Staying on trend, particularly when it comes to technology, is a delicate balancing act for Back Yard Burgers. CEO David McDougall says there’s no question that the entire restaurant industry is moving away from cash and credit and toward mobile payment and ordering methods. But expanding into mobile is costly, and new software doesn’t always easily mesh with legacy systems.
“You certainly need to try to be on trend,” he says. “Being a smaller company, I don’t think I need to be the trendsetter on this. I think I need to see what people adapt to and gravitate to.”
Increasingly in the quick-service restaurant space, people are adapting and gravitating to mobile tools that make the entire restaurant experience more convenient. From ordering and payment to loyalty programs and data-mining techniques, mobile tools have transformed the industry, so much so that incorporating the tools is no longer a brand differentiator, but a critical step.
For his part, McDougall is still a bit skeptical about mobile ordering, especially after a test of the technology in one of Back Yard’s stores showed little customer interest. But he’s all in with mobile payment methods, as the 63-unit chain is piloting its mobile app in several Nashville, Tennessee, stores. Along with quicker payment transactions, the app integrates the brand’s loyalty program. And customers are enthusiastically making the jump.
“It’s really about payment,” McDougall says. “And my belief is that as we go down the road, mobile pay, whether it’s with our iPhones or Androids, is going to be the future versus credit cards and cash.”
That’s a growing sentiment among restaurants and customers alike. Jared Isaacman, CEO of POS provider Harbortouch, says mobile technology has for a couple years been able to make a strong case: Smartphones allow customers to instantly access information about restaurants. Mobile ordering allows customers to skip the line. And mobile apps make it easy for both customers and operators to instantly track loyalty programs. Now with the advent of Apple Pay, mobile payment appears to be primed to make an even stronger argument. In September, tech giant Apple announced that its new iPhone 6 and iPhone 6 Plus models would feature contact-free payments thanks to a built-in Near Field Communication (NFC) antenna, allowing customers to instantly pay without ever grabbing their wallet.
“You move from informational to convenience to loyalty. Now the fourth evolution is going to be payment functionality,” Isaacman says. “I think there were a ton of different options that existed the last two years that no one cared about because Apple Pay didn’t exist.”
While some of these emerging mobile technologies will require additional investment, Isaacman says, quick-service operators can prepare without breaking the bank. He suggests purchasing “future-proof” POS hardware and software systems that will allow for later add-ons and upgrades such as NFC payments.
But he says such decisions are ultimately about meeting demand.
“I think it’s purely doing what the consumers at your business want you to do,” he says. “If they want to do mobile payments, then accommodate them.”
Increasingly, customers want to do business from the palms of their hands. In its annual forecast this year, the National Restaurant Association (nra) reported that a gap remains between what technology consumers want and what technology restaurants currently offer, though that gap is narrowing.
NRA research found that quick-service operators are more likely to offer mobile payment options like PayPal, Apple Pay, and Square than their counterparts in the family-dining, fast-casual, fine-dining, or casual-dining segments. Such functions are rapidly transforming from a novelty, the NRA reports, to a basic expectation. In surveys, about a quarter of consumers said a restaurant’s technology options are important factors when choosing a restaurant—up from about one-fifth of consumers the year before. And this technology isn’t just for the young. A majority of all adults, including those age 65 and older, told the NRA that technology increases convenience, speeds up service, and increases order accuracy. Technology usage rates are only increasing in older age groups.
Hudson Riehle, the NRA’s senior vice president of research, says there’s a strong business case for integrating technologies like mobile pay and mobile ordering, which boost sales and customer frequency. That’s vital in a post-recessionary market in which sales are growing at a moderate pace, while labor costs and food costs climb.
“Most operators have been pretty good at driving out cost inefficiencies and operational inefficiencies. So, at a certain point, the return on investment becomes much more important in engaging and enlarging the customer base,” Riehle says. “And when one looks at the quick-service segment, which tends to be more multiunit operators, obviously the return on investments in these technologies is proving to be an important driver of their adoption.”
