Restaurant Operators are Taking Control of the Digital-Ordering Experience

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Digital ordering is top of mind for many industry players, with brands striving to take control of their customers’ digital-ordering experience.

Starbucks is often looked to as a leader within the mobile-order and pickup space, having entered the game early (launching across the U.S. in 2015) and investing significant resources into the development of its “digital-flywheel” approach, which incorporates rewards, personalization, payment and ordering.

“Over the past five years, we’ve invested significantly and systematically to build a powerful digital flywheel that today enables more than one-billion digital customer occasions a year,” Kevin Johnson, president and CEO, Starbucks, explained during the company’s Q3 2019 earnings call. “The digital strategy we’re executing against ensures we maintain a direct relationship with our customers and avoid getting disintermediated by third-party ordering apps. It also enables us to deliver personalized marketing directly to our most loyal customers in an efficient manner.”

Other large franchise leaders — including Tim Hortons and McDonald’s — have since launched their own digital infrastructure to support this offering, as have brands such as Swiss Chalet, Smoke’s Poutinerie and Blaze Pizza.

Rather than develop their own platform, a range of foodservice establishments have opted to partner with third-party order-ahead services such as Ritual and ClickDishes. Big third-party delivery players, including Uber Eats, DoorDash and foodora, have also started offering pickup through their platforms in recent years.

“Whether it’s first party or third party, people love the ability to order ahead and skip the wait — and they don’t want to pay extra for that convenience,” says Ray Reddy, CEO and co-founder of Toronto-based Ritual, which boasts a presence across Canada, the U.S. and additional international markets.

As Reddy explains, it makes sense that order-ahead is an in-demand service in urban centres. “Drive-thru sales in the suburbs make up [about] 70 per cent of store sales, but that’s true because they’re free to use,” he says. “We think about mobile order ahead as the equivalent of what the drive thru is in the suburbs.”

Reddy’s comparison may prove an increasingly apt one, as Chipotle Mexican Grill announced plans in December to begin testing a new restaurant design featuring walk-up windows to better support its billion-dollar digital business.

Beyond the convenience of skipping the line, mobile-ordering platforms also have the added benefits of easy order customization and allowing customers to save their favourite orders to simplify future purchases.

Ritual goes a step further to facilitate what Reddy refers to as a “peer-to-peer delivery network” within office environments through the platform’s “Piggyback” feature. The social group-ordering feature allows a user to offer pickup for their team when they place an order and notifies team members so that they can join. Ritual even incentivizes those who pickup orders for their team members by offering them extra rewards points, which can be used towards future purchases.

For operators, digital-ordering platforms also unlock insights and marketing opportunities, including direct marketing and personalized offers/incentives.

“We can finally answer questions for restaurants, such as how many new customers do you get every week, how many of them return and, for those who return, how often do they return? Also, what makes them return?” says Reddy. “That’s invaluable data for merchants.”

As with any new technology, its introduction has resulted in a unique set of challenges. “Many legacy POS systems don’t have integration ability,” Reddy notes. In these cases, the company provides restaurants with a device for managing orders. “And, they can either input [orders] into their POS in real time or download month-end or week-end reporting for accounting purposes,” says Reddy.

Efforts are also being made to streamline the pickup experience in restaurants.

“Menus become pointless when 60 to 80 per cent of people have already ordered; what you need is traffic control,” says Reddy. “You see a lot of people coming into stores wondering, where’s my order? When is it going to be ready?”

The solution: displays detailing orders in progress. These can already be found in many McDonald’s locations and Ritual retrofits restaurant partners with tablets that serve the same purpose.

There are also a number of low-tech restaurant features being rethought, including store layouts and the design of order-pickup areas. “The reality is most stores weren’t designed for a mobile-pickup experience,” says Reddy. “When you enter a store…typically the first thing you do is wait in line to order and then move over to the pickup area. But, when you have a lot of people coming in that have already ordered, making them cut through a busy line doesn’t make sense.”

Some brands have developed innovative in-restaurant solutions to streamline the pickup experience. For example, Little Caesars introduced the industry’s first heated, self-service mobile-order pickup portal in 2018, which it launched in Canada in October. The brand’s Pizza Portal pickup has attracted attention as an innovative technology and received accolades from the International Franchise Association.

Customers who order through Little Caesars’ app or website can bypass the line when arriving at the restaurant and retrieve their orders from the Pizza Portal’s secured compartments using a provided three-digit pin and QR code.

Independent brands have also been developing their own strategies to accommodate demand for mobile orders. Vancouver-based Tractor Everyday Healthy Foods launched a new pick-up-only concept — Tractor Digital — in June 2019, developed in partnership with digital-product studio Apply Digital. Leveraging intuitive design and AI, the Tractor Digital platform offers advice and incentives during the ordering process, optimizes menu options and tracks customer satisfaction and quality control.

“It’s an interesting time because we’re asking ourselves where we think customers see value and how people prioritize their purchases for quick-service food,” says Meghan Clarke, the company’s co-founder. “In the heart of urban centres, the [Tractor Digital] concept will probably, over time, be the format that will really sing with customers.”

“My sense is that [digital ordering] is going to become one of the most important dimensions for restaurants to win on,” agrees Reddy, pointing to the shifts that have taken place in retail over the last decade as a road map of what’s to come.

“It’s not about who ran the best store, it’s about who embraced digital and understood the game has changed. The same thing is going to be true in the restaurant world. Winners and losers are now going to be dictated by those who understand and optimize for digital versus those who don’t.”

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