Path to profit: Increasing the Average Online Order Value of Your Restaurant

It’s 2019 and growing your restaurant’s online business is a top priority for you. Sure, getting more online customers (via third parties) is one way of doing that. But over a period of time, you realize that this isn’t a very profitable method.

You get a high volume of orders but then your profit margins are not as encouraging. All those hours of work with very little in return.

Cut to your own online platforms, and you see some challenges there too. While you have had steady growth for some time, your customers only seem to order a few specific things from you. And continuously reaching new customers is (increasingly more) expensive.

So your sales growth doesn’t look as juicy as before.

Suddenly, you find your growth flatlining. But your costs don’t.

In short,

Acquiring new customers is expensive. Existing customers are not buying more.

So how do you grow your sales and profits in this situation?

What is Average Online Order Value? And why you should care

This is when looking at your Average Online Order Value (also known as Average Basket Size in some circles), comes handy.

Average Online Order Value is the (average) bill amount per order. It gives you a sense of the amount of money a customer spends, every time they order.

When you know the Average Online Order Value of your online orders, you can deploy strategies to increase it. And when you increase it, your restaurant gets back to growing. Voila!

This concept is not new. It’s “cross-selling” in the online food ordering context.

How to Calculate Average Online Order Value

Total revenue / number of orders = Average Online Order Value

Example? Sure:

Let’s say you earned a revenue of $2000 last month. And you had 100 orders. Then the Average Online Order Value of your restaurant is $20 for the month.

Note: You could look at this metric over different time periods depending on your objective. We recommend looking at this whenever you review your sales performance. You could also look at this metric by the outlet to get a sense of the neighbourhoods your more profitable customers live in.  

Other handy metrics you should know

Average Order Frequency

A useful metric to get a sense of customer love. Average order frequency is the number of times a customer orders from you in a month, on average.

Average Order Frequency = Number of orders/unique customers

Example: If you received 1000 orders from 200 unique customers then your monthly order frequency for that group of customers is 5.

Restaurant Customer Lifetime Value

The mother of all customer retention metrics, Customer Lifetime Value shows you which groups of customers are worth more to your business.  

Customer Lifetime Value is the amount of money your customers will spend at your restaurant over their lifetime. I.e how much profit your customers are expected to bring to your business.

Calculating your restaurant’s Customer Lifetime Value takes a few steps. But the effort is very likely to pay off. After all, the top marketing companies use this as their go-to customer retention metric.

8 clever ways to increase your Average Online Order Value

In real life, your Average Online Order Value increases when your customers start ordering more each time. Or they order more expensive menu items.

Here are some ways you can encourage this behaviour:  

Upsell with pairings, sides, and add-ons

It’s 10 pm. Your customer has just reached home after a hard day at work. She needs a pick-me-up. She has been eating healthy through the week and so tonight is burger night. Or it’s a cheat day. And no one is counting anything, least of all calories.

She is about to order that burger. Then she sees she can customize her burger. Maybe some extra pickle? Or some special sauce?

Then right before checkout, she sees a recommendation for cheesy fries and a luxurious milkshake. You get the picture.  

Make good food pairings with a side, a salad and a beverage. Pair low calorie or healthy options together, for the calorie conscious. Or try classic combinations like an entree, salad, and side. The idea here is to make irresistible food pairings that none can deny. You are in charge of your menu. You know this better.

This is how Burger King does it:

Add-ons on Burger King's Online Ordering System
Burger King’s Online Ordering System suggests sides before checkout
Make packages & hampers

This works very well for seasonal shopping, festivals and for bakeries. Think chocolates, cupcakes, and macaroons etc. Attractive packages are also great for gifting. You can also charge a premium for a well-designed gift pack and clear inventory quickly.

Here are some beautiful hampers we were stunned by:

 

View this post on Instagram

 

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Add a discount on minimum order and drive bulk buying

Use this to push some of your more expensive menu items. The lure of the discount makes customers increase their order amount. Because they get more value this way. But your minimum order amount makes sure that you gain in the end.

