Proprietary restaurant apps have been gaining traction for years, as many brands have come to see them as yet another channel through which to engage with customers. Chains like McDonald's have rushed to launch apps that allow customers to view nutrition information, play games, manage loyalty programs or otherwise engage with the brand, but beyond leading pizza chains, many have so far stopped short of offering a true online ordering service.
Still, mobile sales are increasing in popularity across all consumer products channels, and demand for the channel is growing fast. What might have been considered a novel luxury just a few years ago is now something customers are coming to expect, and the growth of online ordering hub GrubHub—which brings the ease of mobile app-based ordering to independent restaurants—has only furthered this sentiment.
As a result, chains are feeling more pressure to generate proprietary mobile ordering apps to better compete. McDonald’s announced this morning that it would be testing digital payment and ordering in select markets this year, and Starbucks is reportedly “actively working on mobile ordering,” according to Bloomberg News. Domino’s Pizza, always an early mover when it comes to technology, reported during the third quarter of 2013 that 40% of its global sales were now coming through digital channels, and that mobile sales were growing even faster than online. The company’s mobile ordering app has been available for years, but a new iteration released last year is more efficient and now compatible with 95% of the smartphone market. According to the company, pizzas can now be ordered in as little as five clicks or thirty seconds, catering to the convenience-based needs of the typical mobile customer. Mobile ordering is far from a US-only trend as well: Domino’s’ UK master franchisee reportedly saw mobile sales double year-over-year in 2013.
This is all especially significant in a time when differentiation in foodservice is becoming increasingly difficult to come by, and operators are being forced to pursue every possible strategy in order to squeeze incremental sales out of their existing consumer base. This year has been particularly difficult for fast food, as consumers have been asking for greater value in their fast food purchases, returning to dollar menus and shying away from premium menus.
Ultimately, this move is a continuation of other trends we’ve seen in chained foodservice, as operators look for ways to gain access to every possible consumer, at every possible eating occasion, and through every possible ordering channel. We’ve seen growth in delivery, more efficient and more ubiquitous drive-throughs, daypart expansion, extended hours, and now mobile ordering apps. With growing dependence on digital channels for all consumer purchases, and growing agreement among operators that mobile ordering is the online ordering of the future, we’re going to be seeing a lot more mobile ordering apps - and soon.
Analyst Insight by Elizabeth Friend - Senior Consumer Foodservice Analyst, Euromonitor International
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