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QSRs falter on mobile loyalty without ordering integrationBy
While quick-service restaurants including McDonald’s, Arby’s and Wendy’s invest heavier into mobile with loyalty-based programs, challenges around in-store infrastructures that are not set up for digital are stalling investments for ordering, an area that pizza chains are already dominating.
In the past year, more big casual dining and fast-food chains have been pushing into mobile to primarily incentivize users with rewards and loyalty for coming into stores. On the other hand, Domino’s, Pizza Hut and Papa John’s continue to tout mobile and digital ordering as some of their biggest digital efforts on the ordering front.
“Online ordering started in the pizza segment as a superior alternative to call-in ordering,” said Noah Glass, CEO/founder of OLO Online Ordering, New York.
“Pizza restaurants already had a high-volume of to-go orders, so it was natural for them to start using alternatives first, and mobile orders have skyrocketed as Web traffic shifted to mobile,” he said.
“For other restaurant chains, mobile ordering has broader potential to reimagine the in-restaurant dining and takeout experience at all restaurants because the device is always with you. But this is a new routine behavior change and more fundamental for restaurants like fast casual who relied on the cashier order. It will naturally take longer and have a larger impact when the shift happens.”
Pay on mobile
While mobile for loyalty and payment purposes has been gaining steam among fast food giants, figuring out the ordering piece of mobile has been more difficult for marketers in revolutionizing the in-restaurant dining experience.
Last week, Starbucks revealed during its fiscal year 2013 results that 11 percent of transactions are currently coming from the brand’s popular mobile app, which is a slight increase from the ten percent that was announced earlier this year (see story).
While Starbucks continues to garner attention for its mobile payment program that tightly integrates loyalty to reward consumers with free drinks and food after using their mobile devices to make purchases, not many advancements are being made on the ordering functionalities that Starbucks has been promising consumers for a couple of years.
This suggests that while the loyalty piece remains a staple of Starbucks, other challenges around order-ahead and other interactive features could eventually hold back Starbucks with mobile.
For example, calculating how much bakery items are available in real-time is tough at the individual store level.
Additionally, the preparation of hot beverages is likely a challenge for Starbucks.
Similarly, McDonald’s is testing a few different mobile initiatives for both payments and driving loyalty at a local level, but the services lack mobile ordering (see story).
A recent email from Front Flip for a McDonald’s promotion
One QSR that seems to be headed in the right direction with mobile ordering is Chipotle. The brand’s mobile app lets consumers sign in with an account to place an order and checkout by entering the information off of a credit card.
Once consumers get to the store, they can skip the line and watch as their order is made.
Even though the order is not available right away, the app does significantly speed up the ordering process, giving consumers an upfront value for using mobile to order and pay.
“Loyalty identifies the high-value customers,” Mr. Glass said.
“Giving them the soft benefit of being able to have VIP skip the line service when they mobile order is the ultimate loyalty,” he said.
A slice of mobile
Compared to other areas of the quick-service food industry, the pizza chains have invested significantly in mobile over the years.
Domino’s, Pizza Hut and Papa John’s all heavily play up mobile ordering, but what makes these businesses different from other QSRs is their roots in ecommerce.
In most of these cases, mobile is simply an extension of existent desktop ordering, which is chipping into traditional phone orders as consumers rely more on digital devices to order food and manage their accounts.
In fact, 35 percent of Domino’s $2 billion in digital yearly orders come from mobile.
Similarly, Pizza Hut recently reported that 30 percent of orders are digital when the brand relaunched new apps and a site late last month (see story).
Pizza chains also have a unique angle with digital with simple and straight-forward menus compared to other types of businesses.
Essentially a customized pizza order is specific to individual consumers, but can be predicted whereas a chain such as Starbucks has a lengthy menu that can be difficult to serve up on a smaller-sized screen, according to Brian Stein, managing director at Pervasive Path, Cleveland, OH.
Take Domino’s iPad gaming app, for example. Consumers can spin their fingers across the screen to add items to a pizza to place an order.
The chain also has a pizza tracker that shows consumers who place digital orders the ability to see the progress of their pizza being made.
While many QSRs are trying to figure out the ordering piece of mobile, pizza chains are working on the loyalty component to drive repeat purchases across any screen that consumers have available to them.
“Whether ordering through a centralized call center, Web site or mobile application, the primary challenge is disseminating those orders to the store, tracking order delivery and then reconciling the cash flow between the centralized parent organization and the individual stores,” Mr. Stein said.
“The good news is that once that is done for one channel, assuming it was done correctly, it can then be re-used across future channels,” he said. “The restaurants that didn’t build out Web-based ordering are now struggling to catch up.”
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York
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