State of the QSR industry - Feeding Demand for a More Digital, Efficient Experience - Plexure
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State of the QSR industry Feeding Demand for a More Digital, Efficient Experience
STATE OF THE QSR INDUSTRY 2021 2
Table of
contents
INTRODUCTION 3
MOBILE/DIGITAL ORDERING AS THE NEW NORM 4
CONTACTLESS IS HERE TO STAY 6
CREATING A BETTER PICKUP EXPERIENCE 8
UPDATING DRIVE-THROUGHS 10
ELEVATING DELIVERY 11
IT’S NOT TOO LATE FOR CHANGE 12
STATE OF THE QSR INDUSTRY 2021 3
Introduction works for some QSRs, the fees can become
unsustainable, particularly as mobile
ordering for pickup and delivery becomes
more prevalent, even after the pandemic
Before the first case of COVID-19 was even
fully ends. Plus, with third-party solutions,
detected, retailers and restaurants were
QSRs lack the same level of brand control
already well on their way toward a more
and customer data that they can achieve
digital-oriented experience. From mobile
through their own offerings.
ordering to contactless payments to digital
loyalty programs, businesses have been
So, as more than a year has passed
implementing new technologies to create
since the first reported case of COVID-19,
a faster, more convenient and personally
many QSR brands are evaluating whether
engaging experience. The pandemic,
the solutions they implemented while
however, has dramatically accelerated
under pressure to meet rapidly changing
these shifts, especially for quick service
restaurants (QSRs). customer needs still fit with their long-term
requirements. That determination requires
Yet challenging economic times have a assessing how the world has changed on
unique way of separating the prepared from a more permanent basis and seeing how
the digitally immature, and therefore not all a brand’s solutions can align with evolving
QSR brands fared the same during COVID. demands. For example, only 20% of U.S.
The winners have been those brands that consumers think their ordering habits will
had (or were in the midst of developing) return to a pre-pandemic normal, finds
digital offerings prior to the pandemic — e.g. industry publication QSR Magazine.
their own mobile ordering and delivery apps
— enabling them to fast-track their plans and What will ordering habits look like going
still operate relatively smoothly over the past forward? What do customers expect from
year. These companies not only survived QSRs? And what types of technologies
but were able to thrive in 2020 and further do brands need to deliver the type of
the digital transformation gap between experience that consumers will demand?
themselves and competitors.
In this report, we’ll explore five customer
For those that lacked this technology, many habit trends that QSRs need to keep in
were forced to implement quick fixes via mind as they look to provide innovative,
off-the-shelf, third-party solutions like Uber customizable solutions that can adapt and
Eats and Grubhub. Although this model grow with brands over time.
STATE OF THE QSR INDUSTRY 2021 4
TREND
01
Mobile / digital
ordering as By 2025, almost half of limited
the new norm service restaurants’ revenue will
come from digital, which is around
70% more than pre-pandemic
In years past, QSRs often prided projections, according to Incisiv.
themselves on being able to efficiently
manage long queues of customers in-
store. While that has shifted somewhat in
recent years as apps, websites and digital As such, QSR brands need to
kiosks emerged to provide customers with evaluate issues like:
other convenient ordering methods, the
pandemic has dramatically accelerated Managing digital ordering solutions:
this change. As of mid-2020, 58% of High digital ordering volumes could justify
consumers prefer to order digitally from a more QSRs investing in their own branded
QSR, finds Deloitte. solutions. While doing so would require
brands to keep up with changes like new
“Before COVID-19, QSR, fast-casual, and operating systems, devices and customer
casual dining consumers preferred dealing preferences, advantages like reducing
with cashiers to using apps. After COVID-19, commissions and gaining more control over
those options switched places in the customer data will be worthwhile.
rankings. Options like voice assistants and
wearables are also gaining in popularity,” And it doesn’t have to be entirely an either/
reports Deloitte. or decision. Some QSRs have found
success by both using their own apps to
Even when more customers are build customer loyalty while also expanding
comfortable going inside to order, don’t their customer base and offering specific
expect people to forgo the convenience services like delivery through third-party
that digital ordering provides. fulfillment solutions.
STATE OF THE QSR INDUSTRY 2021 5
Staffing and store design: If more
customers place orders online, then
stores can potentially be reconfigured to
minimize the space dedicated to ordering
and checkout. Staffing decisions may also
change, such as if more resources are
put toward fulfilling orders or back-end
technology support, rather than having as
many front-of-house employees taking
orders. Ultimately that type of model
would support increased efficiencies and
customer satisfaction scores.
Creating a strong customer experience:
Technological bells and whistles cannot
come at the cost of a smooth user
experience; instead they must enhance it. a good experience, especially if that
Convenience and speed are still the top human element of interacting with friendly
determinants for how customers order, employees in-store gets lessened on
finds Deloitte. Similarly, ease-of-use is the occasion. Using customer data to suggest
top factor for restaurants to get customers new items to try and customize promotions
to download their own apps. could help make digital ordering both
convenient and help customers feel
At the same time, brands need to think appreciated.
about ways to reward loyalty beyond
Studies (such as one from the International
Journal of Hospitality Management)
suggest, though, that more customers
want a “Surprise and Delight” experience
that rewards them for no obvious reason.
