Mobile Supercharges Take-Out
While all of the tech dweebs in Silicon Valley are bickering over which local/mobile/social app will win out in the battle for merchants, millions and millions of us would rather put our eyes out than waste a second of our day "checking in" on these damned apps.
Sorry, but count me among the Luddites on this one. Vying to be "mayor" or "chief" or "potentate" or whatever you guys are doing with these check-in tools seems akin to admitting that you spend much too much time in your local Best Buy or Starbucks. I personally am not eager to become the rough equivalent of Cheers' Norm at my nearby Panera's. I know, go ahead and tell me what I am missing about this model in the comments below.
But while this new generation of apps tries to create in us a whole new set of habits, there is a class of less-heralded apps that are riding on an existing habit. And they don't have to invent a new business model. It is the great American ritual of ordering take-out.
According to restaurant search and remote ordering company Snapfinger, the Outback Steakhouse mobile app that launched late last year in the iPhone App Store had a slow start with about 250 orders that first month. Then it clocked 2,400 the second month. "This last weekend they had about 58,000 orders," says Jim Garrett, Snapfinger's CEO. "So it's definitely picking up."
And this is on little to no marketing of the app. Snapfinger has dedicated apps for about 15 restaurant chains like Subway and California Pizza Kitchen on iPhone and Android platforms. The apps include the full menu from these restaurants and even allow users to customize specific items, give special orders and save their favorites for easy reordering later. The mobile apps, like the online ordering Snapfinger also offers, are tied directly to the point-of-sale, so the app can accommodate localized special offers. "It is growing at a steep pace," says Garrett.
While mobile take-out ordering accounts for less than 10% of Snapfinger transactions now (calling and Web ordering are still more popular), Garrett believes that the platform will become the most common channel for take-out on his system in three to five years.
The restaurant industry traditionally is slow to adopt new technology and even marketing methods. Getting the chains to push the technology across their marketing channels is an uphill battle, but Garrett says the incentives for moving to mobile should be apparent. Eighty percent of a restaurant's business comes from returning guests, so increasing guest frequency is critical to business success.
"We see an increase in guest frequency from the mobile app of three to one," he claims. "If you were going once a month, you are going three times a month because you are using the order button more frequently." The app adds convenience because it saves past orders for quick reordering. Garrett also says that the mobile customer is tallying up a check that is 27% higher than phone take-out orders.
Because Snapfinger services the restaurant chains across phone, Web and now mobile, Garrett is getting to see the comparative efficiencies and trends across traditional, new-media and next-media platforms. As Web and mobile orders rise, direct phone orders decrease and overall volume also goes up. Order inaccuracy also declines. "I have been in this industry for 30 years, and this is the most tangible use of technology I have ever seen," says Garrett. "When you talk about value to the customer experience and value to the restaurant -- the increase in check-in guest frequency and the decrease in inaccurate orders, in every category -- it is a slam dunk."
There are some challenges, to be sure. The Snapfinger apps have to manage pretty dense menus that don't always translate well to the small screen. That first encounter with Outback or Boston Market on an app can be daunting. And Garrett admits that franchises need to support the app at all of their locations in order for the consumer to feel confident using the system nearby. Downloading the Subway app only to find that your local venues are not there can sour the experience.
But the potential here is staggering. If restaurants have a direct line back to their most loyal customers, and even know what their tastes are, the CRM possibilities are endless.
While scores of social media start-ups spend the next few years inventing new marketing models for leveraging local venues, my guess is that this simple extension of an existing habit, ordering take-out, is where real people's real money will flow first.