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    Digital Transformation Sweeps Over Restaurant Industry

  • Quick-service brands today are increasingly focused on new tech-enabled opportunities.

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    Another key component of today’s digital transformation is the leveraging of customer data and analytics to lower the cost of customer acquisition.

    It should come as little surprise that the quick-service restaurant industry is highly adept at embracing rapid change and innovation. From ordering apps to kiosks, loyalty programs and artificial intelligence, quick-serves today are harnessing technology to meet evolving consumer preferences for improved speed and ease of check-out. A recent report revealed that the online ordering business grew 23 percent in the U.S. last year. 

    As the industry continues its robust growth—with consumer spending totaling $299.6 billion in 2018, nearly double what consumer spending was 15 years ago— many leading quick-service restaurants are embracing digital transformation to capture greater market share.

    Since consumers, particularly millennials and Gen Z, are especially digitally savvy, there is growing expectation that restaurants must adopt new technologies to offer better in-store and online experiences. This expectation is most pronounced when it comes to placing orders. A recent market survey found that 39 percent of quick-serve guests placed their meal orders using a smartphone app. This represents a significant increase from 2015 when ordering by mobile device was only 11 percent. This same report found that 28 percent used a kiosk and 27 percent used a tablet to place their order.

    Gift cards, also known as branded currency, is presenting new sales growth opportunities for quick-service restaurants, while enhancing customer loyalty and reducing the overall cost of payments. First Data’s 18th Annual Prepaid Consumer Insights Study found that for the fifth year in a row spending lift from gift cards is on the rise. The survey found that for every gift card purchased, consumers are typically spending on average $59 more than the original value of their card.

    Another important trend in quick service is connected commerce, which brings together the convenience of online technology and the proven brand attraction of brick-and-mortar stores. Connected commerce leverages the latest technology to bring added value to the consumer and the merchant alike. One such example involves a popular quick-serve that was struggling with lunch-hour traffic at its stores. Drive-thru line-ups wrapped around the block and the que was equally long in the lobby area. This was creating frustration for customers and jeopardizing sales. By launching a mobile app for ordering, the quick-serve was able to remove some of the choke points around POS and the squawk box, speeding up orders and increasing same store sales – a win/win for customers and the business.

    Another example of connected commerce in action involved a major chain that introduced a mobile application enabling customized food selections. Customers could add food items to their menu choices without feeling pressured at the POS. Even though these add-ons increased the price of the selections, customers appreciated the ability to create items that were uniquely their own. Not only did this increase basket size per order, but by enabling customers to share their customization choices with friends, the concept ended up going viral. In addition, this made repeat purchases that much easier because customized choices could be saved in the app.

    Many quick-serves are introducing self-service ordering kiosks to allow customers to control their own ordering experience instore. Research has shown that about 31 percent of surveyed quick-service guests have used a kiosk, while 54 percent of those say they expect to use a kiosk within the next year. The same study found that kiosks in general have a higher margin than counter orders, delivering an average lift of 15–30 percent per check. Connected commerce has seamlessly integrated multiple aspects of the customer experience to take quick-service restaurant digital and bring value to all participants in the value chain. It enables merchants to promote lower cost payment options to consumers, such as ACH, along with loyalty offers and other promotions. This provides another win/win for customers and merchants as patrons earn rewards, while merchants drive down the cost of payments. 

    Another key component of today’s digital transformation is the leveraging of customer data and analytics to lower the cost of customer acquisition. More and more quick-serves are looking to tap into data around customer behavior and purchases in order to make highly contextual offers. Take for instance when a quick-service restaurant collects data on a customer and recognizes they have already eaten their main meal. Armed with this knowledge, they present that customer an offer for a cup of coffee, a snack, or maybe a dessert item. Consumers are more appreciative of these types of targeted offers because they are more relevant.

    Quick-serves today are increasingly focusing on the opportunities presented by digital transformation. Many are embracing technologies that enhance the quality of the customer dining experience, delivering more of what consumers are clamoring for.  

    John Nicola is responsible for First Data’s Corporate Retail and Restaurant vertical segments. In this role, John leads a team that works with retail and restaurant clients to understand their overall business needs, create/deliver solutions to help them grow their businesses, protect their data, and create operational efficiencies.