Whether loyalty comes intrinsically from
a good experience or from rewards, the
outcome is the same in terms of creating
a positive emotional response. That type
of response is linked to the same type of
endorphin release that people get from
exercise and promotes repeat behaviors.
STATE OF THE QSR INDUSTRY 2021 6
TREND
02
Contactless is
here to stay
Part of the reason why digital ordering is The Appezite study also found that
likely to remain prominent in years to come features like self-service kiosks or viewing
is that consumers are increasingly turning menus on mobile phones could hold some
to contactless options that increase appeal.
efficiencies in customer experience.
Both from a sanitation and convenience “However, kiosks have been rolled out as
perspective, features like contactless hands-on customer experiences, with
payments can help provide a better customers tapping on screens to select
experience for customers. In fact, having menu options and place their orders.
contactless payment options is the top These experiences may need to be re-
drive-through innovation that customers imagined, leveraging voice and gesture
want, finds QSR Magazine. controls, to regain customer use,” notes
separate research from Publicis Sapient.
In other words, QSRs need to consider
their current physical touchpoints and
evaluate whether turning some of them
contactless could help improve speed
Post-Covid, more than three- and/or provide customers with the types
quarters of U.S. consumers would of interactions they’re comfortable with.
As Publicis Sapient notes, technologies
still prefer contactless payments,
like robotics could even cut down on
according to a survey from touchpoints within food prep.
Appetize.
Ultimately, reducing touchpoints could free
up time for both consumers and staff, while
helping more people feel comfortable and
allowing for more positive interactions.
STATE OF THE QSR INDUSTRY 2021 7 Some brands make the mistake of thinking “digital is about communicating. Communicating is part of it. But really, what you want to do is to enable people to perform the actions that they were going to perform anyway but in a more convenient, more personalized way,” says McDonald’s Japan VP of Digital Marketing, Raphaël Mazoyer. Working with Plexure, McDonald’s Japan launched a contactless order and pay system that coincided with a 40% increase in average check. Case study While Japan is the second largest that McDonald’s customers receive their McDonald’s market globally, there meals within moments of being prepared, are many other fast food options every time. Within a few months of launch: available to entice consumers. Therefore, McDonald’s Japan is focused on establishing and 8% 41% maintaining strong customer of total sales originated increase in average connections. from mobile check Harnessing the power of data and artificial intelligence, Plexure 203% 623% helps McDonald’s Japan send increase in guest count increase in app personalized offers and content, per store usage and enables ordering and payment via its mobile app. This includes Watch the video case study: the timing of order fulfilment so plexure.com/case-studies/mcdonalds-japan
STATE OF THE QSR INDUSTRY 2021 8
TREND
03
Creating a
to pay for orders online, rather than just
placing the order and then paying in-store,
which can slow down the process.
better pickup Customers may also want the option to stay
experience
in their cars and have employees bring out
their food when it’s ready. Doing so can be
easier for customers while allowing stores
to not get clogged up by foot traffic.
With demand for contactless options
and mobile/digital ordering on the rise, As PYMNTS.com notes, “mobile ordering
QSRs also need to think about how they in and of itself is no longer enough to win
can create an efficient, enjoyable pickup business at a time when customers are
experience for customers. The ease of loving – and have become accustomed
ordering through an app only to then wait, to – ancillary services like the ability to pay
say, 15 minutes in the store to receive the online and do curbside pickup to complete
items can quickly turn a good experience the touchless trifecta.”
into a frustrating one.
Still, some customers may want to come
So, QSRs need to consider ways to ensure inside a store to complete their pickup, and
that online orders can easily be picked up. QSRs need to be ready to facilitate quick
For one, customers should ideally be able interactions here too.
67% 45%
of U.S. consumers are using curbside of U.S. consumers have used in-store
pickup more often or at least at the same pickup more often or at least at the same
frequency, whereas only 45% did the frequency, whereas 55% did so in April
same in April 2020.* 2020.*
*According to an early 2021 Bluedot study
STATE OF THE QSR INDUSTRY 2021 9 Thus, QSRs will need to think of processes Moreover, an optimized mobilized strategy and utilize technologies that streamline bolsters customer experience by enhancing pickups, whether curbside, in-store or a precision and personalization. There can combination of the two. “The acceleration be two-way data sharing that benefits both of digital will also make curbside pickup QSRs and their customers. Not only can windows and lanes more relevant,” notes customers track their order status, but Morgan Stanley. These designated areas QSRs can increasingly understand how to could help customers get in and out quickly, serve their customers. without hampering the experience for customers in a traditional line in-store. “When you’re able to move more and more customers onto mobile, you’ve got a lot more capabilities to build your orders and fulfillments around the customer and become truly customer-centric. Because they can order online, you know exactly where they are on their way to come pick it up. If you are a restaurant, you can actually cook the order to perfection based upon the fact that you see they’re 45 seconds away. You know the exact parking spot they’re in so you’re handing off the perfect food in the perfect condition in the fastest, most seamless manner.” Cathy Song Novelli, VP Marketing & Comms, Rakuten Ready
STATE OF THE QSR INDUSTRY 2021 10
TREND
04
Upgrading
thru only concepts this year,” says Clark,
in an article for Construction Executive.
