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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.