With overall labor costs rising, it’s time for you to define what “optimal” means for you and take steps to make those labor costs your reality.
The race to keep up with consumers’ expanding tech appetites is on. In our latest Restaurant Readiness Index, a survey of thousands of QSR and fast casual restaurant consumers, we found out just how big those appetites are. 40 percent of recent visitors to Arby’s, for example, reported using self-service kiosks to order and 62 percent of all those surveyed said tech innovations would make them more likely to visit restaurants in the future.
Bypass Chief Innovation Officer and VP of Product, Geoff Johnson, recently sat down with PYMNTS to discuss the findings, how operators should read them, and “the barrier that still needs to be broken through.”
Operations getting in the way of experience
While this edition of the Restaurant Readiness Index focused on consumers, Johnson noted that operational issues take focus away from what you’d traditionally categorize as “customer experience” for many operators. Like restaurants that use delivery platforms having to switch multiple tablets on and off when they want to get listed on a service rather than have a single feed of online orders.
Things that might seem straightforward to a consumer end up taking a large share of time and money for tech investments. For example, “actually changing around a menu is one of the hardest things to do in QSR’s. It’s something that every big brand has tried to solve, and some have spent millions of dollars in custom software going after [that].”
But, as Johnson noted in the Data Drivers podcast, the million-dollar question is how to build the right experience across channels, and keep the customer coming back through the door.
You don’t have to be Starbucks
Johnson cautioned that it’s easy to look at examples of digital transformation like Panera or Starbucks and decide that mobile ordering is the key. Or self-service kiosks. Or apps. But he says, “the starting point of [all this] stuff is data.”
It’s not basing decisions on trends, but understanding how your customers respond: “Looking at the menu, the design, what things customers are actually responding to — only when restaurants have really tapped into that and understand it are things really going to be allowed to level up and change quickly.”
The key to how consumers respond to the technology is how that technology impacts the experience. And a good experience, our Index found, came down to the basics: convenience and speed. Because of that, what restaurants and their tech providers should do, is get tech out of the way when they can. “We have a big view that all the technology should be simpler. A lot of things are heavy; they are very IT-intensive and we think these are the barrier that still need[s] to be broken through,” Johnson said.
Listen to the podcast for more on how customer experience differs across locations, “promiscuous eaters,” and the franchisee-corporate relationship on technology. Click here to download the full consumer report.
“If you build it, they will come” isn’t quite accurate for restaurant mobile apps and other technologies—most apps either don’t meet customer expectations or aren’t used enough to make an impact one way or another. But when digital transformation works, whether it’s for loyalty, mobile payments and ordering, or timely and personalized coupons, it impacts the whole organization.
We found earlier this year in an industry survey that most QSRs fail at digital innovation, though we also surprisingly found that number of locations has little impact on innovation. Regardless of your size, below are five restaurants to emulate in digital transformation, how they’re transforming the customer experience and the (sometimes bumpy) journey it took to get there.
Panera Bread’s Huge Investment
With 30 million members, Panera has the largest loyalty program in the US, MyPanera. Beyond loyalty, Panera offers true omnichannel, allowing for mobile ordering for pick up and payment directly in the app, as well as some of the first self-serve kiosks in the industry. Those new channels have cut down on what Panera owners called the “Mosh Pit” of waiting for orders, where diners huddled around the same pick up line regardless of whether they were dining in or out.
Mobile payment in particular has made a measurable impact to Panera’s business. How much? Over a billion in digital sales, which as of last year, represented a whopping 26% percent of their total sales.
If organizations not only want to have all the features of Panera bread, and see the adoption of those, they’ll need to invest capital. From 2014 to 2017, Panera invested $120 million in what they called their Panera 2.0 initiative, and that’s just the technology—it doesn’t include the marketing dollars it took to get people aware of all those channels.
Most restaurants don’t have $120 million to invest, but if they want to see their efforts pay off instead of flounder, they will have to make some level of investment, particularly if they’re making their first steps in digital transformation.
