For the restaurant industry, mobile payments move into critical mass phase

 
May 29, 2014 | by Alicia Kelso

When Starbucks first introduced its mobile payment option in 2011, the technology was foreign to most of us. Now the brand’s app generates about 14 percent of its tenders.

Without a doubt Starbucks is the mobile payments pioneer that has paved the way for this technology in the restaurant industry. At last week's National Restaurant Association Show, a panel of brand representatives discussed where the industry is now with mobile payments, and how to compete in the growing space. Most of the panelists agreed we’re past the early adoption phase and moving quickly toward mass adoption.

"The advancement of mobile payments comes from knowing more about your guests and if you look at the adoption curve, I believe we're now climbing the slope of enlightenment. Local, regional and major players can now get into this game," said Caleb Mitsvotai, senior manager of IT Strategy at Panda Restaurant Group.

Cava Mezze Grill CEO Brett Shulman, Nando's head of Marketing Sepanta Bagherpour, and Pinkberry's SVP of Marketing and Design Laura Jakobsen, all agreed.

"We're moving into mass adoption and that means customers are going to start expecting it. There are now high expectations for simplicity and nimbleness and fast changes to give them what they want faster," Jakobsen said.

However, Matt Matros, CEO of Protein Bar, said it's still a little too early to be at the critical mass stage. Merchants continue to have reluctance about the new technology, and technology partners are still emerging, he said.

"And from a consumer standpoint, they're still too afraid to transmit their payment data over something they're only accustomed to using as a phone," he added. "Also, the restaurant industry itself is inherently old-fashioned. I think it's still a little bit early."

Still, because of the benefits mobile payments offer, he believes we'll reach mass adoption sooner than later.

Benefits of mobile

Those benefits includes the ability to gather analytics about consumers' purchasing behavior and the ability to then influence that behavior; the opportunity to integrate into a loyalty program; lower interchange rates; more secure payments; and the ability to extend your brand’s experience from your four walls.

"On the data side, it allows you to take a granular look at who your guest is and what their habits are so you can have more meaningful engagement with them. It's a missed opportunity if you're not there," Shulman said.

Mobile is particularly important for brands with younger demographics. For example, Matros said his heavy users are 22 to 35, urban and tech savvy.

"They're far on the adoption curve and we have the ability to speak to them how they want to be spoken to in a specific way," he said.

Such specifics are key to coming up with a successful mobile strategy.

"We didn't decide to do mobile payments, but rather to communicate with our customers better. It's a new way to guerrilla market," Jakobsen said.

Types of technologies and testing

To kickstart your strategy, consider there are a variety of technologies that facilitate mobile payments at the point-of-sale, including:

  • NFC
  • QR code presentment
  • QR code scan
  • Single use number
  • iBeacon technology

Which one best suits your restaurant brand requires a little bit of trial and error, according to the panelists. Nando's, for example, is in the middle of a QR code test. Bagherpour said the decision was based on accessibility and availability.

"NFC has limitations. The customer experience with this is very simple. We treat it as a third tender – it scans the code and the transaction is done. There is no need for a signature and each time the customer earns points toward the loyalty program," he said.

Pinkberry created an individual bar code that customers could swipe and earn points. Jakobsen said it was initially created to emulate Starbucks' system.

"Our business is changing at the moment. What's most critical for us is that our mobile app becomes the center of experience. It's a journey for us as much as it is for our customers," she said. Pinkberry runs promotions to encourage customers to adopt the app. The incentives, Jakobsen said, help them get more comfortable with the concept of mobile payments.

Two major keys to a successful rollout, according to the panelists, are to make sure the operations team executes the process, and to take your time to get the right solution.

"The first part of this is making people familiar and comfortable; that means people in your store need to be comfortable because they're telling people how to use it. Your team has to adopt it and love it. We did a lot of internal training so they could be advocates," Jakobsen said.

Cava Mezze Grill tested a mobile payments platform for about six months and went with an out-of-box solution that was flexible. Shulman said it took awhile because they wanted to get it right.

"Consumers have a low threshold for clunky technology these days. They expect this whether it's a large or small chain and you have one chance to make a first impression," he said.

Protein Bar and Nandos both chose well-known LevelUp, and for a reason.

"We wanted to make sure whoever we partnered with was going to be around a few years from now. We didn't want to be anyone’s beta test," Matros said. "If you're thinking about working with an emerging company, I'd advise you to make sure you're not their first."

Above all, remember that consumers are fickle – most apps that are downloaded are deleted. But, Mitsvotai said, 70 percent of consumers will give your app a second chance and 16 percent will give you a third chance.

"Mobile payments is not a process you can turn on overnight. There are vendors that can handle the complexity for you, but you have to navigate the ecosystem. A good partner is vital," he said. "What's most important is to make sure your brand character and messaging comes through to that application. It's an extension of your brand."


Topics: Mobile Payments , Online / Mobile / Social


Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.
View Alicia Kelso's profile on LinkedIn

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