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Branded vs. centralized ordering apps: Will Chipotle tip the scales?

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April 27, 2015

Chipotle is now enabling fans in 67 cities to have their mobile orders delivered

Chipotle is now enabling fans in 67 cities to have their mobile orders delivered

Chipotle has rolled out mobile-enabled delivery services for users of the Postmates application, following on the heels of Starbucks’ similar move, even as the latter also tests a branded solution, raising the question of whether consumers will prefer third-party or restaurants’ own mobile delivery offerings.

Consumers in the 67 cities currently included in on-demand delivery service Postmates’ offering may now pay for Chipotle orders via online and mobile platforms and have their items delivered to their door, making the chain one of the premiere fast food chains to roll out this feature. Centralized apps providing delivery options from hundreds of local restaurants have proven very popular with consumers, but there is likely to be an upswing in the number of branded apps offering similar services as restaurants’ mobile strategies become more sophisticated.

“Consumers are gravitating toward brand specific apps and centralized apps for different reasons,” said David Bray, founder of dbray Media, New York. “Customers have been using centralized apps for awhile – and are comfortable ordering through them.

“They have proven to bridge the gap from intent to purchase,” he said. “But as apps start to play a more integral role in a brand’s overall marketing strategy – and are being seamlessly integrated into the purchase experience, we’ll see an uptick in the use of brand-specific apps.”

Mobile commerce growing
Brands rolling out delivery options can expect to see their mcommerce revenue grow, as time-strapped consumers with little time to cook or grocery shop turn to mobile for their nutrition needs. The sheer convenience also adds to the attraction, especially if food can be delivered to office buildings during lunch hours or breaks.

“Mobile technologies have made customers demand convenience for the consumption – literally – of products (e.g., food),” Mr. Bray said. “Businesses in the food and beverage industry need to meet this demand by offering delivery ordering capabilities.

“Starbucks, has done this well, by meeting customers where they are in their day with both convenience and connection. Adoption rates of food delivery apps in major market cities are already significant,” he said.

delivery 420
Starbucks is planning to test two delivery options this year

On the heels of the Pacific Northwest launch of the Mobile Order and Pay feature, Starbucks will be testing a variety of delivery options this year (see story). The beverage brand is also teaming up with Postmates to enable fans to order products from the Starbucks app and have their items delivered within specific areas.

This option will be piloted in Seattle in the second half of the year.

Meanwhile, New York is set to be the testing location for the second service option: a “Green Apron” barista delivery feature that enables consumers in specific buildings to order items, which will be brought to them by a Starbucks barista.

Starbucks and Chipotle’s popularity with consumers will likely push the brands’ revenue even higher, although some experts believe that mobile users will still gravitate towards centralized apps and their plethora of dining choices.

“Analysts at Sterne Agee state that the U.S. online takeout category is equal to $70 billion a year, only 5 percent of which takes place online (in any form),” said Gabe Winslow, partner at Sq1, Dallas, TX. “Of that, GrubHub alone, holds more than 50 percent of the market share.

“So, brands will seek to move more of those takeout orders to online ordering, much of that will be done through their own sites and apps, however for takeout, I expect the majority of the industry to partner with the likes of GrubHub, Postmates, etc… as evidenced by Starbucks’ move.”

Uptick for both
From a consumer standpoint, having more options in a competitive space will be beneficial. Both centralized and branded order and delivery apps will likely be able to maintain their consumer base if the brand already had a strong following to begin with, as Starbucks and Chipotle do.

“The adoption rates will continue to grow and expand across all regions of the U.S.,” Mr. Bray said. “Mobile devices are being used by a majority of the population in the U.S.”

“And, mobile usage and the behaviors they create do not vary much on a geographic basis. Therefore, we can expect to see more and more businesses introduce and test new mobile delivery options on both the mobile Web and mobile apps.”

delivery other 420
With mobile ordering on the rise, Chipotle may see sales spike even more, thanks to its delivery option

Ultimately, food and beverage marketers are at a severe disadvantage if they do not begin rolling out delivery capabilities this year. If a marketer’s brand is not well-established, they may be well-poised to team up with a centralized app such as Seamless to reach a wider amount of consumers.

“Delivery options for food and beverage companies will open up that category to mobile commerce in a way that was not possible at all before, aside from to-go orders or reservations,” Sq1’s Mr. Winslow said.

“The more brands embrace mobile commerce as a tool, the faster they can move that 95 percent of take-out orders to digital and away from phone in, which will reduce labor hours in restaurant and increase customer satisfaction and ease.”

Final Take
Alex Samuely is an editorial assistant on Mobile Commerce Daily, New York

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Alex Samuely is staff writer on Mobile Commerce Daily, New York. Reach her at alex@mobilemarketer.com.

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