McDonald’s Unexpected Consequences
McDonald’s has deployed mobile ordering and payment capabilities across all 14,000 of its US stores, with ability to pick up curbside, in the restaurant and at the drive thru. In addition to the McCafé loyalty program found in their app, it features weekly deals so coupon clipping is a thing of the past. Their app has 20 million registered users, but even more impressive is that 40 percent of those are daily active users.
McDonalds found out though that your apps don’t live in isolation from the rest of your restaurant’s ecosystem. Challenges with employees getting a handle on new tech including the mobile app and self-order kiosks have been identified as a culprit in lengthening drive-thru times—an increase of 30 seconds from 2016 to 2017.
But like Panera’s Mosh Pits, McDonald’s isn’t sitting idle. As of 2018, they’re investing two-thirds of their capital in the “guest experience,” and all that entails, including ease of ordering as well as delivery initiatives with UberEATS. Organizations need to think through how the whole technology stack works together, from front-of-the-house to back office, including self-service, mobile ordering, labor scheduling, and your point of sale at the center.
Chick-fil-A Listens to Customers
After a modest rollout of their app, beloved chicken sandwich chain Chick-fil-A joined McDonald’s and Starbucks as one of the top three QSR apps. They did it with a simple promotion: download the app and get a free sandwich—that pushed them from 1,500 to 400,000 downloads a day and netted 3.5 million downloads. Those users stuck around too—Chick-fil-A is second only to Starbucks on the QSR list in daily active users.
While they’ve had mobile order and payment for in-store pickup for some time, this year they added a feature to pick orders up at the drive-thru.
Chick-fil-A listens to customer feedback. That drive-thru feature came about because of customers clamoring for it, and they overhauled their app because customers said the loyalty program was unclear. Particularly if budgets are tight, organizations should pinpoint what customers want so they hone in on the channels they need to develop.
Sometimes customers also need a push, particularly with new tech. While the free sandwich promo came with an initial cost, users continued to use the app long after they finished their meal. Don’t expect people to download and use the app without adequate promotion, including signage or on the display of a customer-facing point of sale.
Chipotle Sticks to the Essentials
Chipotle’s app exploded in app downloads when they added one specific feature: the addition of mobile ordering that led people to designated lanes to pick up their orders ticked up downloads by 50 percent. It’s also the only app on our list to add another channel directly in their ordering app—delivery.
Digital transformation doesn’t mean you have to have every bell and whistle as soon as it rolls out. While all the other restaurants on our list have loyalty programs baked into their digital experience, Chipotle has focused on order and pickup in their app (at least for now). Particularly if your resources are limited, there’s no reason to bake in every feature into your digital experience if your customers don’t need it.
Starbucks’ Long, Winding Journey
Starbucks approached digital transformation in a few ways over a long period. They kicked off with an app for QR-driven mobile payments in 2009 (and preceded tap-to-pay mobile wallets by 5 years). A year later, they linked that mobile payment app to their loyalty program in a single app. Today, there’s not much they can’t do—including reward tracking, payment, wearable integration, and saving in-store music to your Spotify account. They’ve seen massive success, but the move to digital hasn’t been without its missteps.
For example, in 2010, Starbucks went all in on Blackberry instead of Android after launching on the iPhone, causing an employee to hack together their own app. They also discovered security issues in 2011 and 2014 around possibly exposed payments and passwords.
Outside of the app, Starbucks sought to “bring the best possible payment experience” with Square in 2012, which pioneered mobile payments, but like many players in the retail space, wasn’t built for enterprise. That deal led to large losses for Square, and they severed ties in 2015.
Our final lesson from these apps is that digital transformation initiatives don’t happen overnight. It was nearly ten years ago that Starbucks first launched their app in 16 stores. And while there were mistakes along the way, Starbucks pushed forward with a strategy that now sees 36 percent of their sales tied to rewards and 30 percent of their sales paid through the app—which means tracking, personalization and an improved overall experience.
For a successful digital transformation, focus on how it transforms the customer experience. Though it might take longer and cost more than you’d like, keep customers in mind from the beginning to put a successful roadmap together. Only then can you meet expectations in the age of e-commerce—now set even higher with the above best-in-class experiences.
Image Source: Shopping with iPhone by Jason Howie