The NPD Group’s latest research shows digital orders now drive 15 per cent of all foodservice growth in Canada, despite accounting for only two per cent of foodservice traffic. New convenience-enabling technologies, such as mobile ordering and delivery apps, have become a bright spot in an otherwise stagnant industry. And, while foodservice traffic has been flat for several years, restaurant visits paid by mobile apps increased 50 per cent in 2017. Digital technology has also become a significant visit motivator. Here’s a closer look at what NPD research reveals:
• Nine per cent of Canadian consumers are influenced by a digital-media platform before making a restaurant choice. Facebook, YouTube and Instagram are the most influential platforms.
• Fourteen per cent of consumers are influenced by digital marketing before buying. These include digital coupons, emails, apps and online flyers.
• Millennials are four times as likely to search for, or post, an online restaurant review compared to other generations.
• Technology is quickly transforming the foodservice industry and changing the way Canadians dine out. The use of digital technology has been growing rapidly for several years as mobile apps and other technologies help meet the needs of time-strapped consumers.
• Digital technology is also changing where, not just what, consumers eat. Off-premise foodservice occasions are up five per cent year-over-year, while on-premise occasions have posted declines (down two per cent). In fact, 58 per cent of all foodservice occasions in Canada are now off-premise (the highest on record). This trend has been driven by the emergence of digital technology that allows consumers to order, pay, pick up or arrange for delivery quickly and efficiently.
Who’s winning the digital race?
Several leading foodservice brands have committed to strengthening their digital strategy in recent years. Nearly a decade ago, Starbucks revolutionized the foodservice industry by launching an innovative mobile app. Fast forward to 2018, and the app is responsible for generating $100 million per week across its business, globally — all by improving ordering, payment, rewards and personalization. In addition, Starbucks has been able to prove its clients increase their overall spend by between 20 and 70 per cent once they’ve signed up for the app.
Another best-in-class example of digital innovation is Yum! Brands, which owns Pizza Hut, Taco Bell and KFC. Over the last five years, the company has proven an investment in digital technology can help bolster the bottom line. In fact, all three of the company’s brands surpassed expectations for same-store sales growth across all of its restaurants during the most recent quarter, thanks in large part to investments in digital tech. Perhaps most notably, Pizza Hut has now recorded five consecutive quarters of positive same-store sales growth after the company announced it would invest $130 million in improving
restaurant technology and boosting online and digital advertising through 2018. This turnaround is no coincidence — Yum! took the same approach in 2015 when it announced it would invest $180 million into KFC to help revive deflated sales. The chain has since experienced 13 quarters of same-store sales growth.
A strong digital strategy is no longer a nice-to-have — it’s a need-to-have. Restaurant operators seeking to gain more visits and grow the bottom line must decide which convenience enablers are worth their investment and whether or not they can afford not to invest in technology.
Written by Robert Carter