You’re walking down a busy sidewalk to an early meeting when your smartphone dings. A message pops up, noting you haven’t stopped for your usual egg sandwich and latte. A mobile app tells you the nearest Dunkin’ Donuts is three blocks over. Another app brings a coupon for breakfast at a McDonald’s around the corner. You decide. With a few taps, you order, specify a pick-up time and pay, never breaking stride.
That evening at your favorite burger chain, you approach a counter-mounted iPad to order. The system recognizes you from identity data radiating from the phone in your pocket and automatically displays only the foods you like. A smiling avatar on the screen welcomes you. Having checked your purchase history and the store’s inventory, she makes an offer. “You’re due for a reward,” she says. “How about our new Megaman Cheeseybeef for $2? Dessert’s on me.” How can you resist?
The future of eating out lies in today’s experiments at Burger King, Domino’s, McDonald’s, Wendy’s and the many other companies in the $707 billion worldwide fast-food market. Restaurant chains want to use technology–theirs and yours–to create an intimate customer experience. Your personal device and the restaurant’s own systems for sensing, analyzing and transacting will exchange data, for your convenience and their profit. Fast food becomes not so much a destination but a service that follows you from mealtime to mealtime.
Once, a fast-food restaurant’s menu differentiated it from competitors. “Dude food” one-upmanship a few years back brought us delights like Hardee’s Monster Thickburger (up to 1,400 calories) and Red Robin’s Whiskey River BBQ Burger (1,100 calories).
Now IT is the differentiator. But customers expect more technology to be involved in dining out than simply posting pictures of their entrees to Tumblr. They want faster, more accurate ordering, e-coupons and more options for payment, says Darren Tristano, a consultant at Technomic, a restaurant industry research firm that recently surveyed 500 consumers about technology priorities.
“Consumers are forcing restaurants to move faster than they traditionally have,” adds Robert Notte, CTO at Jamba, a $226 million chain that makes healthy (and not-so-healthy) smoothies. “It’s important to be willing to take risks.”
The valuable breakthroughs will come when restaurants get ahead of customers, creating all-new ways of interacting. International markets, school cafeterias, military posts and crowded cities are laboratories for innovation. Along the way, these companies are rewriting organizational boundaries and rejecting old notions about fast-food business models.
Not every gee-whiz experiment will succeed, of course. But where they do, IT will differentiate those restaurants from rivals, says Dennis Lombardi, executive vice president of food-service strategies at WD Partners, a restaurant design and development firm. “It’s all about trying to influence how the consumer moves.”
If You Want Something Done Right…
Paper hats and penciled tickets may have disappeared long ago, but fundamentally, ordering fast food hasn’t changed much since Ray Kroc opened his first McDonald’s restaurant in 1955. But standing in front of a uniformed cashier reciting a list of numbered meals no longer cuts it. Scratchy speakers at the drive-thru are worse.
No one’s gone digital across a whole chain yet, for several reasons beyond the obvious expense. Franchisees, for example, aren’t necessarily required to do what the corporate entity does, and consumers in various markets may not be ready for big change. Older patrons aren’t as eager as Millennials for capabilities like Web pre-ordering and PayPal-based checkout, Tristano says.
Still, customers view Web, mobile and even phoned-in orders as fast and accurate, he says. Restaurants that use IT to improve ordering will have an advantage in cultivating the happy, frequent visitors they need, he says.
At Jamba, which has nearly 800 stories worldwide, Notte is supporting various electronic payment systems (such as Google Wallet and PayPal) in certain U.S. markets, and is piloting mobile and tablet ordering at seven stores in California.
Jamba recently released a smartphone app that, in future versions, will use NCR’s Aloha Connect tools to link to its point-of-sale system so customers can order, pay through PayPal and designate a pick-up time. When they get to the store, they can skip the lines.
