- Mobile order-ahead apps — platforms that enable consumers to remotely purchase menu items for in-restaurant pickup — are on the rise among quick-service restaurants (QSRs). We expect sales on these platforms to reach $38 billion by 2020, representing a five-year compound annual growth rate (CAGR) of 57%.
- Due to their ability to enhance loyalty, increase average ticket sizes, and boost efficiency, these apps can have a significant positive impact on a fast-casual restaurant's business.Growth will be driven especially by customer migration to mobile; a surge in mobile sales at early adopters like Starbucks, Domino's, and Dunkin' Donuts; and widespread adoption at the nation's top 65 QSRs.
- Taco Bell and Starbucks are proving the concept of mobile order-ahead. Taco Bell has built a robust mobile order-ahead app that generates 30% higher average order values than traditional in-store orders. Starbucks also has a thriving order-ahead feature that contributes to increased sales at its busiest stores.
- Alternative products will help propel mobile ordering. Aggregators like Grubhub will onboard smaller fast-casual restaurants into the mobile ecosystem by offering them an existing app to integrate into, lowering the upfront costs of creating a mobile channel on their own. In-store self-service kiosks will help popularize remote ordering and accustom users to less traditional forms of payment that don't require a cash register.
- But there are some risks and drawbacks. Adding a mobile layer onto a commerce business introduces economic and organizational challenges, like higher card-not-present processing rates and the re-allocation of human capital.
Why QSRs Are Embracing Mobile Order-Ahead
Mobile has gained legitimacy as a commerce channel. Millions of retail locations in the US now accept mobile in-store payments from wallets like Apple Pay and Android Pay. Retailers are also developing e-commerce businesses that support mobile payment options in apps and on mobile websites.
However, quick-service restaurants (QSRs) — establishments with limited table service where customers usually buy their food before eating it — have been turning to mobile order-ahead to extract higher sales, intensify customer loyalty, and heighten foot traffic.
- Mobile order-ahead refers to a consumer-facing mobile payment platform that allows customers to order food remotely, pay for the items on their phone, and pick up their order at a specific restaurant location.
Because QSRs have lower ticket sizes than dine-in restaurants, delivery is less economical for them, [...]