Even after its first day on the New York Stock Exchange (NYSE) wrapped Wednesday (March 17), as the company watched its initial share price go from $25 to a session-ending $33 for a valuation north of $4.6 billion, Founder and CEO Noah Glass knew enough not to claim victory. Anyone who has been intimately involved with the restaurant business over the past year knows that volatility is something to be prepared for, regardless of what the market says.
For Olo’s product innovation plans, this was a “tear up the roadmap” moment, Glass said, taking time in between monitoring Day One of the company’s stock trading to speak with PYMNTS CEO Karen Webster. While the company processed 500 million transactions during the year, Glass is far from resting on his laurels.
He noted, “we have a segment of the industry in the enterprise restaurant segment that touches 40 billion transactions every year…We have an implicit 80 times opportunity to grow and scale, and realize that ambition of not just touching the off-premise transactions, but all of the transactions.”
After expanding off-premise and outdoor dining technologies due to the pandemic in the last year, Glass and Olo are now turning attention back to providing in-restaurant solutions as vaccines roll out and the post-pandemic future begins to come into view.
“We’ve always imagined that, at some point in the future, consumers would want the ability to make a reservation and order at the same time or be waiting for a table to open up and place an order at the same time,” Glass said. “…I feel like we’re getting pulled into that sort of opportunity as restaurants reopen. It’s really by restaurants with limited capacity and also the family dining segment … saying, ‘My business lives and dies by Saturday and Sunday morning. I need to turn those tables quickly.’”
So, in the future, we will likely see expanded order-ahead restaurant features provided by restaurants using Olo’s platform. For restaurants rebuilding in the next year or so from the difficult events of 2020, this may provide a chance to operate more efficiently and cut back on extraneous cost. In Glass’s words, these changes will “cut down all that dwell time” that does not make restaurants any money.
Owning The Relationship
Olo’s solutions provide restaurants with the opportunity to own their transactions. For one thing, these transactions are more cost-effective for restaurants than using meal aggregators. Olo’s “transactional stats model,” which includes a subscription fee and a small transaction fee, is, by Glass’ calculation, a far more viable option for restaurants than aggregators’ 20 percent to 30 percent cut, “which is just untenable.” For another, Olo allows restaurants to “own that direct-to-consumer relationship.”
“Our restaurant brands want to know who their consumer is so that they can provide them with a better experience,” Glass said. “They can provide digital hospitality, they can provide greater personalization … And I think there’s a tremendous opportunity ahead of us to help with that sort of thing.”
These direct channels allow restaurants to remain consumers’ main point of contact and to build deeper relationships with their customers.
Glass reflected, “It stems from the restaurant saying, ‘I’m going to build a vibrant, direct-to-consumer channel, and I’m going to … use the marketplaces as an acquisition channel, not let the marketplaces use me as the acquisition channel.’”
The Network Effect
“We really think about Olo being in the center of a two-sided network,” Glass explained. “On one side of it is all of the restaurants that are exclusively working with Olo as their digital order provider … and on the other side is all of the technology partners that want to work with those restaurants.”
He added that this model allows Olo’s partners to see the benefits of each new partner that the company adds.
“Adding a new restaurant accrues to the benefit of all of the partners on the other side of the ecosystem,” he explained. “Adding a new ecosystem partner accrues to the benefit of all the restaurants on the other side of the two-sided network.”
Additionally, Glass highlighted “affiliate networks,” non-marketplace networks that “don’t seek to own the transaction or own the customer data” as opportunities to “remove friction from the customer searching for a restaurant and transacting.” These networks, which intersect with consumers’ daily routines — Glass cited Google Maps and Sirius XM — provide opportunities for contextual commerce, marketing restaurants to consumers at moments in their day when they may be looking for a meal.
“We don’t have to reinvent the wheel,” he said. “We can just learn from the masters of a big SaaS ecosystem and ultimately keep our customer in our heart … What are the things that are going to add value to their ability to meet the needs of the on-demand consumer? And with that as our mantra, [we can] grow from here.”
Reflecting On A Tough Year
It hasn’t been an easy road for Olo. Glass described his reaction amid the first round of pandemic-related lockdowns, at which time he posed this question to his team: “What does the industry need from us now?”
From there, the company built out its curbside pickup options and its delivery capabilities, while also adapting on-premise dining options for restaurants looking to provide outdoor table service with contact-free features like QR code ordering.
One example of a successful pandemic-conscious restaurant solution powered by Olo, Glass cited, is MrBeast Burger, a virtual, delivery-only restaurant created by restaurant magnate Robert Earl in partnership with YouTube celebrity MrBeast.
“MrBeast Burger was this phenomenon,” Glass said. “It was through our partnership with Robert Earl and his restaurant portfolio. He said, ‘I’m doing this thing, virtual additional concepts. There’s a celebrity angle to it. I know you’ve never heard of him, but I’ll tell you, Mr. Beast is a big deal, 80 million followers, and we’re going to launch Mr. Beast burger on top of your platform, and we’re going to do it across 200 of our kitchens.’”
Olo was not expecting this to be a great success. Glass recalled, “We had just really low expectations — there were just no expectations for it. It was one of those things where, like, maybe this will be [an] interesting story at some point.”
The MrBeast Burger app became the No. 1 app on Apple’s App Store for a time, and the restaurant has processed over 1 million orders, all of which have come through Olo. In Glass’s summation, “It was just an incredible thing to witness.”