Restaurant Roundup

QSRs Battle For US Sales With Online Delivery And Payments

Taco Bell is living más as it pulls ahead of Burger King as the fourth-largest quick-service restaurant (QSR) brand with new delivery options and, yes, nacho fries. But McDonald’s Corp. continues to take the lead as the largest QSR, followed by Starbucks and Subway, Bloomberg reported.

While Burger King’s domestic sales only increased by 1.5 percent in 2017, Taco Bell has been drawing in customers with new food items, a Live Más marketing campaign and new nacho fries for $1. Here is how Taco Bell, Burger King and other QSRs stack up.

 

— McDonald’s $37.5 billion in domestic sales — More and more McDonald’s markets are lovin’ it as the iconic American burger chains continues to expand its delivery efforts. McDelivery on the Uber Eats app is available from more than 2,000 restaurants around the country, with 1,000 new stores added in 2017.

McDonald’s CEO and President Steve Easterbrook told the Bernstein Strategic Decisions Conference in New York that the company sees great potential in delivery. The company has recently seen positive momentum and improved operating performance, and delivery is projected to accelerate future growth. So far, Easterbrook said, he’s been “encouraged” by how well delivery is resonating, especially with younger customers.

— Starbucks’ $18.4 billion in domestic sales — Starbucks is far and away the most successful mobile payments platform in the United States. In fact, as of 2017, mobile payment use represented 30 percent of the brand’s total transactions.

The Starbucks loyalty program also grew by 11 percent in 2017 and now represents 14.2 million active members. And with its scale in mobile payments and loyalty members, the company is well-positioned for other innovative initiatives.

“The ubiquity of mobile and credit card payments is enabling us to begin an exploration of cashless stores in the U.S,” Starbucks CEO Kevin Johnson said during a recent earnings report. “By expanding capacity at peak, we now have the ability to offer Mobile Order and Pay to our non-rewards customers.”

Already, a cashless store concept is already up and running in a Seattle pilot. But there are no official reports on its next planned expansion.

— Subway’s $10.8 billion in domestic sales — Subway has learned the hard way that “eating fresh” just isn’t enough anymore. Diners want to opt into mobile order-ahead on their devices, earn customer loyalty points for doing so and browse WiFi in the store while they eat fresh.

As a result, the company announced in 2017 that it would be closing hundreds of locations and is now testing new restaurant tech in its stores. Touchscreen self-ordering kiosks, a new mobile pay app, dedicated pickup areas for mobile orders, digital menu boards and, yes, in-store WiFi will make up its digital strategy.

With the kiosks, the chain plans to introduce three at every restaurant location. And with the mobile app, diners can customize their sandwiches ahead of time in 26,000 of the chain’s 27,000 stores. In addition, Grubhub, Postmates or DoorDash delivery may be on the way as Subway tests third-party delivery services on a small scale.

— Taco Bell’s $9.8 billion in domestic sales — To expand its delivery reach, Taco Bell — along with KFC — has recently tapped Grubhub to provide delivery and online ordering.

The partnership, which includes the two Yum brands, comes as fast food chains have increased their appetite for delivery: McDonald’s, for example, has rolled out delivery to 5,000 of its approximately 14,000 U.S. stores. In fact, McDonald’s found that customers typically spend more when they order delivery.

But Taco Bell’s CEO Brian Niccol is heading to Chipotle Mexican Grill after turning Taco Bell into a lifestyle brand and introducing breakfast at the chain. Following the news, Chipotle’s shares jumped more than 10 percent, CNBC reported.

“Brian is a proven, world-class executive who will bring fresh energy and leadership to drive excellence across every aspect of our business,” Chipotle’s CEO Steve Ells said in a statement at the time of Niccol’s hire. “His expertise in digital technologies, restaurant operations and branding make him a perfect fit for Chipotle as we seek to enhance our customer experience, drive sales growth and make our brand more relevant.”

— Burger King’s $9.3 billion in domestic salesBurger King has a leg up on McDonald’s when it comes to letting customers order and pay for their food with their mobile phones, Bloomberg reported.

Since December, Burger King has been testing mobile payments in the Miami area and is aiming to roll it out on a broader scale, Jose Cil, Burger King’s president, told Bloomberg, noting it’s likely there will be a national rollout of mobile ordering and payments in the coming months.

While pizza restaurants like Domino’s and coffee retailers like Starbucks were early with mobile ordering and payments, the burger fast-food chains have been slow to adopt the technology.

 

Market Differentiation

And, while burger chains face competition from upscale chains such as Shake Shack, Taco Bell benefits from adapting to the taste of younger consumers to differentiate itself.

“They certainly continue to do pretty well, and bring out some interesting and new menu items,” David Henkes, senior principal at Technomic, told Bloomberg. “They’ve done a good job of connecting with the millennials and Gen Z.”

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