Olo's New Delivery App Drops the Menu Markups Hidden in Your Takeout

Place an order for a burrito bowl on a delivery app and you take the delivery and service fees as a given. What you probably do not expect is that the bowl itself costs more than it would at the counter. That hidden markup is the quiet tax of dining via an app, and most people never count on it. On Tuesday a company most diners have never heard of put out a consumer app to put an end to it.

Olo is the company behind the new Olo App, which went live across the country on iOS and Android on Tuesday. It has more than 250 restaurant brands on board, menu prices in line with the store and a flat 5 percent fee. The name may not ring a bell, but there is every likelihood you have used its software anyway.

What Olo Launched

The free app handles pickup and delivery orders from many restaurants in one spot. Waffle House, Five Guys, Noodles & Company, First Watch, Dave's Hot Chicken, Del Taco, Charley's Cheesesteaks, Krystal, Shipley Do-Nuts, Nekter Juice Bar, Din Tai Fung, Frank Pepe Pizzeria Napoletana and Hawkers Asian Street Food are among the launch partners, and Olo says others are coming on board daily.

The whole thing is meant to be simple. Follow the restaurants you like and they come to the top of your feed; a map tells you what is nearby. Reordering is quicker thanks to saved addresses and payment details. There are no ads or sponsored listings in the feed, a marked contrast to the big marketplaces, where paid placement dictates what is seen first. At checkout you can round up the total to the next dollar for No Kid Hungry, Share Our Strength's campaign against childhood hunger.

Restaurant operators got a preview of the app in March, and Olo's existing restaurant customers had a beta run of it before this week's public release. In time the company intends to open the app to restaurants that do not do business with Olo.

How the Pricing Works

The pitch rests on a single change in who pays. By Olo's reckoning, restaurants on the large delivery marketplaces pay 15 to 30 percent in commission on every delivery order, and many hike their app menu prices to make up for it. Olo does not charge restaurants a commission on orders from its app, which leaves them no reason to inflate the menu.

Instead, Olo charges the customer a 5 percent fee on each order. Delivery orders still carry a delivery fee and are run by third-party couriers that Olo links to the restaurant, while pickup orders carry no delivery charge at all. Olo says dropping the pass-through markups saves 15 to 30 percent per menu item, though the amount depends on the restaurant and the order.

To show how little diners know about these markups, the company commissioned a survey of 1,010 U.S. adults in mid-October. The results were telling: 74 percent expect delivery fees, but just 27 percent expect menu items to be pricier on a third-party app. Some 96 percent of app users said they would change at least one ordering habit once made aware of possible markups.

The Company You Have Already Used

"Never heard of Olo? You've already used it." The company's marketing line for the launch is not an exaggeration. Noah Glass founded Olo in 2005 as a text-message ordering service for coffee shops, long before the iPhone came along. From those beginnings it has become the software working behind the scenes to run online orders on the websites, apps and kiosks of many a chain. By Olo's count, the company works with more than 800 brands at some 90,000 locations, fielding more than 3.5 million orders a day and reaching more than 100 million unique customers a year.

After going public in 2021, Olo was taken private by the private equity firm Thoma Bravo last year in a deal worth about $2 billion. That gives the new app an advantage most consumer apps do not have: a head start from Olo Accounts, the shared login system that already ties together some 40 million guests at participating restaurants.

"More than 20 years ago, Olo was born out of a simple idea," Glass said in the company's announcement. "What if you could order and pay for a coffee from your phone and have it ready when you arrived?" He called the app "the next chapter of that vision" and "a better experience for consumers and a more sustainable model for restaurants."

What Restaurants Get Out of It

The attraction for restaurants is not limited to the missing commission. Because Olo App orders are processed on the same systems a restaurant already uses for its own digital orders, there is no need to put another tablet on the counter or train staff on something new. The app also gives restaurants data on orders that the marketplaces would normally hold on to, and it is left to the customer to decide how far the restaurant can go with that information for marketing.

Olo presents the app as an addition to a restaurant's own app, not a substitute. It is meant for the occasional patron who is never going to put a dedicated app on their phone for a sandwich shop they visit twice a year, yet will order if the shop shows up in one app where their card and address are already stored.

"Ordering food should be simple for guests and fair for the restaurants that serve them," Corey Kline, executive vice president of technology at Noodles & Company, said in the launch announcement. He added that the app lets the chain reach guests "while preserving our direct relationship with them rather than routing orders through higher-commission marketplaces."

Can a Commission-Free App Change How America Orders Dinner?

The prospects are real. Olo is not starting from scratch: it already handles orders for some of the country's biggest chains and holds tens of millions of stored accounts, and its restaurant clients have every reason to promote a channel that does not take a cut. If even a portion of the people who order directly from chains turn to one app to browse them all, Olo could occupy the space between a restaurant's own app and the major marketplaces. For diners, the first thing to notice may simply be price transparency, and the reminder that the figure on the app menu is not always the one on the wall.

Then there are the concerns, starting with habit. DoorDash and Uber Eats are part of the daily routine for many people, tied into memberships and stocked with independent restaurants that Olo's chain-heavy network has yet to sign. Delivery is also costly no matter which app you use. Couriers still have to be paid, so an Olo delivery order will still carry a fee and a tip, and the savings will be clearest on pickup. Many of the headline figures, from the 15 to 30 percent markups to the account numbers, are Olo's own and have not been independently verified.

Markups themselves are open to fair debate. The marketplaces argue that restaurants set their own prices on their platforms and that commissions pay for marketing, customer acquisition and delivery networks a single restaurant could not build on its own. Critics, including city governments in San Francisco and New York that have capped delivery commissions, counter that the fees erode thin restaurant margins and quietly pass costs on to the customer. Olo is wagering that a lighter fee the customer pays in the open is better for everyone than a heavier one hidden in the menu.

The signals to watch are concrete. Will the brand list grow quickly past 250 and begin to add independent restaurants? Will the big marketplaces answer with lower commissions or clearer pricing? Once tips and fees are added, do delivery totals on Olo actually come in below the competition? And as more ordering shifts to AI assistants, does Olo's network become the plumbing that lets those assistants place orders with restaurants directly?

When the Bots Come to Order

That last question is one we have been following at Sparknify. Our piece No Agents Allowed looked at how banks, airlines and retailers are barring AI agents from the web even as tech companies promise that those agents will do our shopping for us. Olo is going the other way. It describes its network as a way for restaurants to sell through new channels, AI assistants included, without giving up their margins or ceding control of the customer relationship. Whoever holds the link between hungry people and the kitchens that feed them will help set the price of dinner, whether a bot or a human places the order.

So the next time you order takeout, you may want to check what they charge at the counter first.

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