Digital Transformation Lessons from 5 Leading Restaurants and Cafes

“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.

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Panera Bread’s Huge Investment

  Source: Panera

Source: Panera

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

  Source: McDonald's

Source: McDonald's

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

  Source: Chick-fil-A

Source: Chick-fil-A

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

  Source: Chipotle

Source: Chipotle

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

  Source: Apple App Store

Source: Apple App Store

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

Bypass partners with 7shifts to increase flexibility and controls in restaurant management

AUSTIN, Texas, September 11, 2018 — Bypass and 7shifts today announced that they are teaming up to provide greater controls to restaurant managers while offering flexibility to operators. The partnership will begin at multiple Yogurtland locations with planned deployment at Yogurtland stores across the United States, and as an offering to multi-location restaurants.

"We're excited to offer our franchisees and operators the industry-leading restaurant management platform provided by Bypass and 7shifts.” said John Carlson, VP Marketing, Development & Operations at Yogurtland. “By providing a unified point of sale and scheduling solution, we are empowering our operators to make proactive labor management decisions to boost profitability while continuing to provide a great guest service experience."

Bypass, an enterprise point-of-sale (POS) solution used at hundreds of locations in sports, entertainment and the restaurant industry across over 18,000 terminals, will seamlessly integrate with 7shifts, an employee scheduling software that helps managers and operators reduce wasted time and streamline communication.

“With our new relationship with Yogurtland, we sought out a partner for labor and scheduling, but wanted to go beyond a simple data integration,” said Geoff Johnson, Chief Innovation Officer & Vice President of Product for Bypass. “7shifts not only satisfied the needs of the customer, but we’ve now crafted a powerful partnership that offers the market a truly integrated solution.”

Example of flow from Bypass point-of-sale to 7punches login

Johnson added, “With our partnership approach, we’re looking to closely partner with best-in-class organizations that complement our core product rather than lock people into a one-size-fits-most solution.” With the integration, when an operator clocks into a Bypass terminal, it opens up the 7shifts application with its full capabilities instead of passing data over from one application to another. The integration gives the operator full freedom and the manager tight control over variable factors like grace period and break times.

Jordan Boesch, CEO of 7shifts said, "We are excited to partner with the team at Bypass Mobile to help bring a holistic scheduling and labor management solution to enterprise-level restaurants. We believe that restaurateurs of all types win when they have access to powerful, integrated tools which address their individual operators' labor needs. Our team is proud that our shared missions of accelerating restaurant efficiency have brought us together to create a best of breed solution."

About Bypass Mobile

Since its founding in 2010, Austin-based Bypass has become the leading innovator in enterprise point-of-sale systems, working with more than 300 national restaurant chains, sports and entertainment properties, and cafes in corporate, healthcare and educational settings across 18,000 registers. Whether through fixed terminals, mobile devices or desktop management software, Bypass accelerates profit, efficiency, and most importantly, the guest experience. Bypass combines front-of-house, self service, back-office tools and deep insights for an integrated solution that brings the innovation, sophistication, and scalability of e-commerce to physical merchants.

About 7shifts

Founded in Saskatoon, Canada, in 2013, with offices in Toronto, 7shifts is the restaurant employee scheduling solution for more than 150,000 restaurant workers across North America, Europe, the Middle East and Australia. 7shifts is used by growing multi-unit restaurant groups including Xi’an Famous Foods, Andy’s Frozen Custard, Black Rock Coffee Bar, and many others. More than a scheduling platform, 7shifts empowers restaurant managers to optimize their workforce to better manage employees, resulting in reduced labor costs. 7shifts has secured $4.5 million in funding, led by Tandem Capital and Relay Ventures.

Mastercard MLB All-Star Game Ad on Processing Speed (powered by Bypass)

When A-Rod and Big Papi face off on transaction speed, they do it with the fastest hardware/software in the land...

This fun clip from last week's MLB All-Star game featured baseball legends Alex Rodriguez and David Ortiz in an Mastercard NFC showdown to see who could get more orders processed with their contactless Mastercard.

Shot at Nationals Park, the clip also highlighted the best-in-class speed of the Bypass/Clover software/hardware solution. 

 

Making Digital Experiences a Reality in Sports and Entertainment

Digital experiences are unquestionably the future. Not only are they what fans want, they provide the physical world’s version of a cookie that is so valuable in e-commerce.

If you were to take the 5% of gross sales that Panera invested and apply it to a sports F&B operation – you would spend $2.5 million on the digital program. 

That is not going to happen.  

But 10 years into this annual conversation around bringing seamless digital experience to sports, the growth of the initiatives we are seeing is pushed to the side in favor of further vision conversation.

I have a theory about why: it's not a tech problem, it’s a business problem. Building these world-class digital experiences is an expensive proposition.  

