Caribou Coffee Spills The Beans On Customer Loyalty In The Mobile Age

Consumers’ preference for mobile order-ahead is now driving how physical restaurants are designed and renovated. Nowhere is this change more pronounced than in the coffee industry, from giants like Starbucks building pickup-only locations to smaller chains like Caribou Coffee renovating locations with dedicated pickup windows.

Fraudsters continue to haunt the mobile order-ahead industry, however, with friendly fraud being a particularly well-documented menace. Some customers take advantage of restaurants by requesting chargebacks from their banks or credit card companies with the hope of scoring a free meal, while others are inadvertently causing harm by ordering chargebacks when a refund would be more appropriate. Both types of chargebacks are equally damaging, but they require vastly different tactics to fight.

In the December Mobile Order-Ahead Tracker, PYMNTS explores the latest developments in the world of digital ordering, including new phantom kitchens from Chick-fil-A and Wendy’s, a revamped rewards system from Caribou Coffee, and the most effective methods for preventing chargeback claims before they happen.

Developments From Around the Mobile Order-Ahead World

While consumers are ordering a wide range of cuisines via mobile order-ahead, certain meals stand out as more popular than others. DoorDash’s end-of-year report revealed that the most popular item delivered by the third-party service in 2019 was burrito bowls. The most expensive food order consisted of macaroni and cheese, crab fried rice and curry cornbread at $3,000, while the most valuable order overall was a $5,000 delivery of cognac.

Third-party apps are facing some oversight difficulties, however. DoorDash’s competitor, Grubhub, is taking heat from the New York City Council, which is asking it to pay back restaurants for fees charged for phone calls that did not result in sales. The council alleges that Grubhub’s order-detection algorithm is falsely charging restaurants by mistakenly saying that orders took place. This is the latest scuffle in an ongoing conflict between Grubhub and New York City that stretches back months.

Third-party delivery services Grubhub and DoorDash are driving restaurant innovation, despite these legal struggles. QSRs such as Chick-fil-A and Wendy’s are opening “phantom kitchens,” or locations without dining rooms to conduct business entirely through mobile ordering, pickup and delivery.

Other companies are also fueling these developments, including Uber Co-Founder Travis Kalanick’s CloudKitchens. The company recently secured $400 million in funding from Saudi Arabia’s sovereign wealth fund.

For more on these and other mobile order-ahead news items, download this month’s Tracker.

How Caribou Coffee’s Rewards System Changes With the Times

Major coffee players, such as Starbucks and Dunkin’, were among the first to embrace mobile order-ahead, and smaller chains like Caribou Coffee are following their developments closely, observing what does and does not work and adjusting offerings based on customer feedback.

For this month’s Feature Story, PYMNTS spoke with Caribou Coffee’s senior director, Caroline Larson, about how the chain’s rewards system changed from a surprise-and-delight model to a points-based loyalty program, and what it learned from industry giants when it came to in-store pickup.

Deep Dive: Chargebacks Take a Bite Out of QSRs

Chargebacks are a well-known annoyance among retail stores and other merchants, but it is only with the rise of mobile order-ahead that restaurants are beginning to see them in earnest. They pose a unique threat to the industry, not only because of QSRs’ inexperience in fighting them, but also because of the non-returnable nature of their products.

This month’s Deep Dive explores why chargebacks are a relatively recent phenomenon among restaurants and how customer trust may be the best tool to prevent them.

About the Tracker

The Mobile Order-Ahead Tracker, done in collaboration with Kount, serves as a monthly framework for the space, providing coverage of the most recent news and trends, along with a provider directory highlighting the key players across the segments that comprise the mobile order-ahead ecosystem.