The concept of ordering food online and picking it up at the restaurant isn't a new phenomenon. Restaurants have exercised this concept for years.
But ordering and paying online via mobile and picking up in-restaurant, is the next big thing. And it’s only just begun. It's one space every major player in the mobile payments industry is vying to gain more market share of.
To gain some firsthand perspective on what's happening in the mobile ordering restaurant space, PYMNTS caught up with Seth Priebatsch, the Chief Ninja at LevelUp, to explain what's so different about mobile order and pay in today's world, where consumers expect to have everything available at the touch of a button.
To start, he explained, the trends have evolved along with human behavior. Getting consumers to catch on to mobile ordering is about conditioning them that their phones are the gateway to faster and better restaurant experiences.
"One of the most interesting things that we see, specifically around the use case of mobile ordering, is that it's a relatively unknown consumer behavior. Order ahead has actually existed at a lot of restaurants for a fair amount of time," Priebatsch explained. "But consumers really haven't really latched onto it in as much of a degree as they've launched onto, of course, swiping their card at the register. Or even loyalty programs on things like Starbucks' app where you can pay at the counter."
The case for the mobile ordering app is well told by Starbucks and Dunkin’ Donuts — two retailers that have managed to build brand loyalty via mobile apps that have shown real mobile momentum in the past two years. In the case of these two special use cases, there’s one common thread: loyal customers who have daily coffee addictions.
[pullquote] One of the most interesting things that we see specifically around the use case of mobile ordering is that it's a relatively unknown consumer behavior.[/pullquote]
Starbucks has seen a 100 percent increase in unique visitor trend in a two-year period. And on the Dunkin’ Donuts side, it’s seen an astonishing 456 percent increase in the same two-year time period. While it appears Dunkin’ is doing drastically better, it’s worth noting that Starbucks’ app has been around longer and has had more time to establish customers. Following Starbucks’ massive mobile momentum the past couple years, Dunkin’ joined the space to introduce its own mobile ordering service.
With use cases like ordering coffee on the go that allow consumers to order ahead and skip the lengthy lines, it makes sense that more and more consumers are catching onto mobile ordering, but how has mobile helped evolve the online order, pick up in-restaurant phenomenon?
That's where the on-demand economy comes into play, Priebatsch said.
"As mobile order ahead has been pushed into the smaller screen format of mobile and made really mobile-friendly, we've seen a lot of pick up in terms of merchant demand and a lot of pick up in terms of customer utilization, almost to the point to once a customer starts ordering from their device and realize that they can do that. They actually tend to do that for the majority of their transactions with that merchant moving forward. And kind of jump over the counter entirely in some really interesting ways."
In today's mobile-driven economy, consumers expect to be able to do more from their phone. Hail a cab, order groceries, order coffee, order a burrito. Consumers want more services on-demand — and they want them instantly. That's where mobile is driving the market.
"I think that it's a very real-time behavior and people tend to think of their mobile device for getting something done right away," Priebatsch pointed out. "Even though that experience has existed on the desktop Web for a number of years, I think that people think of the desktop Web more as an action is taken and the outcome is more a package getting shipped to me from Amazon. Or even food delivery."
[pullquote]As mobile order ahead has been pushed into the smaller screen format of mobile and made really mobile-friendly, we've seen a lot of pick up in terms of merchant demand and a lot of pick up in terms of customer utilization.[/pullquote]
For LevelUp, the company has been working with a lot of its merchant partners to help add mobile ordering to their own White Labeled apps, specifically because Priebatsch said merchants are catching on that consumers are drawn to this option. For example, Argo Tea (one of LevelUp's customers) implemented a mobile payment ordering system about a year ago and it has had a major impact on the business — both from a sales and loyalty perspective.
"There is an incredibly high utilization of the feature and the customers that use this tend to be Argo Tea's most loyal customers and drive a disproportionate amount of their sales," Priebatsch said.
Mobile, he added, makes consumers think about activities they want to do on the go. Grabbing food, or coffee, is an obvious use case for one type of daily habit that consumers will always be doing with a smartphone by their side. And from a merchant's perspective, there's a few key factors that motivate them to adopt the mobile order and pay option — drivers like boosting sales, gathering customer data, increasing consumer interaction, and decreasing costs.
Operationally, Priebatsch pointed out, mobile ordering saves consumers time, and can increase store efficiency by using less cashiers and moving lines faster.
"It naturally lends itself to making the payment data available," he concluded. "Data is naturally digital, and it fits very nicely into our goals of giving the merchants a full picture of every one of their customers.”
LevelUp certainly isn’t alone, but has carved a niche in the marketplace of mobile payment players that are trying to enable payments that required ditching the wallet for a smartphone. Perhaps the restaurant space has created the strongest use case for why mobile payments matter in the commerce ecosystem. After all, by digitizing the payment experience on mobile, it allows the merchant to engage consumers faster, build brand loyalty and create a more seamless consumer experience.
Just ask Starbucks, Dunkin' or Argo Tea about that.