I shared this anecdote recently on LinkedIn. It was a lazy, rainy night, so I decided to order from a third-party vendor. About an hour later, I called the restaurant and the food was bagged, sitting on the counter. The driver never showed. In fact, I watched as the driver parked nearby and never moved. Did they get dinner? Go to a bar? I’ll never know. The vendor couldn’t get a hold of them and had no idea, either. My wife’s response: We’re never ordering from that restaurant again.
Not their fault, I replied. But, let be honest. How many times does this situation play out and the vendor gets blamed? It’s always the restaurant’s fault (even when it isn’t). I’m not trying to rail against the system. This is simply the reality of third-party dynamics. It’s a brave, bold incremental frontier. Yet there’s also significant give-and-take that shuffles down to three concerns for restaurant operators: The cost; the shadowy customer experience once the food leaves your door; and the data grab.
King-Casey, a pioneer in restaurant consulting, branding, and design founded in 1953, shared its annual predictions with QSR. Chief among them: What is the customer experience when it’s limited to the delivery guy showing up with your stuff?
That’s the question top quick-serves must try solve in 2019. Delivery, mobile ordering, and curbside pickup are accounting for an ever-growing number of transactions. As TDn2K’s latest Black Box report shows, to-go sales are approaching 9 percent, year-over-year in 2018. In the past two years, the number has been sub-4 percent. So it’s more than doubled in just one calendar turn.
“[Quick-service restaurants] that innovate will be able to differentiate their brands,” says Tom Cook, principal of King-Casey.
Off-premises isn’t turning off
Another TDn2K data point: Dine-in same-store sales have been negative in recent months. However, following November’s 1 percent lift across the industry, chains have achieved six straight months of positive growth. Minus a dip in May, every month since March has posted positive growth—a period of positivity unmatched for restaurants in more than three years. Where is the hike coming from? You can probably guess where this is going. According to TDn2K, it’s a boon tied to that doubling of off-premises business.
King-Casey draws the timeline. Historically, the customer experience revolved around dining in a restaurant (there wasn’t another choice). Then drive thrus took the country’s dining scene by storm. “Some brands, like Starbucks, worked hard to make the drive-thru experience similar to that in-store [the Starbucks video Barista]. Others paid little attention,” King-Casey says.
But now, we’re talking about a world where delivery, kiosks, mobile ordering, and pick-up are removing even more customers from the four-wall experience. This leaves a quick-serve asking, “How can we make these interactions memorable? How can they be used to differentiate our brand?”
Cook suggests starting with the order experience. “The QSR Magazine 2018 Drive-Thru Performance Study quoted a Taco Bell executive as saying the ‘No. 1 pain point in the process is at the order point,’” Cook says.
Two ways to relieve the pain: “First,” Cook says, “most customers are ordering from some form of a menuboard. Have these menuboards been created from a specific menu strategy developed by the brand? Are they easy to understand and navigate from the customer’s point of view? Do they feature high priority products in their ‘hot spots?”
If you can’t answer all of these questions affirmatively, your restaurant has room for improvement.
Second,” Cook adds, “while technology is great, you can’t forget the people part of the order experience. This may require spending more money on training, but it certainly seems like a worthwhile investment to industry leaders, such as Chick-fil-A, whose employees consistently lead the QSR Drive-Thru rankings in virtually every service attribute.”
A straightforward translation: It’s more important than ever to win the areas you can control. Customer service, and doing something as straightforward as making sure your employees say “please” and “thank you,” can make all the difference.
King-Casey’s predictions talk about the correlation between the quality of quick-serves and C-stores. There’s no question the relationship is evolving. The ancient hot dog and fried pocket roll-up thing aren’t what they used to be. C-stores like Sheetz and Wawa are offering products comparable to grocers. C-stores have often looked to quick-serves and their decades of experience for inspiration.
“The ‘grab-and-go category may put the shoe on the other foot,” King-Casey says. “These are high quality, freshly prepared food and beverage products packaged for easy pick-up and consumption, and they’re becoming a sales driver at savvy C-stores.”
Fast casuals, like Newk’s Eatery and its Express Market, are taking notice. Cook sees no reason Panera, McAlister’s, Schlotzsky’s, Jersey Mike’s, and Subway can’t follow suit. If you’ve got a product that moves, might as well package it up.
Look of the times
“NPD research recently reported that total eating occasions were down 3.9 percent since 2009, primarily due to an aging population,” Cook says. “Couple that with the move to off-premises consumption, and you need to figure out a new footprint for your store. For, example, you’ve got to add pick-up areas and probably reduce the size of your dining area because you have less customers in it.”
In pretty much every remodel touted these days, there’s some kind of pick-up feature. Chipotle’s implementing second make-lines and doing its best to advertise the to-go section. McAlister’s is looking at pick-up windows. This is a widespread reality and it’s not going to slow down. Why not take it up a notch?
“Or you can take it a step further and create a virtual restaurant or commissary,” Cook adds. In this instance, you prepare the food and have UberEats or another firm deliver it. Another variation on the “no restaurant” theme is being done by Chick-fil-A, which is developing a delivery-only store. The Nashville location has no dining room or drive thru—roughly 4,200 of its 5,800 square feet will be dedicated to the kitchen, which is more than double the size of a normal Chick-fil-A’s space. This will allow Chick-fil-A to serve an entire region and also free up its nearby units to focus on the in-store orders.
Grab the data
All of the aforementioned notes point to a hyper-competitive 2019 and beyond. “Yet, only a relatively small number of [quick-serves] are using all the data at their disposal to build their brands,” Cook says.
One example: point-of-sale data can give restaurants insight into customer behavior that will optimize a menuboard through proper product positioning and menu mix. You can go further by developing data-driven solutions that increase profits per transaction without negatively impacting customer buying patters and behavior. And on the tech wheel turns. One thing about this big data universe restaurants suddenly compete in is there’s a race to figure out how to optimize and sort through the numbers, and leverage that information to improve ROI. “The tools are there,” Cook says, “and innovative companies will use them.”
This coming year, there will be no shortage of opportunities. And now is the time to turn those chances into actionable results.