Oct. 16, 2013
In the past two months alone, Subway, Dairy Queen, McDonald's, Checker's, Rally's, Sonic and Jamba Juice have announced new mobile payments platforms or tests.
Subway, Dunkin' Donuts and Burger King Delivers, among others, have long ago implemented such a system. Mobile payments may not be at critical mass just yet, but the technology is well on its way.
Mobile payments can be defined simply as consumers using their smartphones to make a retail purchase, according to Gordon Saussy, consulting executive at Isis Mobile Commerce. He was joined by Chet Kenisell, president of Sugar On Top, a Gigi's Cupcakes franchisee; Matt Pyles, operations manager at Barbacoa Mexican Grill; and Geoff Murtaugh, VP of Technical Services at Micros, to discuss the future (and now) of mobile payments in the restaurant industry at the Fast Casual Executive Summit this week in New Orleans.
Benefits of mobile payments
Although mobile wallet adoption remains relatively low in the restaurant industry, the operators on the panel said such apps provide plenty of benefits that will lead to its acceleration.
For example, Kenisell said, mobile payments can speed up service if customers know how to use their apps. If they don't, the speed of service is about the same as swiping a card. Mobile payment apps also provide purchasing data about their users' habits, so restaurants can develop individualized promotions.
"Mobile payments provide the ability to more personally interact with your guests, and you inherently gain more information about your guests that can help you create a different type of customer experience," Murtaugh said.
Loyalty and promotions
Creating promotions via mobile works well, Pyles added, because the consumer is already engaged.
"People check their phones every 5 to 7 minutes. How great would it be to send them a push notification encouraging them to come eat at Barbacoa during those times?" he said. "We're not a destination location. Our customers make the decision to eat here about two minutes before they come in."
Because of the ability to craft real-time promotions, loyalty programs will shift to mobile platform sooner than later, the panel agreed.
"There is nothing more personal than your phone. Your smartphone is a great place for an identity credential for a loyalty program," Saussy said.
Such a program can help a restaurant brand differentiate itself from other brands without breaking the bank.
To integrate a mobile payments program, Saussy said, an establishment must have a POS that accepts NFC (most already do and those that don't will need a piece that costs about $75 to $100); a payments path that can handle the added channel; and a processor that can handle NFC (again, most do and those that don't will require a nominal fee).
When will it hit critical mass?
One of the reasons mobile payments hasn't reached critical mass yet is because both consumers and merchants still need to be educated about how the process works and the security behind the platform. Kenisell runs a co-marketing campaign with Isis and also offers promotions to encourage customers to use the app. Pyles, who said about 2 percent or less of his customers (mostly Millennials) use the wallet at Barbacoa, expects the platform to reach critical mass in two to four years.
With the trend being driven by Millennials, it will pick up as they continue to garner even more purchasing power. Right now, they account for about 21 percent of all consumer purchases.
Adoption hurdles also include staff education.
"If the staff doesn't know what they're doing, the line is going to get really long, really fast," Kenisell said.
Training and adoption rates aside, the panel agreed mobile payment platforms are here to stay and offered tips on what operators should be doing to embrace the technology:
"Keep your eyes open. Don't turn a blind eye to it and don't miss out on this, especially since it's such a small cost," Pyles said. "It's coming and it will help set your restaurant apart and give you a little extra edge. Customers who want to use mobile payments will come back to your restaurant if you allow them to."
Kenisell recommended keeping an eye on developments that will be revealed in less than a month. Isis, the mobile commerce joint venture created by AT&T Mobility, T-Mobile US Inc. and Verizon Wireless, is prepping for a national rollout in November, one that could expedite the technology throughout the restaurant industry.
"Mobile payments, because they're so personal, is the beginning of a whole new era," Saussy said. "It provides a direct connection to consumers. They're not necessarily new consumers, but they're an innovative set of consumers, and those are the consumers you want."
Read more about mobile payments.
Photo courtesy of Wikipedia.