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Beyond First & Third: A New Restaurant Ordering Model
1 Sep
Summary
- A new 'second party' model aims to bridge first and third-party ordering gaps.
- Third-party apps charge up to 30% commission, leading to menu price markups.
- First-party ordering offers ownership but faces challenges with guest acquisition.
The restaurant industry is poised for a significant shift in digital ordering with the introduction of a 'second party' model, aiming to improve upon existing first and third-party options. Launched by Olo founder Noah Glass, this concept addresses the drawbacks inherent in current ordering systems.
Third-party delivery apps, widely adopted during the pandemic, impose commissions of up to 30%, prompting many brands to increase menu prices. This strategy, while offering broad reach, results in 'rented guests' as restaurants do not own customer data. First-party ordering, through a restaurant's own app or website, grants ownership but struggles with guest acquisition costs, which can reach $100 per customer.
The proposed 'second party' model seeks to emulate successful inter-brand collaborations seen in other sectors, like Shopify's Shop App. It envisions a centralized platform where guests can order from chosen brands, benefiting from personalized offers and saved data without incurring markups or dealing with ads.
This new paradigm promises marketplace-level reach for restaurants without exorbitant fees or loss of customer relationships. For consumers, it offers a more personalized and seamless ordering experience, adapting offers based on individual preferences, such as dietary needs, from the outset.
