New York State has partnered with Ritual to provide restaurants with a subscription-based online ordering platform for free through the end of March or April 2021, depending on merchant participation. New York restaurants and dining establishments that join the Ritual ONE service will not pay credit card processing fees, pick-up or delivery fees, subscription fees or set-up fees until spring, reports Restaurant Business. Also, in February 2021, PayPal will contribute $1 million toward discounted purchases by customers at no cost to the businesses. This news comes on the heels of another round of indoor dining closures ordered by New York Gov. Andrew Cuomo, effective Monday, December 14.
The end of indoor dining (again)
Gov. Cuomo made the decision to close indoor dining to reduce the spread of the coronavirus which has been spiking in New York again. While the first doses of the COVID-19 vaccine have arrived across the United States, it will likely take weeks or months before any significant decreases are seen in the spread of the virus. The governor’s move to eliminate indoor dining temporarily is preemptive, though it will be devastating for most restaurants, many of whom may not recover from another closure.
“New York State is a global food capital and its world-class chefs, servers and staff have been among the COVID-19 pandemic's hardest-hit workforce during this global pandemic. It's critical that while restrictions are in place on how bars and restaurants can operate in order to protect the public health, we also open new opportunities to counteract the economic strain they face,” Governor Cuomo said in a statement.
“This latest piece of New York's Empire State Digital initiative will give these establishments an opportunity to expand their online businesses free of charge, with an added incentive that will encourage customers to continue supporting their favorite restaurants, bakeries and coffee shops. Restaurants support New Yorkers, and New York will continue to do what we can do to help support them, but now more than ever, it's critical for the federal government to do its part too and provide real relief for this critical industry,” added the governor.
Commission-free, subscription-based e-commerce platform
Unlike digital food ordering and delivery services like DoorDash and Uber Eats, Ritual does not charge participating restaurants a commission on dine-in service, or delivery and pick-up orders. Instead, the subscription-based platform charges a monthly fee of $49 per location after a free 30-day trial. Credit card processing fees are normally 2.8% + $0.20 per transaction, and set-up typically starts at $99. All fees will be waived through March 31, 2021. If at least 2,500 new merchants sign up (approximately 5% of New York’s restaurants), Ritual will extend the offer until April 30, 2021.
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Mutually beneficial relationship between Ritual and restaurants
As part of the partnership, participating restaurants will have access to their customers’ data to better understand their buying patterns and to market directly to them through automated marketing. Also, restaurants using the subscription-based platform will be included in a statewide marketing campaign as part of the program.
Unique features about the Ritual ONE platform are that restaurants can accept orders from customers without any special hardware, and the platform integrates directly with restaurants’ existing POS systems. The company provides 24/7 support for restaurants. Restaurants can accept touch-free payments via PayPal or Venmo. Restaurants that join the subscription-based platform through the Empire State Digital Initiative will not be charged processing fees on those payments, and they can opt out at any time.
To make it easier to attract customers, restaurants can accept orders through Instagram. Customers go to the restaurant’s profile page in Instagram and click on the new “Order Food” button to place orders. In addition, customers can order from participating restaurants through Facebook, Google Search, Google Maps and Assistant. The subscription-based platform makes customer retention easier too with a customizable Loyalty+ loyalty program where customers can earn digital stamps for their purchases.
“Gain new customers through social media ordering and retain them with a best-in-class loyalty and marketing program,” says Ritual on their website.
Restaurant Business says that Los Angeles and Toronto have similar arrangements with the UK-based Ritual technology company. Chicago uses a similar service called Tock which is offering restaurants in “impoverished areas” a free six-month subscription to try.
Ritual and PayPal CEOs comment
Ritual co-founder and CEO Ray Reddy commented on the partnership with New York State.
“As New York businesses adapt to changing customer needs, it's critical that they have a commission-free digital platform to keep everyone safe while profitably growing their businesses. Ritual's products enable all our favorite local restaurants, bakeries, and coffee shops with industry-leading technology to offer contactless ordering for pickup and delivery. We believe local businesses make our communities thrive and we are proud to partner with Governor Cuomo and PayPal to support New York,” Reddy said.
PayPal CEO Dan Schulman also shared why PayPal has joined the partnership.
“New York has been at the forefront of the COVID-19 pandemic and has shown incredible resolve and resiliency in the face of this unprecedented challenge. Small businesses have been deeply impacted throughout this crisis – and it is essential for the business community to work with the public sector to do what is necessary to help those who need it most. PayPal is proud to join with New York State and Ritual on this endeavor to support local small businesses,” Schulman said.
As the pandemic wears on, companies that are still in business are wearing out. Partnerships like this one may not breathe new life into every small business or restaurant in New York State, but hopefully, it will help. This is an ambitious but commendable partnership between the state, Ritual, PayPal and Venmo. The state gets to look like the good guy, Gov. Cuomo gets some positive press, and PayPal, Venmo and Ritual get visibility and new merchants to join their ranks. The subscription-based Ritual has a major opportunity to expand into a market that has huge potential for future growth. While they may be offering their technology at no cost on a short-term basis, they could potentially grow their customer base significantly which will increase their recurring revenue long-term.