But the technology isn’t all good. In NRA’s study, about two in five consumers said technology made restaurant visits more complicated, underlying the continued importance of quality customer service.
“In the end, the restaurant industry is obviously a hospitality industry,” Riehle says. “And the challenge for the operators has been and continues to be how to remain high-touch in a high-tech environment.”
With Panera 2.0, an ongoing technological overhaul for the fast casual Panera Bread, some customers get even more face time with employees than before. Diners can order at in-store kiosks or on their phones, and instead of picking up at the counter, a server will deliver food to the table. Blaine Hurst, Panera’s executive vice president and chief transformation and growth officer, says freeing up cashiers allows more staffers to focus on quality and accuracy. By alleviating lines at peak hours, Panera 2.0 bakery-cafés are seeing significantly higher sales—in some cases more than 30 percent higher.
“However, labor costs have not decreased,” Hurst says. “Rather, we have invested in additional hours—particularly in the back of house—to help ensure operational excellence.”
Chick-fil-A continues to roll out its mobile payment system after piloting mobile ordering in 132 stores in 2014. Michael Lage, manager of digital customer experience, says the transition to mobile wasn’t driven by movement among the competition, but by mere convenience. With the app, Chick-fil-A stores can offer curbside and in-store pickup, which allows customers to circumvent the line at the counter or drive thru. By scanning their smartphones, diners don’t have to dig around for cash or their credit card. The whole process is much faster than a traditional transaction, Lage says. This year, the company plans to add an auto-reload option that will allow customers to securely store credit card information for continual reuse.
“We have a commitment to fresh food and good service, and Chick-fil-A’s mobile app reinforces both,” Lage says. “It empowers our customers to get what they want, when they want it, and how they want it.”
A joint study by researchers at Cornell University and Mississippi State University found that customers are “ready and willing” to adopt customer-facing payment technology like tabletop tablets and smartphone payments. Joel Collier, the Tommy and Terri Nusz Professor of Marketing at Mississippi State University and the study’s co-author, says acceptance is growing in large part because of the convenience that comes with mobile ordering and payment methods.
“Convenience, at least in the mind of the consumer, is what’s driving this,” Collier says. “I’m going to take on this partial employee role because I see that there’s more convenience and benefit to me by doing so.”
Collier’s study, which focused on the casual-dining segment, found that customers specifically like the control mobile payment provides them. With tabletop tablets or smartphone apps, there’s no need to wait on a check. Diners pay and leave on their terms. Obviously, that dynamic is decidedly different in the drive thru or at the front counter of a quick-service restaurant. Collier says preliminary results of a similar study on the quick-service side of things show a similar fondness with mobile ordering, which gives customers greater control and improves order accuracy. But customers aren’t as endeared with mobile payment, simply because it doesn’t have as much of an effect on speed or convenience as it does in full-service establishments.
“What we’re initially seeing is that payment itself is not going to have the same effects it has in casual dining,” Collier says, “because the benefit and speed really aren’t that much different. If I’ve finished ordering and swipe my card versus pulling out my smartphone, I’m really not seeing much of a time difference. Where they see the inroads on that is the ordering and preordering; that’s where you see the convenience built in for consumers.”
Convenience is key to Domino’s mobile app, which has been downloaded by more than 5 million Android and Apple users. Since the October addition of “Dom,” a voice-activated ordering personality similar to Apple’s Siri, Domino’s has received more than half a million app orders, says company spokeswoman Jenny Fouracre. Online ordering now accounts for about half of all Domino’s orders, which can help free up workers in stores, as fewer people are needed to man the phones.
But Fouracre says labor efficiencies aren’t the reason for going mobile.
“It improves customer satisfaction. It gives consumers a sense of control they like,” she says. “It increases order accuracy. Customers like ordering online better than the experience when they call into the store.”
She says Domino’s isn’t banking everything on mobile technology. The brand has upgraded backend systems and its website, and added its signature Domino’s Tracker function to Samsung Smart TVs, which rolled out on Super Bowl Sunday.
