The COVID-19 pandemic is one of the biggest challenges the quick-service restaurant (QSR) industry has ever faced, with social distancing and stay-at-home orders forcing restaurants around the U.S. to close their dining rooms and rely on delivery and takeout services to stay afloat. The National Restaurant Association expects the industry to lose up to $240 billion by the end of the year, with millions of restaurant workers laid off or furloughed and numerous eateries forced to close permanently.
Restaurants confronting these challenges are turning to mobile order-ahead services more than ever to continue their operations. Some have been forced to rely on third-party apps such as Grubhub and Postmates, which can come with high fees and require restaurants to relinquish some control over the delivery process. Others, such as Mexican QSR giant Taco Bell, have their own mobile ordering systems and have been working hard to push app adoption as an alternative to in-store dining.
“With COVID-19, we’ve gotten very serious about making big strides in digital,” said Zipporah Allen, Taco Bell’s vice president of digital experiences. “We were already on that path in a really big way, but the pandemic has really accelerated our initiatives in this space.”
Allen recently offered PYMNTS an inside look at how the pandemic has emphasized leveraging customer loyalty to drive sales as well as how lingering fraud threats will continue to target the space once the crisis passes.
Changes Due To COVID-19
Customer loyalty is an extremely important driver of QSR sales, but it has never been more important than it is now. QSRs cannot currently rely on customers to stop at their restaurants in the spur of the moment as stay-at-home orders and social distancing guidelines mean dining rooms are generally no longer spots for spontaneous meals. QSRs must, therefore, count on consumers making conscious decisions to purchase food from their restaurants, which requires customer loyalty.
Restaurants are fostering this loyalty with programs that reward customers for repeated purchases, with the idea that those faced with several meal options will pick the one that empowers them with their purchases. Taco Bell uses a system that grants customers rewards points for every dollar spent, and these points can be redeemed for free menu items, for example.
“Loyalty is a huge part of our [digital initiative],” Allen said. “We know that when customers are shopping for a digital experience, they want a one-on-one, personalized experience, and loyalty [programs] lay the foundation for that.”
Taco Bell promotes personalization by analyzing customers’ favorite orders and offering them novel rewards items they are likely to find appealing. This expands customers’ menu preferences, giving them more reasons to return to the restaurant for different meals.
“My favorite menu item is a cheese quesadilla, for example,” Allen noted. “So based on my shopping habits, the app could reward me with a grilled cheese burrito to invite me into new products.”
Mobile ordering options and loyalty offerings are likely to remain popular after the pandemic recedes, too. QSRs like Taco Bell predict that these changes in customers’ preferences are here to stay and they are adjusting their business models to meet their needs.
Preparing For A Post-Pandemic World
It is unclear exactly how customers’ preferred restaurant experiences will shift after the pandemic, but Allen predicts that they will continue to seek personalized offerings that reward QSR loyalty and Taco Bell is leaning into this change.
“We are preparing for a big shift in consumer behavior, but I don’t know exactly what that’s going to look like,” she said. “And even when consumers begin to dine in again, I think that the way that they want to order and the way that they want to pay and interact with our team members is going to be different. That’s why we’re so focused on making sure that we have a program in the app that gives a personalized
experience that rewards and recognizes our fans, because that shift in how customers want to interact with brands is not going away, I don’t think.”
The ever-present specter of fraud that restaurants face is not going away, either. Bad actors are using various tactics to take advantage of customers who are new to mobile ordering, including hacking into mobile order-ahead apps and pilfering personal data such as passwords, rewards points and credit card information. Compliance with regulatory standards like the California Consumer Privacy Act (CCPA) is the best way to prevent this fraud, Allen explained.
“We have a whole team dedicated to safety and security, especially in times like today where with the shift to online you have [increased] digital risk,” she said. “We’ve got a really robust technology platform, and we’re compliant with the regulations that are out there, like CCPA.”
QSRs that survive the pandemic are not necessarily out of the woods, however. They must continue to monitor all aspects of their mobile order-ahead programs, including customer behaviors and fraud risks, to ensure that their ordering platforms will remain successful in a post-pandemic market.