I asked my cashier at a pizza place yesterday if the lines were always so bad at 6 p.m. She said, “Yeah, people love our pizza. It’s totally overwhelming, though. We just can’t keep up with everyone coming in. At least we can turn off our online orders, so we don’t have quite as much pressure.”
Digital players call this practice “throttling.” During peak demand times, restaurant managers, and sometimes even hourly employees, can choose to turn off digital channels to focus on the customers in front of them. Many restaurant chains actually encourage this behavior, training a hierarchy for customer service. If you get busy, the thinking goes, turn off the lowest-margin channels first: Perhaps the third-party marketplace your restaurant does not have a preferred agreement with, then the other third parties. If things get really bad, some go so far as to say, turn off the first-party channel and let the restaurant focus on guests walking in the door.
How does throttling affect consumers?
The biggest challenge with this approach is how it feels from a consumer perspective. When a restaurant gets busy, or the drive-thru line gets long, restaurants don’t lock the doors or put orange cones in the parking lot. Consumers might drive past, see the line, and “balk” at the wait (balk rate is the percent of potential consumers who choose not to enter the line), but that choice is the consumer’s, not the restaurant’s.
Closing the digital doors prevents the consumer from seeing the digital line. The choice to wait or to balk is no longer the consumer’s. In fact, the consumer does not even know the restaurant exists. A throttled digital restaurant will not come up in a consumer’s third-party marketplace search. If the consumer has never chosen the restaurant before, the restaurant is missing a prime opportunity for awareness-building and that all-important first trial. If the consumer has chosen the restaurant previously, suddenly the restaurant is gone. Did it go out of business? Move? The consumer may not even pause to wonder before choosing another place and building a habit elsewhere.
Imagine a food court at a premium, class A mall. Your restaurant has paid a fortune in rent to be at this mall because traffic counts are high and the demographic matches your target perfectly. It’s expensive, yes, but you see it partially as a marketing cost — getting your brand in front of a large number of the right people for you. Now imagine that every once in a while at lunch during peak hour when you aren’t there, an employee closes the restaurant and takes the sign down. You would never do this in the brick-and-mortar world. So why would you do it in the digital world?
How can throttling affect off-peak demand?
The second challenge with throttling is that employees can get so busy that they forget to turn the digital channels back on. When 2 p.m. rolls around, demand falls off a cliff, hurried consumers are no longer streaming in the physical door, and digital demand would sure fill in the valley right now — but wait: no orders are coming in. Today, most systems require that the employee who made the active decision to shut down digital demand also must make an active decision to turn it back on. Even without meaning to, a well-intentioned employee, following the customer service training, might get so distracted by dinner prep that they completely forget to switch on the third-party channels.
Don’t believe this happens? Spot check your restaurants on the platforms around 1:15 p.m. and see how many of them are offering third-party delivery.
What long-term effects can throttling have on your digital business?
Every consumer’s session on a third-party platform is different. It’s different from mine, from yours, and from another consumer’s. It’s also different each time an individual consumer goes on the app, depending on time of day, previous orders, geographic location, sponsored listings, promotional offers, click rates, order conversion rates, and — importantly! — availability. Just like no two consumers’ Amazon home pages are alike, so too are no two consumers’ DoorDash sessions.
Turning off your restaurant’s digital storefront, even for 15 minutes once a week, can train the algorithms unproductively for your business. Most obviously, if your restaurant isn’t there, it isn’t getting clicks or orders. The lack of this positive consumer feedback trains the algorithms that your restaurant isn’t as popular as a restaurant that is open and getting clicks. Algorithms are impersonal. They don’t care why something is happening, only that something is (or is not) happening.
Worse, turn off long enough or often enough, and the algorithm’s operational metrics will start to punish your restaurant’s results. The algorithm, again, impersonally, will measure each restaurant’s availability rates, order cancellation rates, late order deliveries, overall order-to-delivery times, and consumer ratings to determine how high the system should prioritize showing a particular brand to a consumer.
What’s a restaurant to do? Is it worse to be unavailable or to be late? Each platform’s algorithms are different, and the platforms are updating them constantly. So while it is obviously better to execute perfectly every time, when a restaurant can’t, the best course of action may change over time. Being available matters. Keep your digital doors open.
What are the alternatives to throttling?
The best alternative to throttling is increasing the capacity and throughput of your restaurant. Through work redesign, a restaurant can handle more orders at peak hour than it ever thought possible. Working with firms like Service Physics to optimize restaurant processes, kitchen equipment layout, and labor allocation can take what looks like a maxed-out kitchen and create the ability to output more meals.
Technology solutions to these challenges are coming. Nextbite’s Ordermark, the online order aggregator, for example, has an “auto-on” feature that turns the platforms back on without employee intervention after the pause period ends.This solution prevents employees from forgetting to turn the online store back on after a rush. UberEats and DoorDash are working on similar features. Ordermark monitors and reports on store-level availability, so that operators can coach these stores on staffing, labor allocation, and the importance of the digital storefront.
Companies like Juicer and Sauce are bringing dynamic pricing to the restaurant industry, an idea borrowed from the travel industry. Dynamic pricing puts the choice back in the hands of the consumer — they can still order at peak, but it might cost more. Just like with air travel, a consumer can decide they value that time enough to pay a higher price, or they can take an alternative time and pay less. DoorDash is already experimenting with similar approaches, offering $ off incentives to consumers who will take a later delivery time when more drivers are available.
Yes, but do I really have to do this?
We often hear a love-hate relationship between restaurants and third parties. We can imagine many readers thinking to themselves, “What’s the big deal if my third-party sales are less than they could be? Maybe that’s a good thing?”
We could write an entire chapter about why this line of thinking is not helpful. (And we have!) Restaurants need first party AND third party sales.
Put yourself in your consumer’s shoes. In fact, imagine the last time you searched for something on Amazon and it was out of stock: What did you do? Maybe you were hoping for a particular brand or color. You needed the item. You didn’t have time to go to the store. You value free 2-day shipping. You just bought a different item. And now you’ve learned that the new brand is actually pretty OK. And it shows up in your order history to buy again. And maybe you’ve even forgotten all about the original brand you were shopping for.
Peak hour can be overwhelming. But don’t let your team close your digital doors to survive. Give them the tools they need to succeed.