Olo launched a nationwide consumer app for restaurant pickup and delivery, letting people order from more than 250 brands, including Five Guys, Waffle House and Dave’s Hot Chicken, at the same prices they’d pay in the store. Unlike DoorDash, Uber Eats, and Grubhub, which take a 15% to 30% commission on every delivery order that many restaurants cover by raising their prices on those apps, Olo doesn’t take a commission from restaurants. It instead charges customers a flat 5% fee on the order, plus delivery when a third-party courier brings the food.
Quick History About Olo: The company launched in 2005 as GoMobo, letting people pre-order coffee by text message so they could skip the line, and later pivoted into offering ordering software that restaurants could use on their own websites and apps, instead of passing their customers to third-party ordering apps. I was sold on the concept from day one, bought a bunch of stock in Olo at $31 a share just after its 2021 IPO, which subsequently tanked, and then Thoma Bravo took the company private last year at $10.25 per share, so I never got to experience the upside of my investment. I’m secretly still rooting for them though.
Who delivers the food when you order through Olo?
Even though Olo itself isn’t taking a commission from restaurants, aren’t DoorDash, Uber Eats, and other delivery apps getting their slice either way by delivering the food?
Olo’s Dispatch tool pulls quotes from the delivery services available to each restaurant and picks the best one, so the driver often still comes from DoorDash or Uber through their white-label services, DoorDash Drive and Uber Direct, or from the restaurant’s own staff. So yes, DoorDash and Uber still get paid in some cases, but through a delivery fee rather than a 15% to 30% cut of the order, and without the menu markups. Olo also opens the door for other delivery services to compete against those major players for delivery of the order.
More than 800 restaurant companies already use Olo’s software to take orders on their own websites and apps, and Olo wants to eventually bring every one of them onto the new app, along with restaurants that aren’t customers, meaning restaurants won’t have to use Olo’s ordering system to connect their menus and sell through its app.
It’s about time that someone knocked these delivery apps off their pedestal.
I’ve been a proponent of a direct-to-restaurant solution for years, as it’s unfortunate what Uber Eats, DoorDash, and the other delivery apps have done to the cost of restaurant delivery. Back in my day, you’d just call the restaurant directly and they’d send their guy. Now, some rando delivers your food, eats some of your fries, and takes a sip of your drink, and you pay a premium for it.
Will Olo be the disruptor that the industry needs? It’s certainly got the technology and the financial backing to do so. Now we’ll just see how they execute.
