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Every day, entrepreneurs dream up new ways to “disrupt” so-called “legacy” businesses like quick-service restaurants. It sometimes feels like we’re just along for the ride, jolted by the twists and turns in the road of innovation.
I believe it’s our turn to get ahead of the curve. It’s time to digitize or die.
Sometimes, being the first to adopt new technologies can make us the beneficiaries, rather than the target, of all this disruption. We just have to take a stab at reading and reacting to the near future. Above all other trends, I’d say that three will have a tremendous impact on quick-service restaurants: EMV compliance, the growth of on-demand services, and the rise and fall of social media platforms.
Combined, these trends are encouraging what I call the “Uberization” of quick service. The car service Uber is built on fast, seamless payments; one-tap vehicle requests; and location-based service. In their own way, these three trends are injecting some Uber-like qualities into the quick-service restaurant industry. To understand what’s next in this industry, we have to unravel the impact of each trend.
Good news for digital wallets
EuroPay, MasterCard, and Visa (EMVco) set the standards for global credit card use, and they are requiring U.S. merchants to swap magnetic strip readers for EMV-compliant devices by October 1. These “chip-and-pin” devices require customers to insert their credit card and type a four-digit PIN or signature to approve every transaction. In testing at Togo’s, we found that they both add 20–30 seconds per transaction. This is why EMVco will lead restaurants to adopt and champion mobile wallets.
NFC payments with Apple Pay, Google Wallet, and similar services are faster than mag-swipe transactions and way faster than EMV. To protect speed of service, quick-service restaurants will need to adopt NFC, if they haven’t already, and then aggressively promote its use. This will be a gradual process. Just 15 percent of Americans have used a mobile wallet, according to research firm Chadwick Martin Bailey, and an additional 22 percent are likely to adopt one in the next six months.
Many mobile wallets will introduce loyalty features that reward customers with points, personalized deals, and other perks. Such promotions will be key to convincing regular customers that they should try out the new tech. Much like Uber, which tries to make payments as automatic and invisible as possible, restaurants will try to get payments out of the way.
Once upon a time, delivery was the exclusive domain of pizza and Chinese food restaurants. Today, we see all types of restaurants, from quick serves to Michelin Star, using third-party services to deliver food. The emergence of “sharing economy” services that emulate Uber have made this possible.
On-demand food is in vogue because on-demand everything is the norm. Millennials, in particular, are conditioned to immediate gratification—music, videos, physical goods, and services are all available with a tap. Sharing economy businesses have expanded on-demand consumption to cars, accommodations, handyman work, and dozens of other categories to meet this expectation. It’s only natural that tech companies are now crowdsourcing food deliveries from independent drivers and bicyclers who provide their own vehicles and operate semi-independently. The cost of staffing a delivery team is no longer a deterrent.
Simply put, quick-service restaurants need to provide one-tap orders on mobile phones to compete for younger customers.
Until recently, most quick-serve restaurants could get away with a presence on Facebook. With the population of Facebook teens shrinking more than 25 percent between 2011 and 2014, according to iStrategyLabs, restaurants are under pressure to diversify. However, Facebook advertising strategies don’t necessarily work on Instagram, Snapchat, and other places where Millennials have fled to avoid their Baby Boomer parents (apparently “Likes” from mom aren’t cool). So the task before each brand is to crack the code on new networks.
On Instagram, users don’t want to see images from your marketing team. Let’s face it: Professional sandwich photos don’t stack up well against authentic images from friends, influencers, and celebrities. However, restaurants can succeed with user-generated content (UGC).
If you launched a new product, you could hold an Instagram contest asking people to submit fun photos around a theme. With Togo’s new HiRiser, for instance, we asked people to submit photos comparing the monster sandwich to other objects for a chance to win free sandwiches for a year and other prizes. We tracked submissions by the hashtag #MyBigTogosHiRiser so participants could submit photos on Facebook, Twitter, or Instagram. The social engagement that generated was exceptional. Yes, you can make it fun for people to take pictures of sandwiches—if you’re creative about it.
Snapchat is a different monster. Some brands send discount codes and deals around mealtimes. Others use it as more of an affinity and entertainment channel. For example, Taco Bell famously sent re-usable Valentine’s Day Snapchats (“Nacho average Valentine”) that recipients could resend to friends with their names added in the “To” and “From” fields.
For quick-service restaurants, Snapchat’s new sponsored location-based filters open up interesting possibilities (and revenue streams for Snapchat). Brands can now create Snapchat filters that are available only in specific locations, like a restaurant. It’s a recipe for promoting word-of-mouth marketing that occurs at the exact moment people are enjoying your food.
Most of us work for quick-service brands that happen to use technology. Internally, some restaurants will begin to identify as tech companies that happen to serve food. Many retail companies have made this identity swap. It’s simply recognition that technology—whether it takes the form of new POS systems for mobile wallets, on-demand delivery services, or bold social media strategies—is critical to providing great restaurant experiences.
Restaurants can’t continue to play a frenzied game of technology catchup. This is a call for quick-serve brands to become the early adopters that catch the wind rather than chase it.