Retail

Digital Initiatives Help QSRs Survive A Q2 Earnings Famine

mobile food ordering

A quick look at some recent earnings reports illustrates how digital innovation is softening the COVID-19 blow for quick-service restaurants (QSRs), fast-casual eateries and fast-food chains.

Chipotle was saved by the byte, as it were, with PYMNTS reporting that its second quarter “would have been an absolute disaster if not for the digital capabilities and order-ahead service it implemented during the pandemic, all fueled by delivery deals with Uber Eats and Grubhub.”

Digital revenue for Chipotle rose 216 percent and accounted for nearly 61 percent of second-quarter sales. All told, order-ahead sales have risen 140 percent since the pandemic began, while home/office delivery has increased 125 percent.

It looks like a similar story at Yum Brands, parent of KFC, Pizza Hut and Taco Bell. Analysts expect the firm to report a $1.7 billion revenue drop when it unveiled quarterly results on July 30, but mobile order-ahead advancements might have staved off even worse financials.

“With COVID-19, we’ve gotten very serious about making big strides in digital,” Zipporah Allen, Taco Bell’s vice president of digital experiences, recently told PYMNTS.

“We are preparing for a big shift in consumer behavior, 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,” she said. Allen said that explains the QSR’s deep focus on in-app personalization “that rewards and recognizes our fans.”

The Golden Arches are in the same boat, experiencing a “COVID earnings diet” as well.

“Looking at comparable sales, we expect the second quarter as a whole to be significantly worse than what we experienced for the full month of March,” McDonald’s President and CEO Chris Kempczinski said recently in a statement.

But he added that “our strong foundation and the unique advantages of the McDonald’s system, including a high percentage of drive-thru restaurants and investments in delivery and digital, have enabled us to adapt to the changing landscape presented by the COVID-19 outbreak.”

Smart Moves And Tasty Tests 

PYMNTS’ Provider Ranking of Mobile Order-Ahead Apps (MOA) shows how QSRs are weathering the pandemic with clever pilots of contactless payments and delivery, among other innovations.

In our latest MOA rankings, No. 1 ranked Domino’s actually crushed second-quarter results with revenues surging to $920 million and U.S. same-store sales up more than 16 percent on the strength of its legendary delivery business.

No. 2 chain Burger King is likewise leveraging preexisting drive-thrus and delivery capabilities. Ranking this time around at No. 3 is Starbucks, which heavied-up on personalization and rewards to spur sales at the nadir of COVID.

Chick-fil-A earned its No. 4 spot on the latest Provider Ranking of Mobile Order-Ahead Apps partly with easy-to-prepare meal kits that folks could order at home, while the No. 5 ranked Dunkin’ has an app that keeps running, with its recent expansions deeper into rewards and partnerships.

While the National Restaurant Association warns that the industry is facing quarter-trillion-dollar losses by Dec. 31 — plus yet-unknown tallies of jobs and businesses permanently gone — chains are pursuing digital initiatives with an understandable urgency.

In addition to contactless everything, chains are beefing up rewards programs to improve pandemic survival odds. For example, an article accompanying PYMNTS’ July Order-To-Eat Tracker noted that pandemic shifts have pushed drive-thru restaurant chain Checkers and Rally’s to work toward leveraging a mobile app-enabled loyalty program.

“While people were already shifting over to eCommerce transactions, the first wave of COVID-19 really spurred things into faster motion,” Josh Buchmann, senior director of eCommerce and guest engagement for the company, told PYMNTS.

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New PYMNTS Study: Subscription Commerce Conversion Index – July 2020 

Staying home 24/7 has consumers turning to subscription services for both entertainment and their day-to-day needs. While that’s a great opportunity for providers, it also presents a challenge — 27.4 million consumers are looking to cancel their subscriptions because of friction and cost concerns. In the latest Subscription Commerce Conversion Index, PYMNTS reveals the five key features that can help companies keep subscribers loyal despite today’s challenging economic times.

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