Retail

How QSRs Are Driving Retail Innovation Via Emerging Tech

How QSRs Are Driving Retail Innovation

Retail innovation comes from various places – and for the new decade, that includes quick-service restaurants (QSRs), the site of massive technological change.

Self-service kiosks have been gaining popularity, and cutting-edge technology like biometrics is starting to be integrated. According to a new study from the National Restaurant Association and Technomic, 22 percent of consumers used kiosk ordering last year.

Examples include CaliBurger, which has been utilizing facial recognition ordering technology in two locations, as well as Dallas-based Malibu Poke, which has rolled out similar tech. Jon Alexis, owner of Malibu Poke, said the biometric system has effectively retained customers and helped them quickly reorder their favorite meals.

Users who approach the self-service kiosks can place a new order or a repeat order either by facial scan or by personally identifiable information (PII) like a phone number or credit card. Users ordering with the kiosk for the first time are prompted to receive a facial scan to remember the order for a future purchase.

Pickup Windows

There has also been a rise in restaurants with exclusive pickup windows or lanes. Recently, Starbucks announced the opening of a Starbucks Pickup store in New York City that taps into Starbucks Mobile Order & Pay.

Chipotle continues to roll out new “Chipotlanes” to a few dozen locations and plans to ramp up the pilot program later in the year. These lanes allow customers to order and pre-pay online and pick up at a designated time.

Similarly, Pizza Hut is piloting cubbies for pickup orders in California and plans to expand the test into additional West Coast cities next year. And Caribou Coffee is rolling out a small-format concept in Minnesota called Caribou Cabins; these 600-square-foot stores don’t have dine-in seating, but do offer outdoor seating, a drive-thru and a walk-up window.

While McDonald’s is in the midst of a major renovation across its U.S. system that will add self-order kiosks, it is also testing a McDonald’s To Go format in London. Customers order using kiosks, while the staff is mainly back of house and there is no seating. The concept is meant to accommodate on-the-go diners.

However, these conveniences aren’t targeted only at customers; they are also designed for ease in facilitating pick-ups through third-party delivery services.

Contactless Payments

Loyalty, too, is a source of innovation.

Technologies like near-field communication (NFC) have emerged as an especially intriguing way for QSRs and other businesses to tie the ordering and loyalty experiences to today’s mobile users’ needs. Customers are drawn to payment methods that take as little time as possible, which is why many have embraced methods that lack signature, PIN or credit card information requirements, and instead opt for quicker paths that mirror one-click ordering on eCommerce sites.

NFC technology – also known as contactless payment technology – can provide the speedy experience consumers desire, while also offering QSRs a wealth of personalized insights. NFC payments are available for both Apple Pay and Google Pay mobile wallets, linking loyalty services to immediately benefit QSRs. One study showed that consumers with access to NFC loyalty programs visit restaurants 60 percent more often – a sharp jump in customer interaction and spending. NFC-enabled loyalty programs can thus lead to longer-lasting, more trust-based relationships between QSRs and customers who already want to use mobile phones for one-touch payments.

Sales generated by NFC and other contactless payment technologies are predicted to reach $190 billion and 60 million users in the U.S. by 2020. This represents a usage boom, as the past five years’ sales only totaled $9 billion. The technology is certainly projected to become more popular, but why link it to loyalty programs?

Users are more likely to engage with rewards points – and the companies that offer them – if those points come attached to speedier payment methods. Technologies like NFC Loyalty ID, which sends customers’ personal details directly to QSRs’ loyalty programs, can increase engagement by instantly showing users what they earned from their purchases. Automatically calculated amounts can more easily be redeemed, reducing potential POS frictions for customers. This method allows QSRs to more seamlessly offer instant redemptions, and enables program members to keep track of their perks through their mobile devices.

It is all but certain that in the new decade, QSRs will continue to drive retail innovation.

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Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the December 2019 Mobile Card App Adoption Study, PYMNTS surveyed 2,000 U.S. consumers for a reveal of the four most compelling features apps must have to engage users and drive greater adoption.

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