Here are some examples of some (fiendish) discounts:

Krispy Creme Offers
Bulk buying offers from Krispy Kreme

 

50% off but upto a maximum amount
Zomato’s clever discounts
App only offers

Investing in your own app to get direct online orders is a super idea. You have a direct marketing channel with your restaurant app users. And customers who have downloaded your restaurant’s app are likely to be more engaged with your brand. You can use push notifications to serve app only offers to these engaged group of customers. And they are likely to order more than casual one-time website visitors.

The Domino(s) effect

Domino’s is famous for offers that focus on Average Online Order Value. One of there longest running offers (at this point though it’s hard to tell if its an offer or their entire sales strategy), is the example below. Think about it. You went to their site, perfectly happy ordering just 1 pizza. Then ended up ordering 2 because you could not resist the deal? That is an Average Order Value strategy at work.

A data-driven and image-rich online ordering menu

Your own online ordering system is a great way to amplify your brand. Customers are twice as likely to order something once they see its image. Let’s face it. Our will power is no match for an unrelenting series of tantalizing food pics.

Showcasing your online menu with a lot of high quality real images lets your customers see what they’re ordering. And more importantly, appeal to their indulgent sides.

You can also optimize your online ordering menu using data to showcase the items that are selling more, upfront. This way you are likely to get a few extra items per order.

We find this to be a very effective strategy at growing your Average Online Order Value.  

A picture is worth a thousand words?

High quality, well lit imagery will get you those orders!
Punjabi By Nature’s image-rich online ordering menu
Loyalty programme

As a recap, your Average Order Value increases when your customers buy more expensive food items or buy a number of items each time. And a tiered loyalty program that rewards people based on how much and how often they order, is probably one of your greatest tools. You could simply give people more points for higher basket sizes. Customers want to earn more points and save a greater amount each time. As a result, you have a higher Average Order Value.

Here is a neat loyalty programme we designed for Debonair’s Pizza:

An example of a tiered restaurant loyalty programme
Debonairs Pizza’s tiered loyalty programme
Seasonal campaigns

Make yourself a go-to place for seasonal shopping and gifting with seasonal campaigns. People order more during festivals. And targeted campaigns that showcase your seasonal or festive packages are sure to be a hit. You can also give seasonal offers or tailor your loyalty programme to hand out more points during a specific period. This is a winning strategy for increasing your Average Order Value.

Will you just look at these beautiful seasonal campaigns by food businesses?

Regular customers will always buy more

As mentioned before, acquiring new customers is an important part of your sales strategy. But having that as the only strategy is quite unforgiving. Like a hamster wheel.

Instead, looking at your regular customer base carefully, creating different segments based on recency, the frequency of orders or your restaurant’s Customer Lifetime Value. And then increasing the amount they spend with you each time is a necessary addition to your restaurant’s growth strategy.

Here’s a reading list on this topic:   

  1. Everything you need to know about customer retention for restaurants
  2. Promoting Restaurant Loyalty Programs: 7 Ideas You Can Implement Today
  3. 15 Restaurant Loyalty Program Ideas that are timeless [Delivery & Dine-in]
  4. Win-Back Campaign for Restaurants: How to Get Your Lost Customers Back

Getting the word out with CRM

No matter your strategy you would need an effective way to reach your customers. And while Social media is a great way to reach customers, your CRM system is a more direct and personal approach.

Yet, restaurant CRM systems often come under scrutiny for their effectiveness. So if you’re already using a CRM system and struggling to make the most out of it, we have a few ideas.

We recommend using a CRM system that integrates with your online ordering and makes use of valuable customer data.

And back to growth

With this, you will have everything you need to increase the Average Order Value of your online ordering system. We wish you a speedy recovery from stagnating growth and success on your path to profits.

See you later alligator! Ciao ciao, vada pao!

 

Path to profit: Increasing the Average Online Order Value of Your Restaurant
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Souradeep Datta

Souradeep Datta

Souradeep is a content marketer at LimeTray. His roots are in advertising, digital marketing, and design. Loves food, music, simple things and making things simple. Prefers writing about himself in the first person. But he knows he can't always have what he wants. Reach him on: Twitter @deepsour Instagram @deep_sour