Preordering Quick Service Items is Gaining Traction

Have you ever tried to buy a cup of coffee or lunch and found the line to be extremely long? I have and I’m sure you have as well. Nobody wants to wait in lines especially if you are just buying a quick service food item. While ordering food to go is not a novel idea, advances in technology has enabled the capability to preorder and pay for products via mobile devices for the on-the-go consumer. Starting this month, Starbucks will be trialing its new preorder system via their app in 150 stores. How does it work? First, customers select the items and the location for pickup.

  • The app will show the approximate wait time before the order is placed. No, you can’t set it to pickup in, say, an hour—the order is created as soon as it is received, so you better not be too far away.
  • When the order is placed, payment is made from the customer’s registered Starbucks Card—no fumbling for change at the register.
  • If a beverage isn’t hot or otherwise isn’t to the customer’s satisfaction during pickup, Starbucks says it will remake it.
  • The next time the customer opens the app, the menu screen will display recent orders.

In addition, customer names will be printed onto a label, eliminating the chance that human baristas will spell things wrong. It really is a new Starbucks experience. Starbucks is not the only company trying this. McDonalds, Taco Bell, Pizza Hut, Domino’s Pizza, Subway, Chipotle, Chick-fil-A and Dunkin’ Donuts are using, testing or developing similar apps.

What about other businesses?

Implementing these capabilities in a small business is not an easy task. To retrofit computer systems, redesign the layout of your location, design and customize an app and train employees to work with the new systems typically costs $25K for each location according to Crone Consulting. This is a significant amount of money for any small business. One way to cut out some of the cost is to partner with a third party. Order Ahead, Square, and others have their own apps that they are marketing to small businesses. With similar services to the Starbucks app these companies will give merchants scale and reach for a 5% to 10% cut of each transaction.

 

Early Results Are Promising.

While full impacts are not known, some trials have shown promising results. Coupa Cafes has been testing preorder apps at 2 of their 7 locations for a few months now. They have found that preorder customers spend 50% to 80% more per transaction than non-preorder customers and some days those preorder transactions account for 15% of the total sales at that location. Another company, Sprout Café, has seen wait times be cut by as much as 85% for to go orders. This is significant for them as their mobile orders have doubled in the past 12 months and now accounts for 30% of their business. Within the next couple of years, every quick service restaurant should have a mobile express line. This will help them serve as many as 30% more customers according to the National Restaurant Association.

 

Where do we go from here?

Only time will tell. As technology continues to advance, it will be an interesting space to watch. Small businesses can’t do everything themselves and partnering with 3rd parties makes sense. Square is beginning to tie some of this with iBeacons which adds another layer of complexity and opportunities. 2015 will certainly be interesting.

 

 

 

Jason Peaslee

Jason Peaslee is the Managing Partner of Thrive Analytics, a marketing research and analytics consulting firm. His career spans more than 20 years in marketing, advertising, product development, research, and business management. Before founding Thrive Analytics in 2010, he held several senior leadership roles at AT&T, Reynolds & Reynolds, Berry Network, & The Berry Company.

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