CHICAGO -- The ability to order food with the click of a few buttons on a smartphone is becoming widespread -- even fast-food companies are getting in on the action. But the technology -- which in some cases tracks a customer's location and times food preparation accordingly -- can vary widely.
Restaurants admit that some customers are still wary about the freshness of their food when ordering ahead.
"I think some users assume [their food] would be sitting on that counter for them because that's how most in the industry do it," said Hunter Swartz, the founder and chief executive of Chicago restaurant company Eastman Egg, who focused on a mobile app as a cornerstone of the company's development. "As much as we had to educate the public about our food, there's been just as much education for the app."
Mobile ordering is becoming a critical piece of many restaurants' plans because it can mean improved sales. Customers spend more and visit more often, on average, when they're using a phone to order food.
The first restaurants to make mobile a big part of their business were the ones that rely heavily on delivery: pizza-makers. At Domino's, customers can order just by texting an emoji of pizza or opening the app; no clicking required. Pizza Hut and Papa John's have made big advances, too, and all three credit about half their sales to mobile orders.
Few restaurants are as far along as the delivery operators, but many have advanced their own apps by leaps and bounds to capture more customers on the go.
Starbucks introduced mobile pay through its app a year ago, and it now accounts for about 5 percent of sales, Chief Financial Officer Scott Maw said at a conference earlier this month. That jumps to 20 percent of transactions at peak times at several hundred of its urban stores. It expects that number to accelerate quickly in the near future, as customers get more comfortable with the technology. A quarter of Starbucks' customer payments already are made with its smartphone app.
Maw also said Starbucks' app eventually will be able to use weather data to market food and drink items to customers.
In June, Dunkin' Donuts debuted mobile ordering nationwide and Chick-fil-A offers a new app with mobile-ordering capabilities. Taco Bell has had mobile ordering on its app since 2014, but sister company KFC doesn't offer it. McDonald's, the world's largest burger chain, has been testing a mobile-ordering system since the spring and has said digital initiatives are a priority.
Among fast-food restaurants, the frequency of customer visits increases by 6 percent and average spending per visit rises by about 20 percent when technology is used to place an order, according to a Deloitte survey released this month. Visits tend to increase because technology makes it easier to repeat an order automatically, while repeat orders of custom or upgraded drinks lead to increased sales.
In addition to an expected sales increases, the data collected from mobile-ordering apps can shine a light on the makeup of customers.
App capabilities are often vastly different from one to another.
"You've got a tremendous variability in terms of sophistication," Deloitte restaurant analyst Andrew Feinberg said. "You've got Starbucks, Panera, Domino's that are doing well, while you've got others that have been trying for a while and still struggling with it," he said. "A lot of restaurants have a very long way to go."
Business on 09/29/2016