Outside Insights | October 2013 | By Laura Radewald

Can Mobile Payments Wait?

How to tell if mobile payments are right for your quick serve now.

Mobile payment programs can help fast food restaurants appeal to customers.
Mobile payment programs like LevelUp can help quick-serve operators appeal to customers. Level Up
Bookmark/Share this post with:
Email this story Email this story
Printer-friendly versionPrinter-friendly version

With technology and purchase behaviors changing rapidly, quick serves are feeling pressure to adopt mobile payments. I’ve participated in several conversations and industry events focused on mobile payments, and have noticed that along with feeling pressure, operators are confused. Is the mobile payment space just a fad? Will a winning solution ever emerge? As a result of this uncertainty, most have decided to take the wait-and-see approach, intending to adopt mobile payment as soon as it hits the mainstream or one mobile payment solution wins out.

I think this is the wrong approach for many quick serves. As the CMO of Dunn Bros Coffee, an 80-location brand that recently launched a mobile payment and loyalty app built by LevelUp, I believe that for some operators, offering mobile payments is imperative.

Quick serves with a mobile payment and loyalty app have experienced more frequent visits from customers who use the app to pay.

Here is a checklist to help determine whether your restaurant needs to jump into mobile payments now or can wait a year or two. The list was developed with input from other quick-service executives, all of whom agree: If your restaurant meets the following qualifications, waiting to adopt mobile payments could be detrimental to your business.

Your restaurant relies on repeat customers

Many quick serves offer something their customers consume on a daily basis, like coffee, doughnuts, or smoothies. When you rely on a high purchase frequency, it’s important to make your brand a part of your customers’ daily routine. But winning a customer’s purchase every day, or even every week, isn’t easy. With several competing restaurants in every square mile, quick serves have to give consumers a reason to visit.

While a mobile-payment program itself might not motivate a visit, a loyalty program seamlessly integrated into a mobile payments app will. Quick serves with a mobile payment and loyalty app have experienced more frequent visits from customers who use the app to pay.

Your category is commoditizing

Nearly every category in the quick-service industry is on the path to commoditization, with some brands getting there faster than others. Categories with a plethora of national competitors are commoditizing most rapidly, including coffee. Of course, the greater degree of commoditization, the more important it is to differentiate.

Mobile payments can be an important point of differentiation. When you put a branded app right into the customer’s hand, you enable a far deeper relationship with customers. Changing the relationship you have with customers is extremely important when you’re in a category full of competitors.

You want to appeal to a younger crowd

Millennials interact with technology nearly 24/7. As natural adopters of the latest tech trends, they expect their favorite restaurants to be as cutting edge as they are, providing options that cater to their digital lifestyles.

While not every quick serve is looking to appeal to a younger crowd, those that are find that mobile payments are a strategic imperative for staying relevant with that demographic. For brands targeting Millennials, waiting for a mobile payments solution to win isn’t a viable option. Young consumers are seeking places that let them use the technology they love, so the first quick serve in a category to provide this experience will have a lock on younger consumers. By the time a “winner” emerges in the mobile payments space, it may be too late to capture Millennials’ attention.

Your customers are in a hurry

If your brand caters to a crowd that’s always in a rush, mobile payments are a great way to improve your customer experience. As a coffee company, Dunn Bros is familiar with lines and rushed customers, so it’s not surprising that a recent study showed location is a primary factor in the coffee purchase decision. Since building a restaurant every block isn’t an option for most, it’s important to give fickle customers a reason to go a few extra blocks. Paying with a mobile app is faster than paying with credit cards or cash, so when a customer is deciding between your location and one closer in proximity, a faster payment method, especially one that rewards loyalty, will likely be the deciding factor.

If your quick serve meets all, or even some, of these qualifications, I believe it’s imperative you develop a mobile payment strategy now. Many will wait for a winning mobile payment solution to emerge, but for some, doing so may jeopardize the future of their business.

Laura Radewald is the chief marketing officer of Dunn Bros Coffee.