Outside Insights | May 2017 | By Guest Author

Questions Restaurants Should Ask Order-Ahead Vendors

Mobile ordering takes significant time and effort as well as a dedication to changing your operations, training, and other internal adjustments.
Mobile ordering helps increase order accuracy and decrease lines during peak times. Thinkstock
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After years of speculation over when mobile payments would finally take off, mobile ordering has quietly stepped in as the must-have killer feature. This past year saw a wave of merchants launch mobile ordering as consumers are starting to expect mobile to enable them to order, pay, and skip lines forever.

Working with Dunkin’ Donuts and Taco Bell to launch mobile ordering applications, we’ve seen first-hand the impact this functionality can have on a quick-service restaurant. These apps have well over 20 million downloads and account for millions of transactions every week. Together, with Starbucks, these merchants have led the way for order-ahead to be the new norm. We expect 2017 to continue the mobile ordering revolution and with good reason.

In addition to the obvious consumer benefit of skipping lines, order-ahead offers merchants a variety of other business wins. A Deloitte study found that among fast food restaurants, order-ahead increases visits by 6 percent and ticket size by 20 percent. Taco Bell has found mobile orders to be 30 percent higher than in-store, which we’ve found to be consistent across our other platform customers.

Further, mobile ordering helps increase order accuracy and decrease lines during peak times, all of which amount to a plethora of reasons to consider adding this feature to your mobile roadmap.

However, mobile ordering takes significant time and effort as well as a dedication to changing your operations, training, and other internal adjustments. To ensure these efforts are not wasted, here is some strategic direction in assessing order-ahead vendors. The following questions are key considerations for any merchant.

Menu

Menus can be frustratingly complex. Even seemingly simple menus with a dozen or so modifiers can result in thousands of potential combinations. If you have numerous store locations with different menus then your equation is even more complicated.

An interesting fact about older order-ahead companies is that they were one, not made for mobile and two, not made for larger enterprise restaurants. Their roots are enabling mom and pop shops to have fax or Internet ordering. The obvious draw back is that these systems cannot handle complex menu structures.

Key questions to ask vendors are:

  • How will my menu appear?
  • Does the organization make sense?
  • Is it consistent with how your menu appears in other channels?
  • How will consumers modify or customize orders? If the only means to customize is via a comments field, that’s not an ideal solution.
  • How do they handle menu and pricing updates?
  • How much load can they handle per minute? Have they been truly stress tested at your peak hours?

A less obvious draw back of older order-ahead systems is that because they were not architected for mobile, complex menus often tax mobile apps unnecessarily. The front-end client may be heavy and clunky as a result, so don’t be fooled by a company that touts they’ve been in the order-ahead business for over a decade. That’s not a benefit in mobile; it’s a liability.

Patents

Beware of the many patent holders (some call them trolls) in the mobile ordering area. Mobile in general is full of patent landmines but order-ahead in particular has some of the most litigious and active patent holders around.

Key Questions:

  • Do you have a licensing deal in place with any ordering patent holders?
  • Are you or have you ever been a named defendant in a lawsuit related to order and pay functionality? If so, what’s the status of the suit?
  • To what degree will you indemnify our company for patent infringement?

It’s worth noting that even if a vendor will indemnify your company in this area, that doesn’t prevent a patent holder from suing your company as well. The patent holders in this area have named 30+ large merchants in their suits as well as vendors. And being realistic, your company likely has larger pockets than most order-ahead vendors so you’ll be a greater target.

Data

This may surprise you but your data may not be your data with some large order-ahead vendors. It is actually the case in most aggregate apps where multiple restaurants are lumped into one ordering application. We’ve spoken with restaurants and coffee chains that are trying to leave those apps and their main complaints are around data—the inability to see beyond one store’s data at a time, the inability to aggregate and manipulate their data and the inexplicable fact that they don’t get any of this data if they switch vendors.

Key questions include:

  • Who owns my data?
  • How can I access it, use it, manipulate it?
  • What are the different views? (ex. store, region, national etc.)
  • Can you send me data in the way my BI/data team wants to consume it?

If data is important to you (and it should be), dig into this area both in the RFP process and especially in the contract process. Our perspective is that the merchant’s data belongs to that merchant alone. Even if you’re not currently doing anything with it, it’s a treasure trove that can be mined later.

Data is in our view, one of the key benefits of a mobile ordering app. This is often the first time that merchants have individual SKU-level data associated with an actual person. This opens up enormous possibility in targeting communications and programs in ways that marketers have only dreamed of to date.

At the end of the day, you need to come to terms with who do you want interacting, and potentially owning things like payment credentials, the aforementioned data and even social preferences.  A third party provider who is trying to build their network on your brand or a solution set tailored to empower your customer.

Overall Experience

Finally, there are a number of other questions that you’ll want to ask related to the overall app experience to ensure that consumers will actually download and use the app you’re investing in. Pure play order-ahead vendors may have little to no mobile expertise, so you may have to cobble together a few different vendors if you want a truly engaging app that has offers and loyalty to keep consumers coming back.

Some potential questions include:

  • Do you provide front-end mobile development?
  • Will you integrate with third party vendors for non-ordering features such as offers, loyalty and mobile pay at the POS?
  • What does the consumer experience look like when loyalty is provided by another vendor? How do you ensure a cohesive experience?
  • Are you able to provide mobile payments and loyalty at the POS? If not, how would these features be integrated into the mobile ordering app?

We know that mobile ordering requires a significant investment and we hope that these sample questions help guide your decision making.

Jon Squire, CEO of CardFree, has more than 19 years of business, marketing and product development experience in financial services and emerging technologies. Most recently, Jon was CMO of CorFire, SK C&C’s global mCommerce headquarters where he led the deployment of Dunkin’ Donuts Mobile. He was also SVP of Mobile Payments at mFoundry where he spearheaded the Starbucks Card Mobile team and helped create the first mobile wallet initiatives in the U.S. with retailers, carriers and financial institutions. Between his work at CorFire and mFoundry, Jon has been involved in the two largest mobile payments programs in the nation. Jon has consistently driven innovation and created world-class product offerings in new categories. He launched the first national mobile P2P offering in partnership with Sprint and PayPal and is well known for his leading edge work with NFC, barcode and alternative technologies that integrate with the point of sale. Earlier in his career, he also led mobile/e-commerce payment initiatives for Wells Fargo and ran E*TRADE Advisory Services.