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Olo CEO Noah Glass unveiled the Olo App at a conference in March. | Photo courtesy of Olo<\/p>\n
Ever since the pandemic forced a shotgun marriage between restaurants and third-party delivery apps, the two sides have had an uneasy relationship. Apps like DoorDash and Uber Eats have helped many restaurants reach new customers. But they have come at a steep cost.<\/p>\n
Now, a longtime restaurant tech supplier is coming to market with what it believes is a better way.<\/p>\n
On Tuesday, online ordering provider Olo is launching the Olo App, a mobile app that will allow consumers to order directly from some of the more than 800 restaurant chains that use Olo.\u00a0<\/p>\n
The app will aim to solve a few of the biggest issues with traditional third-party delivery apps: high prices for restaurants and consumers, a lack of data for restaurants, and a marketplace model that encourages discounting.\u00a0<\/p>\n
Unlike on third-party delivery apps, which charge commissions of up to 30% per order, restaurants will pay no commissions on Olo App orders, meaning they will not have to mark up their menu prices to cover costs.\u00a0<\/p>\n
Consumers will pay a fee for delivery orders, plus a 5% network fee that goes to Olo. They will also have the option to round up to the nearest dollar to make a donation to No Kid Hungry, a charity focused on childhood hunger.<\/p>\n
In tests by Olo employees, Olo App orders have been 15% to 30% cheaper than the same order on third-party delivery apps, Olo founder and CEO Noah Glass said.\u00a0<\/p>\n
Olo will also share the order data with restaurants, which is intended to give brands more insight on their customers and also allow them to communicate with customers who agree to receive marketing.<\/p>\n
Customers will be able to curate the app to their liking, creating a list of \u201cfollowed\u201d brands that always show up first. Otherwise, restaurants will be ranked based on their distance from the user.\u00a0<\/p>\n
\u201cIt’s really a first principle of the Olo App that it’s not going to be algorithmic,\u201d Glass said in an interview. \u201cIt\u2019s going to be purely based on a guest curating their own experience based on their preferences for brands that they like and want to follow, or based on their own geographic travel and discovery.\u201d<\/p>\n
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The app will initially feature about 250 brands.<\/p>\n
New York-based Olo is perhaps one of the few restaurant tech companies that could realistically take on third-party delivery apps. Founded in 2005, the company helped pioneer the concept of using a cellphone to order ahead from a restaurant. That evolved into online ordering, third-party delivery order integration, payments, and other services. Along the way, Olo has amassed a large customer base of chains including Shake Shack, Sweetgreen, Noodles, Five Guys, and Panda Express.<\/p>\n
In other words, it has the infrastructure to power an ordering app, and the restaurants to populate it. It will launch with over 250 brands covering 20,000 locations, and the hope is that all 800-plus Olo customers and 90,000 storefronts will eventually come aboard, Glass said. It also plans to start adding non-Olo clients, including local restaurants, to the app starting as early as the first quarter of next year.<\/p>\n
The bigger challenge will be getting consumers to use the app. Olo is widely recognized in the restaurant industry, but is not well known among diners. And tens of millions of consumers are already loyal to DoorDash, Uber Eats, or Grubhub.\u00a0\u00a0<\/p>\n
\u201cWe\u2019ve seen other versions of consumer marketplaces that compete with DoorDash, etc., and they haven\u2019t worked,\u201d said Anna Tauzin, fractional CMO of Naf Naf Grill, which will be available on the Olo App. \u201cThe consumer\u2019s mind is awfully hard to change.\u201d\u00a0<\/p>\n
Still, she said, if the app can bring restaurants even a fraction of new sales, it will be a win for the industry.\u00a0<\/p>\n
And Olo believes it has a good head start on attracting users. More than 40 million consumers have created an account with Olo to order from an Olo restaurant. They will soon be getting emails with the message: \u201cNever heard of Olo? You\u2019ve already used it.\u201d\u00a0<\/p>\n
Glass added that Olo\u2019s goal is not to pry customers away from third-party delivery apps, but rather to appeal to those who are seeking an alternative.\u00a0<\/p>\n
\u201cIt’s really about guests who are finding a first-party [ordering] experience to be a high-friction experience, to download a new app, create a new account, and [also] finding a third-party marketplace experience to be overly expensive, or to be very noisy,\u201d he said.<\/p>\n
Besides reaching out to Olo account holders, the company is also investing in PR, social media marketing, and influencer marketing campaigns to help spread the word.<\/p>\n
And even with the customer acquisition challenge, joining the app remains a fairly low-risk proposition for restaurants, said Kyle Mark, CIO of Woworks, a franchisor of fast-casual brands including SaladWorks and Frutta Bowls.\u00a0<\/p>\n
\u201cIt was a no-brainer when it was brought to us,\u201d Mark said. \u201cI think the potential for a high reward is higher than most people think. I think Olo, and Noah specifically, are very interested and have every reason to put everything they have behind this.\u201d\u00a0<\/p>\n
Operationally, adding the new ordering channel will not change much for Woworks: Olo App orders will come in like any other Olo order. And the best part is, they will be commission-free, Mark said.\u00a0<\/p>\n
\u201cCommissions through third party, DoorDash, Uber Eats, Grubhub \u2014 they kill the restaurant. They just seem to be going higher and higher every year,\u201d Mark said. \u201cThis completely turns that on its head.\u201d<\/p>\n
Even though the Olo App could pose a threat to the incumbent delivery apps, Glass said they have all agreed to continue acting as delivery providers for those orders. Olo does not have a courier network of its own, and relies on its Dispatch technology to route orders to third-party delivery workers.<\/p>\n
\u201cThe reality is, they are all competing with one another, and they are also competing for the hearts and minds and wallets of their delivery drivers, and it’s a benefit to have another source of demand and more liquidity from Olo,\u201d he said.\u00a0<\/p>\n