If you hadn’t heard the news about Dunkin’ Donuts accepting Masterpass as a payment method in-store, in their mobile app and online, it’s quite possible that you may have already started seeing the ads. Themed on “winning the morning,” the ads feature harried adults on the go (stay-at-home dads, office workers, lifeguards) achieving life’s most important small victories with an assist from Dunkin’ Donuts, Mastercard Masterpass and actress Jane Lynch:
It’s not a terribly subtle ad — or series of ads — but as Tor Opedal, Mastercard vice president of U.S. Market Development, told Karen Webster in a chat about the recent news, it is becoming an increasingly unsubtle world out there when it comes to the battle for the hearts and minds of the American quick-service restaurant (QSR) consumer.
“The competition is very intense, and because the marginal growth in restaurants is very flat, it’s almost a zero-sum game out there in terms of customer acquisition.”
In a very real sense, every customer who goes to Starbucks is a loss to Dunkin’ Donuts, which makes the Dunkin’ loyalists here at Boston-based PYMNTS incredibly sad, since we always root, root, root for the home team. And as consumers are increasingly gravitating toward mobile order-ahead, line-skipping experiences, QSR merchants are increasingly finding themselves pulled into its orbit.
“Our brand vision is to be the most-loved on-the-go beverages brand, and we know that our guests are busy people who live busy lives. We need to earn their loyalty by ensuring that we are leveraging technology to make using the Dunkin’ Donuts brand as quick and as easy as possible. On-the-go ordering was one of the most game-changing initiatives in our history — not only is it a way to drive membership in our loyalty program, it is a clear demonstration of our commitment to enhancing convenience for our guests through technology-based initiatives,” Dunkin’ Donuts Chief Digital Officer Scott Hudler noted in an interview.
Which includes making sure that when it comes to paying for that cuppa joe from Dunkin’, they are enabling that consumer’s favorite mobile payments experience, too.
“The feedback [from restaurant chains] is they would like to be agnostic because they don’t want to alienate potential customers,” Opedal said.
“If someone has a way they want to pay and you prevent that by not making it available to them, in a fiercely competitive world, that’s a loss — even though it may be a small share of customers overall. The last thing they want to do is to let payments acceptance get in the way of converting customers — in fact, it is just about the last thing they want to worry about.”
And in fact, he noted, especially in the QSR space, which is full of franchise owners and corporate operators, the challenges and ways to hurt themselves by moving to mobile order-ahead goes well beyond mobile payments.
The Fundamental Problem With Franchises
Given the popularity of mobile order-ahead, one might expect its rollout among merchants to have been a bit quicker — particularly QSR merchants whose bread and butter is getting customers their food faster.
But a franchise model introduces a layer of friction, since getting franchisees on board with anything new isn’t always the world’s easiest sell. And corporates, Opedal noted, often don’t have a lot of room to force the issue, because depending on the nature of their covenants with the franchise holder (and how old it is), they may not be able to make demands beyond “the absolute basics.”
And franchise holders, he said, are often less than delighted to try something new, particularly given all the “new” things they’ve tried recently.
“There are new POS systems with new requirements, new back office requirements, encryption, tokenization — and a lot of other things that are already part of their cost of doing business,” Opedal explained. “They see this pitch as, ‘OK, I now have to add mobile payment and order-ahead right after I spent a lot of money on all of the other things that were essential to the business — even though it is a small percent of sales right now.’”
The return on investment is there, but from the ground floor of a franchise holder, it is a long road to get to the ROI because going mobile order-ahead is a lot harder than just adding Mastercard’s Masterpass (or any other mobile wallet) to an app, Opedal noted.
“Getting something going like this requires not just being able to take an order, it takes retooling to store operations to meet peak demand,” he said. “That’s where mobile order-ahead fails or succeeds.”
Which, as all of us have seen or read about right here on these pages, is a capability for which the kinks are still being ironed out and where those kinks are magnified in a franchise environment.
“I can visit a different branch of the same chain three times and have three different order-ahead experiences in the same chain in the same city,” Opedal explained. “It’s not as operationally seamless as we would like it to be. This is more than IT or payments — it is marketing, it is training, it is operations, it is design layout and looking at flows of the store. If the store owner doesn’t consider it holistically, the whole model can collapse.”
Clearly not the greatest of outcomes, since getting those details correct is now a consumer expectation.
Moving The Trend Lines
The mobile dining space, he noted, has a lot of evolving to do still, past making mobile payments and tap-and-go ordering easier and more intuitive. The next phase of that, he said, will be about dealing with the reality that the mobile app economy is not what it used to be and relying on mobile apps isn’t always viable.
“If you think about your restaurant use through a month, you eat out 25 times, but 10 of those are your favorite coffee place.”
The rest, he said, are going to become a tangle of mobile apps that start becoming ignored on customers’ phones — mostly forgotten, even with all their fancy functionality.
“I think we are going to see more cloud apps; most of us are on Siri, or Alexa, or Google or Facebook. It is going to become more natural to order not in a dedicated app, but in the place where you are already spending your time.”
And that, he noted, will mean even more integrations, as API and food’s relationships to them will have to be re-oriented to being more outward-looking and able to ease time in with outside mobile app operators.
But the change, he said, is coming, because consumers are voting with their feet and their mobile wallets. They want to win at the morning — just like the ad says — and they are going to flock to whatever vendors are making victory the shortest distance between two points.