“Mobile is important in that it’s giving customers access to Domino’s pizza anytime and anywhere,” Fouracre says. “But certainly when we think about technology as a broader area of focus for our company, it’s more than just mobile.”
And the mobile experience itself is far larger than just mobile apps. Dev Ganesan, CEO of digital marketing and analytics firm Fishbowl, says operators without their own apps should invest in their websites, which should be responsive, allowing easy viewing on mobile devices. It’s also vital to make sure mobile sites are clean and simple, without too much information on the screen, because many customers are using their smartphones to research restaurant menus, locations, and store hours before dining.
“These are some simple steps,” Ganesan says, “that can enable them to take advantage of what’s happening in the mobile space.”
Noah Glass, founder and CEO of digital ordering platform Olo—which works with more than 150 restaurant companies, including Wingstop, Baskin-Robbins, and Noodles & Company—says mobile apps are quickly becoming just as much of a restaurant necessity as websites. Aside from the speed and accuracy benefits of mobile ordering, Glass says, the technology provides restaurants with powerful data. By tracking customer habits and geography, restaurant-branded apps can target suggestive selling to individual customers—which helps explain the increased incremental revenue operators realize on mobile orders.
Across the industry, three-quarters of transactions are consumed off-premises, Glass says. And with technology like mobile ordering, operators can increase revenue from carryout, drive thru, and delivery sales, thus increasing their revenue per square foot of restaurant space.
“The dining room is kind of less important inside the restaurant, and kitchens continue to be more and more important,” he says.
Mobile’s power with loyalty programs is two-fold. Restaurants can track a consumer’s behaviors, offering certain promotions based on geography or past buying habits. And customers no longer have to carry around loyalty cards, collect stickers, or clip coupons.
“From the consumer side, it’s great. From the restaurant side, it’s a gold mine of data,” says Jackie Rodriguez, a senior manager at Technomic. Research from the consultancy firm released this spring found that the share of consumers who have used a smartphone to pay for a meal had nearly doubled year over year, from 10 percent up to 19 percent.
“I think that number is really going to take off just from looking at the current environment,” Rodriguez says.
Drew French, founder of the 21-unit Your Pie pizza chain, says that the ability to individualize marketing was one of the many compelling reasons for his company’s move to mobile.
“If we have a new gluten-free product, for example, we can send out a message to people who have ordered gluten-free products in the past, just letting them know,” he says. “It’s allowing us to really talk to our customers in a much more direct way than in the past. Where it was a broad blanket, now we can have real conversations with our customers.”
Many consumers come to restaurant sites through a mobile Internet browser, meaning operators need to stay
on top of both mobile apps and mobile-optimized websites. But many restaurants are dragging their heels when it comes to mobile sites, according to the Search Agency’s Mobile Experience Scorecard. The online marketing firm found that many of the 50 most visited restaurant and catering company mobile sites were very slow to load—on average 70 seconds or longer.
Slow load speeds are a killer, says Brandon Schakola, group director of earned media for the Search Agency, because users will pogo-stick back and forth between searches until they get a page that loads quickly enough. He says many brands are working to launch sites built with responsive Web design—allowing for easy viewing across devices—as opposed to sinking lots of time and money into native apps. But restaurants don’t seem to be paying enough attention to speed. The scorecard, released last fall, found that Papa John’s site had the fastest load time with Panda Express, Domino’s, Wendy’s, and Jimmy John’s rounding out the top five.
Surprisingly, the report found that 40 percent of the mobile restaurant sites studied didn’t have a button to click to order food or make a reservation. Schakola says those brands are simply leaving money on the table. Altogether, the study paints a picture of brands that don’t understand the technology well enough to meet the needs of an increasingly savvy consumer base.
“Consumers, and especially the Millennial demographic, can spot a completely useless app or experience faster than most brands can figure out why they are failing to receive orders,” he says. “Brands need to get better at testing and listening to user intent, regardless of device.”