The challenge facing digital investment in sport

Panera Bread, Starbucks and Dominos are frequently cited as having most successful digital programs. For some perspective, Panera spent $150 million over four years to bring their digital solution to market. This was possible because Panera’s stores do over $3 billion in annual sales. Digital has now reached 26% of Panera’s revenue. Starbucks' history of digital investment and results is very similar – although over a longer period of time.

When you apply that model to sports venue it breaks. The highest volume sports properties generate $50 million in F&B revenue. If you were to take the 5% of gross sales that Panera invested and apply it to a sports F&B operation – you would spend $2.5 million on the digital program. 

That is not going to happen.  

Three paths forward

So, knowing that the ROI equation is out-of-whack for sports and entertainment market, is there a way to bring the cost of these digital programs in line with budgets and expectations? Here are couple paths that we see being successful, and they all involve leveraging investment by third parties that can productize a digital offering for sports:

First – Teams and work together within or between leagues to standardize their requirements for digital. There is a committee with almost 50% of MLB engaging on this subject, whether agreement can be reached on workflows and requirements remains to be seen. However, if you could leverage a $2.5-$5 million investment across the league, the cost of the program on a per venue basis, while expensive by today’s standards, generates an ROI.

Second – Concessionaires building their own digital experience with or without 3rd parties is a viable economic model. A large concessionaire in sports generates $1-$2 billion in gross sales, and could justify the investment required to bring a sophisticated digital solution to market. The challenge here – if they build it – is whether clients will accept a solution across their portfolio.

Third (and this is the route Bypass is pursuing for the time being) – Work with digital solutions that are being productized across merchant brands and market segments. Apple and Google are both introducing digital-enabling functionality in their wallets. With Apple specifically, the wallet now accepts a pre-registered loyalty card that can be sent to the phone when the guest makes a digital payment. So you take a huge amount of friction out of registering and participating in the digital program – no card to carry, no sign-up process – really a seamless way to create the physical “cookie”.

We are enabling this technology, working closely with Apple for a $500 million retail restaurant, where the budget makes economic sense. Our goal is to productize it and bring it back into sports at a price point that makes sense for venues. I’m hopeful that will be possible and we’ll certainly know more when we go live in Q4 of this year.  

Success Story: TIAA Bank Field upgrades security, increases revenue with Bypass

OBJECTIVE

22%

PER CAPITA REVENUE GROWTH

SPEED + SECURITY

NO DIP IN SPEED OF SERVICE
WITH EMV TRANSACTIONS

As the Jacksonville Jaguars’ home stadium, TIAA Bank Field (TIAA) desired to accelerate their food and beverage service, while also taking the next step in security — installing a P2PE-validated solution that accepts EMV transactions.

On top of maximizing revenue potential, TIAA also needed to streamline their concessions, suites, and in-seat service operations. Reliable reporting and timely access to data were requirements for gaining insights to inform future innovation opportunities.

Bypass has been a fantastic update to operations at TIAA Bank field - delivering a seamless implementation, superior peak-load stability, and reliable reporting.
— Chris Angne, Vice President Operational Systems and Standards, Delaware North Sportservice

SOLUTION

Bypass enabled TIAA to combine all food and beverage sectors of the venue under one partner. After clear goals and deliverable dates were established, the installation phase included over 550 terminals across concessions, suites, and in-seat solutions.

Utilizing Bypass’s full P2PE encryption technology was key to improving service speed without sacrificing security. TIAA had previously been hesitant to accept EMV or mobile wallet payments due to slow transaction speeds, but Bypass’s unique partnership with First Data and Clover provided the assurance needed to move forward.

Bypass’s full-featured, back-of-house system produced accurate reporting and reconciliation, which streamlined workflows. Bypass was also able to handle custom integrations, such as a partnership with Ticketmaster to accept tickets with stored value.

The Jaguars pride ourselves in making the game day fan experience efficient and seamless at TIAA Bank Field. the Bypass POS and management system contributes to that goal by ensuring we’re ready for the next innovation in concessions solutions.
— Larry Wilson, VP of Facility Operations, Jaguars

 

RESULTS

The TIAA and Bypass partnership delivered accelerated revenue across all food and beverage categories and streamlined venue management.

ACCELERATED REVENUE

After Bypass’s implementation, transaction counts were compared to the previous system on both standard POS systems and once EMV payments were accepted.

When comparing Bypass’s performance to TIAA’s previous provider, Bypass delivered significantly more orders during peak hours of service. Peak load transaction count increased by 22%*, as speed translated to more revenue for TIAA.

ENHANCED SECURITY

Furthermore, even after EMV payment technology was deployed, transaction speed was held generally constant (only up 3%), despite the leap in security.

STREAMLINED MANAGEMENT

Bypass was able to synchronize data into digestible reporting, ready to be consumed by teams located in and out of the venue.

Like the transition to EMV, Bypass’s fast development cycles successfully positioned TIAA to evolve to the needs of the market and to easily innovate as the business continued to grow.