The idea is that with one tap–not multiple cards and pieces of paper–customers can pay, redeem coupons and collect loyalty points, Notte says. “No more Costanza wallet,” he laughs, referring to the Seinfeld episode where George’s overstuffed wallet throws out his back and then blows apart in the street.
Mobile payment “is not going to explode overnight, but we’ll be in a great position to support it as customers start to adopt it,” Notte says.
At Domino’s Pizza, which launched online ordering in late 2007 and its famous pizza tracker in 2008, more than one-third of pizza sales originate online. Now the $1.5 billion company wants to move more customers to mobile. Domino’s already has mobile apps and a website optimized for mobile devices.
This year, CIO Kevin Vasconi and CMO Russell Weiner aim to add features such as access to a CRM system that will remember regular orders, addresses and other details without the customer having to type them in every time. Fields will prepopulate and the system will do automatic error checking, which makes the user experience a competitive differentiator, Vasconi says.
Then there are profits to think about. “We like people on mobile platforms,” he says. “Customer satisfaction is higher, cost to serve is lower and [average sales] tickets are better.” Vasconi declines to discuss why that’s the case at Domino’s. But research from Intuit about the financial services industry suggests that mobile customers are more engaged with the company, more loyal and tend to use more of the services offered.
In full-service restaurants, too, customers are interested in doing their own ordering, says Patti Reilly-White, CIO of Darden Restaurants, which owns the Olive Garden and seven other chains. Pilots of Web and mobile ordering are under way at several Olive Gardens in eight markets. “Finding ways to make [dining] more convenient is important for our guests,” says Reilly-White. “We don’t want to miss out.”
Cheeseburger in Your Own Paradise
Missing out is partly what motivated Burger King to start delivery service in 2011. Sales had been flat or down for the past few years and Wendy’s was about to overtake it as number two in fast food. Burger King’s comeback effort includes expanding the menu, remodeling restaurants and opening more stores internationally, including in Africa, China and Russia.
Delivery is getting special attention from Burger King CIO Kelly Maddern. Fast-food companies have done delivery in many countries for a long time. Mopeds and bikes outfitted with insulated bags adorned with corporate logos swarm the streets from Shanghai to Manila to Moscow. But in the United States, burger and chicken delivery is a departure that demands new thinking. In addition to figuring out how to keep fries from getting soggy (a job for “packaging engineers” with degrees in such things), fulfilling Web orders requires a call center and a different workflow inside the restaurant. Also, labor costs jump, as Burger King acknowledged in recent financial documents.
Even so, Burger King is aggressively rolling out delivery service, adding at least 15 locations to the 47 stores in four states that already bring burgers to your door. The menu is limited to mainstays–including Whoppers, of course–and special bundled deals for families. The $2.3 billion company hopes to increase sales and get closer to individual customers, Maddern says.
With a $10 minimum and an average $2 delivery charge, the average order value for delivered food is higher, she says. Burger King is working with EMN8, a software, marketing and consulting company, to run the bkdelivers.com e-commerce site. Customers who set up loyalty accounts can ask the system to remember order histories for quick reorder. Today, Burger King awards a free sandwich after every fourth order. In the future, Maddern plans to cross-sell and upsell with recommendations that pop up on the website as customers click around. “As I start to learn more about your preferences, I can start to tailor offers specific to you,” Maddern says.
The EMN8 software is also capable of calculating a customer’s lifetime value, which considers both sales history and costs incurred in support calls. Wait–tech support for buying a hamburger? As fast-food chains offer mobile and Web options, they will also have to help customers navigate the brave new world.
Pink Slime and Toxic Chickens
Some restaurants are using IT to show customers the source of their products, making their supply chains more transparent. They’re responding to growing consumer demand for information about where food comes from, but they also see how social media spreads ugly stories and magnifies the damage they do.
