KEY POINTS

  • Quick-service restaurants are increasingly offering mobile order-ahead apps that allow consumers to make orders remotely and pick up what they've ordered in store. The apps offer consumers convenience and retailers the opportunity to drive higher revenues. 
  • Taco Bell's early success with its order-ahead app gives other chains a blueprint for launching these apps. Taco Bell recently launched a mobile order-ahead app that has been downloaded 2 million times in the first four months, and 3 out of 4 Taco Bell chains processed a mobile order on the app's first day. Other chains with these apps include Pizza Hut and Chipotle.
  • Mobile order-ahead can drive higher average order values. Taco Bell's app orders are 20% higher on average compared to in-store because consumers are more likely to add toppings to their orders or send in group orders via the app.
  • Other types of apps have already shown success within the food and beverage industry. Seamless/GrubHub has already had phenomenal success in the $9 billion online ordering market. And the Starbucks and Dunkin' Donuts mobile in-store payments apps have proven that consumers will use their phones for brick-and-mortar purchases given attractive incentives like loyalty programs.  
  • While mobile order-ahead offers a substantial opportunity to restaurants, it also comes with risks. A successful mobile order-ahead program could have a substantial impact on the dynamics of a brick-and-mortar restaurant's operations. If order flow is not managed properly, this could create an unpleasant in-store experience and reduced sales.


Mobile order-ahead and the quick-service restaurant opportunity

Retailers are racing to take advantage of the opportunity in mobile commerce. Mobile commerce grew 28% in 2014, reaching $36.4 billion in revenues, and the segment remains poised for continued double-digit growth.

While a whole host of retail segments have embraced mobile commerce, fast-food and fast-casual restaurants — dubbed Quick-Service Restaurants (QSRs) — have only dipped their toes into this space. In part, this is because their service is fast by nature and requires an in-store visit, so there isn't an obvious advantage to enabling online or mobile ordering.

Recently, though, Taco Bell launched a mobile order-ahead app that has seen significant early success, and now other QSRs are starting to follow suit. 

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 [...]