Exploring Online Models for Restaurants: Should You Use SaaS, Build Your Own, or Choose a Different Approach?

The path you choose to establish your online presence can greatly influence your success. This article explores three key models: Commission-Based platforms, Fixed Price models (including direct ordering), and Referral-Based services. We’ll also examine the decision between building your own online ordering system or using a SaaS platform, helping you determine the best approach for your restaurant.

The Business Models

1. Commission-Based Model

Overview:
Commission-based platforms such as Talabat, Deliveroo, Cari, and Jahez charge a percentage of each order as a fee. These platforms offer value in return for commissions typically in logistics and marketing. This model is favored for its low upfront costs and ease of entry into the online market.

Impact at Different Stages:

Depending on the stage it is in, here is how your business might be affected:

• Startup Phase: Ideal for new businesses with minimal upfront investment to acquire new customers and establish quick presence.
• Growth Phase: Increasing order volumes can lead to significant commission costs. Discovery becomes an issue as your brand’s freshness on the platform starts to wane. Increasing volumes to offset the costs becomes increasingly important.
• Maturity Phase: High commissions may eventually limit profit margins, especially for established businesses. Typically mature businesses see value in the logistics element, but are doing a lot of the heavy lifting on the marketing side. New customer acquisition goes down whilst repeat business increases.

Recommendation: Use this model if you want a low-risk, quick entry into the online market, especially when starting out. Maintain the option for new client acquisition at later stages whilst investing in lower-cost options – such as direct ordering – for repeat business.

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2. Fixed Price Model and Direct Ordering

Overview:
The fixed price model, used by platforms like Shopify, Ordable/, and Foodics, involves a flat fee for using software tools and services. Direct ordering allows customers to place orders directly through the restaurant’s platform, bypassing third-party services. These platforms typically offer much more flexibility in terms of functionality and cover a lot of the business operational needs. Using these platforms means that brands must invest to some degree in direct marketing and logistics to get full value from them.

Impact at Different Stages:

Depending on the stage it is in, here is how your business might be affected:

• Startup Phase: Requires an initial investment but offers full control over the customer experience.
• Growth Phase: As sales increase, the fixed cost becomes more manageable, leading to better profit margins.
• Maturity Phase: Consistent costs allow for better financial planning and scalability. The customer experience is superior and customer retention provides much higher margins.

Why Direct Ordering?

• Control Over the Customer Experience: You control your brand and customer interactions, leading to stronger customer relationships.
• Enhanced Profit Margins: Avoiding commission fees results in higher profitability as order volumes grow.
• Customer Loyalty: Direct ordering platforms facilitate personalized marketing and loyalty programs to boost customer retention.
• Flexibility and Customization: Manage your menu, pricing, and promotions in real-time, offering a tailored customer experience.

Recommendation: Choose this model if you want full control over your online presence and are ready to invest in long-term growth. Use this in tandem with commission-based models or use what you would pay in commissions for marketing to grow your customer base.

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3. Referral-Based Model

Overview:
Referral-based models, such as Cari, charge only for customers referred to your business. This model is cost-effective for acquiring new customers without significant upfront investment. These platforms tend to offer additional services such as marketing and logistics.

Impact at Different Stages:

Depending on the stage it is in, here is how your business might be affected:

• Startup Phase: A low-risk way to acquire new customers with no large upfront costs.
• Growth Phase: Costs scale with sales, aligning expenses with revenue. Acquisition becomes more difficult, but profitability from existing clients is very beneficial.
• Maturity Phase: Sustainable for continued customer acquisition, though dependent on referral quality. The model becomes a disincentive as the platform itself grows, you no longer acquire a bigger market share, and platforms are incentivized to send existing clients to different brands.

Recommendation: Consider this model if you’re looking to supplement other strategies with a cost-effective, low-risk customer acquisition method.

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Should You Build Your Own Online Ordering System or Use SaaS?

Building Your Own:

Advantages:

• Complete Control: Tailor every aspect of your platform to meet your specific needs and brand identity.
• Scalability: A custom system can grow with your business, adapting to new challenges and opportunities.
• Data Ownership: Full control over customer data enables advanced analytics and personalized marketing.

Disadvantages:

• High Costs: Developing and maintaining a custom system is very expensive and time-consuming.
• Costs Scale Poorly: As your business grows, your costs can grow disproportionately.
• Technical Expertise Required: Significant technical knowledge is needed to build and support a custom platform.

Recommendation: Build your own system if you have the resources and desire for a fully customized solution that offers complete control and scalability.

Using SaaS:

Advantages:

• Lower Costs: SaaS platforms offer an affordable, predictable pricing model with minimal upfront investment.
• Quick Deployment: These platforms allow you to launch your online ordering system quickly and efficiently.
• Ease of Use: Designed for non-technical users, SaaS platforms handle the technical aspects, including updates and security.

Disadvantages:

• Limited Customization: SaaS platforms may not fully meet all your specific needs.
• Platform Dependency: You rely on the SaaS provider for updates, security, and data management.

Recommendation: Use a SaaS platform if you need a quick, cost-effective solution with minimal technical involvement. Particularly, use local SaaS platforms that have adapted their services to the needs of the markets you are in.

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Summary Table: Online Models for Restaurants

Criteria	Commission-Based	Fixed Price (Direct Ordering)	Referral-Based
Examples	Talabat, Deliveroo, UberEats	Shopify, Ordable/, Foodics	Cari
Cost Structure	Percentage of each order (15%-30%)	Flat monthly/annual fee	Pay per referred customer
Impact at Startup Phase	Low upfront cost, easy to get started	Requires initial investment, more control	Cost-effective customer acquisition
Impact at Growth Phase	Increasing orders lead to higher commission costs	Fixed cost becomes more manageable, scalable	Costs align with revenue, scalable
Impact at Maturity Phase	High commissions may limit profit margins	Consistent costs, better for long-term planning	Sustainable, but dependent on referral quality
Advantages	– Ease of entry – Access to large customer base – Flexibility (pay as you go)	– Cost control – Full control over brand – Scalability	– Cost-efficient – Targeted growth – Low risk
Disadvantages	– High costs – Dependence on platform – Limited branding	– Upfront cost – Requires technical know-how – Marketing effort required	– Limited reach – Dependency on referral partner – Variable referral quality
Best for	New businesses looking to minimize upfront costs	Businesses seeking solid growth, control, and scalability	Businesses focused on low-risk customer acquisition
Use Case	Quick entry into online market	Long-term growth and brand control	Supplementing other models
Should You Combine?	Often combined with fixed or referral models	Can be combined with both models	Best when used alongside fixed

Conclusion

Taking your restaurant online is a vital step, and choosing the right model can significantly influence your success. Whether you opt for a commission-based, fixed-price, or referral-based model—or decide between building your own system or using a SaaS platform—each approach has its own advantages and challenges. By carefully considering your business’s needs, resources, and long-term goals, you can select the best strategy to achieve lasting success in the online space.