KFC, the chicken chain owned by Yum Brands and a long-established player in China, is still hurting from the “45-day chicken scandal.” Last fall, reports accused KFC’s local Chinese suppliers of pumping illegal drugs into their birds to make sure they grow fast–from hatch to slaughter in 45 days. The stories dominated China’s media, including its microblogging service, Sina Weibo. Consumers criticized KFC and warned each other not to eat there. A popular TV news show investigated the allegations, as did China’s food and drug administration, finding that some farmers abused antibiotics and KFC suppliers bought affected chickens. KFC has denied intentional wrongdoing and vowed to improve its supply-chain practices.
CEO David Novak addressed the controversy in February, telling Wall Street analysts he expects sales to drop this year. Because China accounts for 42 percent of KFC’s profits, the whole company will be affected. “We don’t know how long it will take us to recover,” he said. “This onslaught of negative media coverage [has] been longer lasting and more impactful then we ever imagined.”
Last year, McDonald’s struggled with the “pink slime” Acontroversy. Celebrity chef Jamie Oliver talked about how last-stage beef remnants are used in hamburgers in the United States, after being processed with chemicals illegal for Aconsumption in some countries. The $27 billion McDonald’s, being the largest purveyor of burgers around, quickly became a target of consumers’ outrage. Twitter and Facebook lit up with angry talk, and one unappetizing image of an oozing pink mass was repeatedly shared.
McDonald’s soon announced it would no longer use this kind of beef filler, saying the decision had been in the works since 2011. The company considers social media a risk to its business and warns investors of the peril in its financial documents.
“Transparency, processing–all those things are becoming incredibly important. Restaurants are going to have to answer those questions,” says Tristano. “Some can and others won’t.”
McDonald’s Australia can and does. Rather than reacting after stories circulate, Macca’s–as McDonald’s is nicknamed by Australians–has created an application to show the curious public more about its ingredients. Not meals in general, but the very burger or fry someone is about to bite.
Using the TrackMyMacca’s iPhone app, a customer scans an augmented reality trigger on the package of her food. The app transforms data points from Macca’s supply-chain systems about farms, suppliers, ingredients, date, time, weather, location and other variables into an animation that incorporates the faces and voices of real farmers. The text that accompanies the visuals is by turns wry and informative. “We were very conscious of being entertaining in an adult way,” says Shamini Nair, national marketing manager for McDonald’s Australia. “The Simpsons was the inspiration,” she says, referring to the animated TV comedy known for sharp social commentary.
The app isn’t comprehensive. It provides history for just five products–the most popular ones, Nair says. Since its launch in January, the app has seen 45,883 unique downloads. The project took more than a year. “We didn’t anticipate it would be so long, but it needed to be to deliver accurate information,” she says. Her digital business group worked with an outside ad agency as well as internal IT, supply chain, quality assurance and legal, among other departments. McDonald’s outlets around the world have asked for details about building the application, Nair says, including Canada, the United Kingdom, the United States and Turkey. Building something similar, she says “would take commitment, but I would love to see it happen.”
With all the super-efficient electronic ordering soon to come, bottlenecks will move from the cashier to the kitchen. But IT advances behind the counter will help, says Lombardi at WD Partners. Restaurants will be able to attach intelligent sensors to kitchen equipment to monitor use. Analyzing the data in real time will show how well the crew is working, he says. He envisions a time when video will be integrated in all zones of the kitchen. When sensors detect a cook isn’t operating the grill well or someone is making shakes wrong, a pertinent training video will launch on a nearby monitor to review procedures. Such a system could also keep statistics on which workers trigger which videos, information that could be handy in performance reviews.
At Red Robin, CIO Chris Laping launched an interactive, gamified training programlast year on iPads. Employees go through food preparation, menu and customer modules, using text, images and animations. For example, waiters act out real-life scenarios by clicking on animated customers. If someone orders a margarita, the waiter must ask for proof of age, politely. “This allows them to practice. You don’t want to piss off a live guest,” says Laping, who is also senior VP of business transformation. New cooks try techniques and recipes virtually as well. “You’re not throwing out food while practicing.” (For more on this company, see “Red Robin Burger Chain Treats Facebook Users Royally” sidebar at the end of this article.)
