Mobile Order-Ahead Grows at Lightning Speed

Dan Brames
Group Executive – Retail Payments Group
Posted on April 27, 2017

What are your thoughts on mobile order ahead?

I often order my lunch from the sandwich place near my office, using their mobile order-ahead app. I like that it allows me to spend more time eating, and less time waiting for my food. Studies show that I’m far from alone among quick service restaurant (QSR) customers. In fact, BI Intelligence projects a compound annual growth rate of 57 percent during the next five years and estimates that mobile order ahead will become a $38 billion industry by 2020.

Those numbers haven’t gone unnoticed. According to LevelUp’s Seth Priebatsch, mobile order-ahead deployments at QSRs tripled between 2015 and 2016, and they’re projected to climb to 300,000 by year end. If that happens, nearly half of QSR and coffee shop locations in the U.S. will offer mobile order-ahead.

Consumers benefit by reducing a key pain point

That’s great news for consumers who find waiting in line to be a pain point – which seems to be most of us, these days. Today’s consumer seems to be busier and more impatient than ever – factors that have propelled e-commerce growth. Still, no one can order a steaming latte from Amazon.

Consumers who routinely visit a particular retailer – Starbucks or Dunkin’ Donuts, for example – have bought into the perks that such retailers have employed to habituate usage of their mobile apps and incentivize repeat patronage. Mobile order ahead represents the next step in the “crawl, walk, run” evolution of habituating consumers to use mobile payments.

Retailers benefit by earning and learning

Digitization leads to higher average tickets – 30 percent higher for Taco Bell. Another key benefit of mobile order-ahead is that, with the help of data mining, retailers can further monetize their app, sending push messages to customers that encourage them to spend more. For instance, if a restaurant knows that I come in every Monday for lunch, they can send me a reminder for my Monday order or a discount coupon for Tuesday.

Mobile order ahead may be able to reduce labor costs significantly – by as much as 30 percent, according to a recent article in PYMNTS.com – but the jury is still out on labor-saving costs for QSR. Many items cannot be prepared too far ahead of pickup and some QSRs are showing some growing pains associated with mobile order ahead.

In a recent quarterly earnings report, Starbucks announced that its mobile app accounts for 27 percent of in-store purchases. Seven percent of the 27 percent is accounted for by mobile order ahead. Seven percent is an impressive number, but not free from creating queuing challenges. The quick rise in mobile order ahead has created bottlenecks in some locations as employees struggle to keep up with preorders. Starbucks is evaluating potential solutions including testing a mobile order-ahead only location and Panera admits to adding staff to keep pace with the mobile order-ahead crowd.

What’s next?

I believe that we still see mobile order-ahead apps quickly penetrate other lines of trade beyond QSR. Suppose you’re a construction worker. Time is your currency and you don’t want to spend it waiting in line at the hardware or home improvement store instead of getting paid. It makes sense for lines of trade serving time-pressed customers to offer mobile order-ahead apps.

I also imagine that I’ll soon be able to say, “Alexa, please order me a large pepperoni pizza from Domino’s for pickup at 6:30 this evening.”

In conclusion

The technology requirements for mobile apps have come a long way. – it’s much easier for retailers today to create an app than it was even two years ago. That’s one of the reasons I believe mobile order-ahead will become table stakes in QSRs, as well as extend to other lines of trade quickly.

If you are considering an order-ahead app, it’s important to make sure you work with a partner who is experienced and who has the scale to support your efforts over the long term. What are your thoughts on mobile order ahead?

Leave a Reply

There are 2 comments for this article
  1. bill pryor at 4:28 pm

    This is the kind of tech that will start popping up table-side at full-service restaurants as well, as people are impatient when it comes time to, not only waiting in line but also paying their bills.

  2. EVRYEDGE at 8:25 pm

    “I also imagine that I’ll soon be able to say, ‘Alexa, please order me a large pepperoni pizza from Domino’s for pickup at 6:30 this evening.’ ”

    This is pretty much a reality now! Check out the links below, Pizza Hut launched the ability to ask Alexa for a pizza in December 2016. And, just a couple months ago, made ordering via Alexa the center of their National Pizza Day campaign.

    http://blog.pizzahut.com/press-center/alexa-ask-pizza-hut-for-a-pizza-please/

    http://blog.pizzahut.com/uncategorized/national-pizza-day/

Dan Brames
Group Executive – Retail Payments Group

Dan brings over 20 years of financial and payments industry experience to FIS through senior marketing and management roles. Most recently, he was a management team member at Valutec which was acquired by Metavante in 2007 and FIS in 2009.