Trends in Online Ordering $OLO
Will a recession spell doom for third party food delivery services? It’s hard not to be discouraged by the near obscene costs of ordering from $UBER Eats or $DASH compared to ordering directly through the restaurant. Personally, I never use these services anymore because I pay almost double what it would cost to just go pick something up. Take-out culture is here to stay, so a recession could lead to a shake-up in how we choose to order food. Enter (or re-enter) direct ordering.
Direct Ordering Advantages:
- Up to 30% discount to 3rd party marketplaces
- Access to loyalty programs
- Data sharing for improved customer experience
- Greater insulation from market conditions relative to third party marketplaces
Can direct ordering SaaS platform $OLO actually benefit from a recession by taking market share? DoorDash and other third party delivery services seem to be positioned to struggle in a recessionary environment. On the other hand, direct ordering fills the need created by the take-out culture. It doesn’t feel like a stretch to suggest that this space could see some consolidation and shrinking competition as decreased consumer spending puts pressure on expensive luxury services.
You can read more about it here.
@dissectmarkets would be curious others thoughts. Kind of different businesses. Olo mainly focused on digital ordering for large franchises and has strong gross margins. Toast is more small business with a wider amount of solutions but smaller margins due to most revenue coming from financial services vesus subscription. They seemed to have stronger growth last quarter though
@dissectmarkets It’s not necessarily better. I think Toast is great too but they cater to SMBs and provide more of a total restaurant suite of products - lots of hardware connected with their software whereas Olo is all SaaS. Olo’s go to market strategy is more efficient too as they sell at the corporate level and effectively lock in a large number of locations with each deal they make. Toast can certainly make waves in online ordering but their customer base is more at risk in a slowdown.