Quick-service restaurants (QSRs) are intensely competitive and have very little margin for error, causing many to employ technologies such as mobile apps and self-service kiosks. Diners want such innovations, too, and are turning so sharply to mobile food orders that the global food delivery mobile app market could rise to $16.6 billion by 2023 at a compound annual growth rate (CAGR) of 27.9 percent. QSRs’ kiosk adoption is also expected to push the worldwide kiosk market well over $30 billion during the next few years.
Ayr Muir, founder and CEO of Clover Food Lab — a Massachusetts-based vegetarian fast-food chain — knows it is critical to tap any opportunities that could spark company growth, pushing him to rely on mobile ordering apps and digital kiosks to separate Clover from rivals and drive traffic.
For this month’s Feature Story, Muir, a Harvard and Massachusetts Institute of Technology (MIT) graduate, discussed how these technologies deepen customers’ dining experiences without replacing human interaction. Muir also explained the significant challenges smaller QSRs like Clover face, such as choosing the right third-party delivery service and managing such critical relationships.
Small Business Growth Challenges
Muir, who founded Clover in 2008, described himself as an environmentalist, noting that the mission of his restaurant is to “address global warming by building a better food future.” Clover started with one food truck and it now has 12 restaurant locations throughout the greater Boston area.
The CEO is optimistic about Clover’s future, but smaller restaurants like his face challenges as they try to grow. The company notably develops its own software for its mobile ordering app and kiosks — a task that can strain other firms. The work is critical, however. Muir said customers’ app use has grown “dramatically,” reaching 32 percent of sales — up from 20 percent after its first 12 months on the market. He thinks usage will grow to “north of 50 percent” over the next two years.
Seeing Fast Growth In Mobile Ordering
The Clover app offers up-to-the-minute information on ingredients and product availability. Muir admitted that the restaurant was relatively late to the app game as it tested the product for 12 months before its launch.
“It has a gigantic change in behavior and effect on how we run the restaurants,” he said. “It’s been tremendous for our business.”
Muir is a bit more ambivalent about kiosks, which Clover is testing in one store.
“Some of the [kiosk] experiences [at other places were] absolutely terrible,” he said, adding that this made him wary about the devices causing negative experiences.
The technology displaces labor and brings consistency to the customer experience, he explained, noting that kiosks are ideal for more introverted customers. The devices can also potentially upsell products, but Muir does not see them as much of a revenue driver for Clover.
“I don’t really look at it as a sales driver for me or others in the industry,” Muir said. “I think what drives sales is customer excitement about the product.”
Clover Sees Shift To Delivery Services Boosting Revenue
Muir said he has “mixed feelings” about trying increasingly popular third-party delivery companies such as Grubhub. He instead views these services as potential competition. Delivery players entice restaurants with promises of heavy promotion and sales increases, but Muir said that uptick can be short-lived. Clover signed with third-party delivery service Caviar only after a long test period, during which the restaurant closely monitored customer feedback. Caviar offered a premium service as well as an enticing sign up discount, he said.
Clover does not have an in-house delivery service and will soon be using the much larger DoorDash, which recently bought Caviar and claims 35 percent of the market. The shift will increase Clover’s delivery business five to seven times immediately to 8 percent or 10 percent of its sales, he said. Clover and DoorDash will integrate their systems in the coming weeks.
Consumers are embracing delivery services, kiosks and mobile apps more and more, but Muir does not want these digital experiences to eclipse the importance of human interaction.
“I’d hate to end up in a world where there’s no human-to-human interaction in the stores,” he said. “It’s important for people to know and interact with the people who make their food. At the same time, we don’t want to miss out on some of the positives that could come from some of the new technology.”