Meals by mobile

 
Nov. 28, 2007
While text ordering on cell phones may still seem like a novelty, it's one of the fastest-growing new segments in the quick-serve restaurant industry. Considering the number of cell phones and restaurants nationwide, and the increased need for speed and convenience, the growing popularity of text messaging makes sense.
 
Papa John's recently rolled out text ordering at all of its 2,700 U.S. restaurants and many Domino's restaurants accept orders from Web-enabled mobile devices. The company plans to make the service available in all of its 5,100 U.S. restaurants next year.
 
According to Noah Glass, founder and chief executive officer of text-ordering provider GoMobo, the market is large. GoMobo services Dunkin' Donuts, Papa John's, Popeyes, Quiznos, Subway and others.
 
"We believe the market for text-ordering in the United States is in the range of 250,000 to 500,000 restaurants," he said. "Mobile phones are the most ubiquitous technology product in history, with over 233 million active mobile phone accounts in the U.S. alone."
 
Glass said text messaging has taken off in recent years, increasing from 22.8 billion text messages sent in the United States in 2004 to more than 158 billion in 2006. In addition to users between 18 and 25 years old, another large demographic are women older than 35.
 
Text ordering is generally a simple process. Users typically send a designated keyword to a "shortcode" on their cell phone containing their favorite order, which is then sent to the restaurant. For example, with Campusfood.com, which services more than 300 of the top college campuses across the country, students and local residents can set up their favorite orders, such as two large pizzas, a soda and salad delivered to their home, and give it a favorite name (such as "pizzafav").
 
Customers then can text their favorite to the shortcode to place their order. Restaurants receive orders as if a customer ordered from the Web.
 
"We are reaching our customers who can now order on the way home from class or from the library," said Michael Saunders, president of Campusfood.
 
Despite the novel approach, issues remain.
 
"As ordering moves away from the restaurant counter, chain operators need to plan both for new inputs and for the infrastructure necessary to easily incorporate them into restaurant operations, including enterprise-level customer profiles and routings as well as smooth integration with site systems," said Karen Sammon, president of software solutions for PAR Tech Inc., a hardware and software provider for the foodservice industry. "Delivering new order options, as well as the right enterprise infrastructure, are a top priority for us."
 
She added the company also is evaluating the mobile phone as a payment device for point-of-sale terminals and kiosks. Sammon said location-based services could enhance the order process.
 
"For example, instead of going to my New Hartford Starbucks, I want to order my coffee from one in Chicago," she said. "That enterprise piece allows me to select a store or tells me the nearest location based on a GPS chip in my phone. My customer profile is available to speed the ordering process by allowing me to select from my favorites."
 
Sammon said when she then enters that Chicago Starbucks and walks up to that device, it needs to recognize who she is, either through a confirmation number or a unique RFID chip in her phone or loyalty card.
 
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"That device will allow me to use my cell phone for payment," she said.
 
Merchant participation
 
Terry Erisman, CEO of mobile-ordering firm MyTango, said getting merchants to participate in these programs is a challenge.
 
"The greatest challenge is merchant recruitment because many merchants are stuck in a 'If it ain't broke, don't fix it' mindset, or they don't think it is fair to allow people to skip the line," Erisman said. "Some merchants have actually told us they want people to stand in line to order – as if the preferences of their customers not to stand in line aren't important."
 
GoMobo's Glass agreed. "The main challenge of GoMobo has been explaining to restaurants why what we're doing is so revolutionary and different from the many online-ordering services out there," he said. 
 
Although the younger demographic generally is more familiar with mobile devices and new features, customer education is crucial.
 
"We work with online and mobile marketing firms to create local market awareness about the service, and we provide 'How GoMobo Works' brochures at each restaurant so customers can learn more," Glass said. "Word-of-mouth marketing has been key in helping GoMobo spread to groups of friends and co-workers."
 
Some services, such as MyTango, charge a fee to consumers (25 cents per order), while others, such as Campusfood.com, are free. However, fees don't appear to be a problem, at least according to Glass.
 
"GoMobo customers often pay less for their food than non-GoMobo customers do, as restaurants offer text-message specials and promotions for GoMobo customers," he said. "Restaurants pay a small transaction fee for GoMobo for the benefit of increasing sales and automating order-taking and payment to focus more employee time on order-making."
 
For text ordering in general, funds normally are transferred to the restaurant with a stored credit card.
 
"When I think about myself as a mom of young kids, the ease of placing an order and being able to zip through a drive-thru or pull up curbside without having to bring my children in — that definitely has value to me," Sammon said. "Plus, the convenience of ordering, and the ability to receive confirmation via phone to ensure accuracy."
 
While text ordering may seem like a novelty to some, Sammon sees plenty of room for growth.
 
"Quick-serve restaurants have a great opportunity to use text messaging because they share the same demographic as heavy texting users — teens," she said. "Table-service chains promoting takeout or curbside delivery are another great fit for text ordering. There's that convenience of quickly ordering a complex family meal and having it ready when you arrive at the restaurant."

Topics: Marketing , Operations Management , POS


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