Online ordering services seem too expensive. Are they really profitable for restaurants?
With the rise of online ordering for restaurants, the idea that online ordering can actually cost you money has become a popular myth among restaurant owners. But it’s just that: a myth.
When done correctly, online ordering can be very profitable. The trick is understanding the concept of incremental profit.
Incremental profit is a fancy way of calculating the profitability of a business decision when you don’t include fixed expenses that you already have to pay for — things like rent, most labor costs, insurance and electricity.
In the example below, we remove fixed expenses that you must pay for, regardless of whether you offer online ordering, and we add an additional 10% cost for more kitchen staff to prepare your online orders. We also add a 25-30% online ordering fee.
As you can see, when you remove fixed expenses, your profit margins for online ordering can actually be as high as 30-40% percent — much higher than on-premise dining!
So what are the key takeaways?
- When calculating profitability, exclude your fixed costs
- Account for incremental Labor Costs from your increased online ordering volume
- Online ordering can account for 30-40% incremental profit!
Without online ordering, you’re missing out on incremental profit and the thousands of new users signing up for online ordering platforms every single day.
Ready to get started with online ordering? Ordermark is here to help!
Send all your third-party online orders to a single printer and tablet. Our team of experts is here to guide you through the set-up process and our Support Team is available 24/7. We’ll even help you find the best online ordering providers for your restaurant!