As companies plan five year models, user-generated revenues should be part of the mix. AllMenus.com (owned by Dot Menus, Inc.) incorporates a field-tested online ordering services for restaurant and has recently signed up with two major dailies.
Pat Scanlon, Director of Interactive at Post-Gazette.com, advocates building UG revenues as an annuity that can replace classifieds. After a cost/benefit analysis his team scrapped their restaurant section to go with Allmenus in January, the first newspaper site to do so.
As a full partner, AllMenus will compile 80 to 90% of restaurant menus in the area for content on the site - a number that runs into the thousands - and then offer online ordering as a service to restaurants who deliver (a few restaurants use the software for take-out but the vast majority is delivery).
As of October, 2010, Scanlon said the Allmenus partnership is off to a slow start in Pittsburgh - the target is six figures in revenues - but that he considers it worth the wait.
Allmenus CRO Anthony Wills estimates that a market the size of Pittsburgh is ultimately “worth” about 50,000 orders a month (think 10% of an average $10 plus order, split roughly 50/50 with the partner). He bases this estimate on metrics from Allmenus’ sister site, Campusfood, a mature company which has been providing online ordering of food around university campuses for years (campus markets are “carved out” of the AllMenus partnership).
Campusfood.com currently takes about 24,000 orders monthly for 90 restaurants around Pittsburgh's four campuses, he said. The student market is ideal - most students don't cook - but there is no reason that the larger area with more delivery should not be as profitable long term.
According to CrunchBase AllMenus.com has 240,000+ restaurant menus in the database;and Campusfood ordering is available at 340 universities.
Scanlon says the biggest surprise so far is the number of 50% off Dining Deals orders and number of multiple orders.
The platform has a clean interface that looks like a directory of menus; featured restaurants go to the top and the system allows online ordering, delivery, open table reservations and discounts on in-restaurant dining.
In major markets Wills’ own sales team acquires restaurants for the program. The role of the media partner site is to “integrate [Allmenus functionality] completely in the primary site navigation” and to run advertising and widgets for online orders and dining deals throughout the site.
In small markets Wills doesn’t provide a team to develop restaurants but allows partners to use the collective database of menus and software, and develop online ordering customers directly through their own sales teams.
One company, The Leader Telegram.com has licensed the software for a fee simply to have menus as content for their own dining channel.
The revenue share is determined, Wills says, ‘by who does what to who,” ie how much of the development work is done locally.
So, given the co-branding instead of white label requirement, is Allmenus a friend or frenemy? One way to assess a technology partner is to ask 'Does it provide a valuable service that media companies cannot adequately address on their own? ' and is it exclusive by market? The same holds for user-generated partners and in this case the answer in most cases is yes and yes.
While some alternative partnerships exist that may allow white labeling (we have not found any) there is value in the years of testing the e-commerce process and how to acquire repeat customers. Allmenus is not a tech start-up, rather it has been engaged in online ordering since 1997 and served 3 million orders by 2008.
In addition to its software, all Allenus is an expert in marketing to people who order online and helping them create a habit. Internal metrics show that once someone has ordered three times they will order 24 times annually, so “The key is getting someone to order at least three times, using email blasts and discounting. Then we have an annuity that starts to build,” Wills says.
Wills says the best markets are urban areas with higher density levels, and more restaurants per block. Cold weather markets do a little better than warmer weather. A blizzard for example will increase ordering volume by 30%. The key demographic is slightly young, upwardly mobile, so an educated and more stable market like Chicago is better than a depressed area like Las Vegas.
While Campusfood.com took on campus restaurants as a standalone pureplay, Wills says Allmenus.com will rely on media partners with a trusted brand and sales force to make signing up local restaurants easier.
“We are not keen on walking into a market and doing it ourselves. A media partner brand expedites restaurant acquisitions,” Wills says.
He also has a tendency to say things publishers may not want to hear, which can be a good reason to listen.
“Most of those restaurants with local brand have been priced out or lost confidence (in advertising). The pay-for-performance model gives them the opportunity to reengage in that brand and allows the publisher to get their foot in the door,” he says.
Fears that advertisers will simply migrate online - a major resistance point for newspaper companies - don't really seem applicable. The target is a very small slice - restaurants who deliver - and online ordering gives them a new reason to advertise, especially online where the "click" from a discount goes directly to the order page.
"There is no migration of businesses deciding, 'I’m going to stop advertising in print and online order'. We can show that once a restaurant has online ordering capability it makes their print ad more effective," Wills told me.
We think there is value in the ability to build an annuity from online ordering and are recommending this partnership, especially in high density restaurant markets. While print companies have the "feet on the street" advantage in helping acquire restaurants, there is no reason why this model can't work for any local media company with significant traffic online and offline audiences.
The author, Alisa Cromer is publisher of a variety of online media, including LocalMediaInsider and MediaExecsTech, developed while on a fellowship with the Reynolds Journalism Institute and which has evolved into a leading marketing company for media technology start-ups. In 2017 she founded Worldstir.com, an online magazine, to showcases perspectives from around the world on new topic each month, translated from and to the top five languages in the world.
1 comment on this item Please log in to comment by clicking here
Tuesday, November 2, 2010 Report this