drive-throughs Part of the reason for emphasizing drive-
throughs is that they can align well with
other features such as mobile ordering
Another way for QSRs to provide efficient and delivery. As stores reimagine their
service and minimize contact is to utilize layouts and staffing to handle fewer
drive-throughs. During the pandemic, customers lining up in-store to place
stores that already had this infrastructure an order, they might be able to dedicate
often benefited, but drive-throughs could more space and staff to prepare drive-
become even more important going through orders, thereby increasing
forward. efficiency.
In addition to these logistics, QSRs will
also have to consider how they utilize
technology to upgrade the overall drive-
through experience. If this method
becomes more standard, brands will need
to ensure that a long line of cars doesn’t
“Drive-thrus are not only here to
equate to a long wait time.
stay but they are now a core pillar
of future restaurant development.” Instead, QSRs might want to add options
like designated mobile ordering lanes.
Shane Clark, director of Forty-nine percent of U.S. consumers
development & construction, would prefer to order online and then
Southwest region, Dunkin’ Brands drive through a “pickup only” lane, finds
QSR Magazine. Doing so could both
provide a contactless payment option
while potentially cutting down on the
“In fact, numerous brands have launched logjams that can occur when everyone
drive-thru only prototypes or heavily goes through one line to order and then
focused on the expansion of their drive- pick-up and pay at the next window.STATE OF THE QSR INDUSTRY 2021 11
TREND
05
Elevating
delivery
The pandemic has also had a dramatic
effect on food delivery, making this a
channel where many QSRs will have to
develop a viable long-term strategy. That said, the most common response
was to keep usage the same. Considering
According to Morgan Stanley, total online the elevated usage during the pandemic,
food delivery reached $45 billion in the that means QSRs that have not adapted to
U.S. in 2020. By 2022, delivery is expected delivery demand will likely need to do so
to grow to 16% of the addressable market, going forward. And since many consumers
whereas the company previously projected seem open to ordering directly, some
that would occur in 2025. “That means QSRs could stand to gain from developing
nearly three years of consumer spend is their own branded apps and hiring their
being pulled forward, led by accelerated own delivery drivers.
growth from delivery platforms,” says
John Glass, Morgan Stanley’s lead equity The more control that QSRs have over
analyst covering the U.S. restaurant sector, the delivery process, the more that they
in a company article. can create an elevated experience on
their own terms. For example, instead of
Of course, this market is larger than just leaving promotions up to third-party apps,
QSRs, but the opportunity still exists for QSRs with their own delivery solutions
all different types of restaurants to appeal could customize offers and provide
to consumers who want delivery. Over the their own loyalty rewards. And instead of
next year, slightly more consumers plan waiting for a third-party driver to pick-up
to increase than decrease their usage and deliver an order, which can create its
of direct delivery, finds QSR Magazine. own inefficiencies, a QSR could establish
Conversely, these surveyed customers processes to get deliveries out as soon
tilt slightly more toward decreasing than as the food is ready, thereby providing a
increasing their third-party delivery usage. better experience for customers.STATE OF THE QSR INDUSTRY 2021 12
It’s not too late will keep coming back to that specific
restaurant. Yet if QSRs can take more
for change
control over their promotions and analyze
their own customers’ data, they may find
better ways to develop retention.
“Despite evidence that showed customers
Keeping up with evolving customer
would spend more if they had access to
demands may not be easy, but those
loyalty and rewards programs, nearly 40
who do not adapt their technologies and
percent of restaurants do not offer such
processes will get left behind. Fortunately,
programs,” finds research from PYMNTS
even though brands that already started
and Paytronix.
making some of these changes, such
as around mobile ordering and delivery
Although it’s not too late to adjust your
solutions, may have had a leg up during
strategy, the window to adapt won’t stay
the pandemic, it’s not too late for other
open forever. There’s a reason there’s
QSRs to add solutions that align with what
only one Blockbuster remaining. Working
consumers crave.
with an experienced and flexible partner
like Plexure can help you quickly identify
At the very least, brands should think
your brand’s unique challenges and build
about how they’re using customer data
solutions around them. From developing
to analyze these different areas. For
mobile ordering solutions to analyzing
example, calculating the percent of
your customer data for personalized
revenue that comes from delivery vs.
pickup can help brands assess their ideal offers across the entire customer journey,
Plexure can help QSRs thrive in this new
store layouts. Regardless of a QSR’s level
environment.
of digital transformation, they can add
personalization to existing strategies to
We’ve helped some of the world’s leading
enhance consumer experience and build
QSR brands, like McDonald’s, innovate to
loyalty.
better serve their customers. See how we
can help your brand do the same at
Moreover, QSRs need to think about how
www.plexure.com.
they’re building loyalty. Delivery volume
might be high one month due to a third-
party app’s promotion, for instance, but
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