumers by being able to launch … without having to go. thanks to all the investments you are used to. “
Achieve digital wholeness
Another key function of these ghost kitchens, from Olo’s perspective, is that they allow the ordering platform to move closer to that goal of capturing a much higher percentage of total restaurant orders – in 2020, the company processed 500 million of the industry’s 60 billion transactions. total.
“There is so much to do so that we can penetrate beyond where we are,” Glass said. “We’re not even at 1 percent, and these virtual brands that are inherently 100 percent digital have accelerated the path to this ultimate ambition of touching every transaction, because they’re 100 percent digital, 100 percent delivery.”
Glass noted that “in thinking of [going from] digital primacy to digital wholeness ”, the company seeks to capitalize on the desire of consumers to adopt the QR code in restaurants to“ reduce 63% of [off-premise] restaurant transactions are addressable and now 100% of restaurant transactions are addressable. “
In today’s connected economy, consumer spending behavior on food is becoming somewhat establishment independent. As categories such as restaurant versus grocery store become more fungible, Olo is excited about the opportunity to capture not only a greater share of restaurant orders, but also a greater share of the overall food market.
“When you combine the restaurants and the grocery store to form a combined $ 1.6 trillion food industry, that’s huge,” Glass said. “And there are so many opportunities. It’s exciting that we are where we are, in the position that we find ourselves in, to go and do interesting things that add value to merchants and consumers.