Sensors on storeroom shelves, meanwhile, could track inventory against sales, using formulas to watch for problems. One does not want to run out of pickles, after all. The system could send a text alert to inform the manager of that and other troubling circumstances. A Wendy’s franchise in Minnesota, for example, runs video displays in the kitchen and a back-office dashboard to monitor sales, costs and labor metrics in real time.
Smart mechanization and operations monitoring, Lombardi says, will not just recognize that something is amiss but will also seek out likely causes.
Backroom technology will affect the customer experience as well, through digital signage. Today, some chains use electronic menu boards at the counter and in the drive-thru lanes. Unlike the traditional cardboard, wood and metal signs, digital signs can be programmed to change as the day passes. Panels can be reserved for promotions, entertainment or information.
But responsive digital signage is the future. That is, by integrating point-of-sale and inventory systems with outside variables such as weather and community events, digital signs can flash instant promotions. Say chicken sales have been down all day and, as the dinner hour approaches, so does a snowstorm. A manager may decide to offer a family-meal special, suggesting customers bring home a hot dinner to ride out the weather. The digital sign can display suggested product bundles in one panel with regular storm reports in another.
“Informative messaging that’s changeable is powerful,” says Jack Clare, CIO of Dunkin’ Brands. He predicts it will be among the near-term IT investments restaurants make.
Further down the road, drive-thru systems could be equipped with voice recognition, negating the need for a dedicated person in a headset. Since the systems will have to recognize only 200 to 300 words common in the fast food setting, Lombardi says, they will converse not only in multiple languages but also in dialects. But surely voice recognition won’t replace “the singing drive-thru lady” at a Popeye’s in Louisiana known for greeting customers with song.
Perhaps the ultimate end for some chains will be to go restaurantless. Well, to a certain extent.
Jamba, for example, has installed JambaGo self-serve machines that supply smoothies to over 400 sites. The machines dispense smoothies in Jamba’s usual flavors but with ingredients specially formulated for vending machines. Customers pay by walking over to a cashier, but in the future Notte envisions a fully automated vending machine that takes mobile payments. The company wants to install JambaGos for 1,000 more sites this year and is hiring sales managers for “non-traditional development.” They will target schools, hospitals, stadiums, airports and other locales where having a full-size store may not make sense.
Red Tomato, a pizza place in Dubai, United Arab Emirates, has shrunk the store footprint to just 2 inches. Red Tomato gives customers a magnet shaped like a pizza box to stick on their refrigerators. A customer uses a mobile phone to configure the magnet, specifying a favorite pizza and toppings, along with payment data to keep on file. Any time he wants pizza, he presses the button on the magnet, which alerts Red Tomato by sending a Bluetooth signal to the customer’s smartphone. The customer receives a text message confirming the order and the pizza arrives soon after. No call, no clicks, no problem.
Red Robin Burger Chain Treats Facebook Users Royally
The rewards program at Red Robin Gourmet Burgers reflects how modern consumers blend online and offline activities.
In the original e-commerce model established in the late 1990s, companies fought to get people to shop on the Web. Now, some companies realize consumers don’t live their lives in one realm or the other, says Chris Laping, CIO and senior vice president of business transformation at the $977 million chain of 473 casual-dining restaurants worldwide.
Members of the RedRoyalty program receive free food and discounted meals, as you may expect from a loyalty program. But they also get Facebook credits through virtual currency from a company called Plink. Customers register with Plink, and when they eat at Red Robin, they earn credits to use on Facebook to play games such as Farmville. “The demographic data on those games is startling,” Laping says. “Not young kids, but decision-makers of the house.”
That’s just the kind of person Red Robin wants to visit the restaurant. “Facebook credits are an incredible motivator to get off the computer and go spend money at brick-and-mortar places,” he says. “We’re rewarding people with what they’re interested in.”
A wave of experimentation is washing over the dining industry, Tristano says. “This is the time to evolve.”