Restaurants beef up mobile investments

Sept. 11, 2013 | by Alicia Kelso

While it took a couple of years for restaurant operators to get the hang of social media marketing, they may not have the luxury of waiting as long to figure out the mobile platform. Mobile is the fastest growing technology ever, at least according to someanalysts.

Much of this growth is being driven by the digital-native Millennial generation. According to Nielsen, smartphone penetration among U.S. teens grew by 45 percent in 2012. They're not just using their  devices to chat and play games; they're using them as savvy consumers.

Restaurants have been stepping up their mobile investments accordingly. Juniper Research found that retailers plan to spend $55 billion annually on mobile marketing by 2015, nearly double the $28 billion level expected this year.

And, according to a recent MillennialMedia report, restaurant brands are currently using promotions as part of their advertising campaigns nearly five times as often as other industries. Brands from Domino's to Dunkin' have admitted an increased focus and budget on mobile initiatives within the coming year. So where, exactly, is this money being spent? Everywhere, basically. Mobile initiatives can include payments and promotions, loyalty and locators, and everything inbetween.

Targeted offers and speed of service

According to a recent report from MillennialMedia, as more restaurants jump into the mobile marketing space, their biggest goal right now is to increase foot traffic (81 percent). Targeted marketing initiatives have been tested at numerous concepts, including Dairy Queen and McDonald's, to woo guests and get them to return.

Brands are also increasing their mobile promotion/couponing presence to drive traffic, even using mobile users' geolocations to offer them a spontaneous deal if they're nearby.

Dunkin' Donuts launched a new promotion this month, for example, offering guests free Munchkins if they use the brand's mobile app. Dunkin's My Offers tab on the app pushes exclusive, geotargeted regional discounts for its signature items.

Speed of service benefits

Once such targeted campaigns drive guests in the door, mobile is then being used to expedite service time, a major differentiator in the cutthroat restaurant space. According to James Wester, research director, Payments at IDC, mobile-enabled speed is valuable not only to customers, but also to restaurants that are built around a "fast service" promise.

"There are a lot of expected benefits to leveraging mobile as a customer channel, many of which may or may not actually come to fruition. But one benefit that is available right now is in getting rid of lines so customers don't have to stand around and wait. With mobile applications, customers can place orders or reserve tables without having to be in a merchant location. It's similar to calling ahead but it doesn't require that a restaurant or retailer dedicate a person to answering the phone. Those applications are already being deployed successfully," Wester said.

For pizza, the biggest mobile benefit comes from ease of ordering. At the big chains, mobile ordering has increased exponentially within the past year alone (up 187 percent from 2012 over 2011 in the UK). Some brands are even adding text ordering — such as Mazzio's.

Guest interaction, loyalty

But, as users know, mobile is about much more than speed and promotions. Interactive features have grown rapidly and now make up about 28 percent of mobile budgets, according to MillennialMedia.

Brands such as Rita's, which introduced a game in April, Chuck E. Cheese, with its augmented reality photo app feature, and A&W, with its burping mascot, have inspired customers to download a restaurant-specific app because of their interactive features.

Domino's UK has dabbled in augmented reality, as well. Last year, the company installed posters at more than 6,000 sites across Britain. The posters include an AR feature allowing customers to download deals, get the company's mobile ordering app and become a Facebook fan.

Loyalty programs are also going mobile, adding another layer of interactivity. Old Chicago is in the test phase with a new text-based loyalty program.The brand could also explore other mobile features in the near future, such as payments, but is taking it slow because apps can "easily get too crowded," according to Ben Brown, vice president of Loyalty.

Rita's recently added the Punchh mobile app to mark the first day of spring. Customers receive a mobile "punch" each time they visit, en route to a free Ice. And, Pinkberry CEO Ron Graves said the brand's mobile app is now the center of its loyalty program, and provides functionality for fans.

"Launching the Pinkberry app was just the beginning of making a more primary way to interact and communicate with our customers," he said. "The key to unlocking mobile's potential is for industry players to focus on emerging expectations of our customers. This means developing mobile interactions that meet consumer demands for utility, speed and convenience."

Payments growth

While mobile couponing and interactivity are growing priorities right now, mobile payments platforms are also gaining in popularity in the restaurant space, with many of them being rolled into new apps (such as Dunkin's). The mobile payments industry is expected to jump to more than $62 billion by 2016.

A recent eMarketer report says the payment component is a major opportunity for restaurants/retailers, noting: "Mobile payments offer unique opportunities for retailers to connect with and capture information from consumers throughout the purchase funnel, (including) leveraging geo-targeting around a restaurant location, offering mobile coupons that can be saved to a mobile wallet, and capturing POS data."

Most restaurant chains have just started to scratch the surface on payments. For example, Wendy's CMO Craig Bahner said earlier this year that the chain is testing mobile payments. Tim Hortons unveiled a m-payment feature last year, claiming to be the first company in Canada to do so, and McDonald's, Subway, Burger King and others have at least piloted a payments feature.

Although the dizzying pace of mobile technology may be hard to keep up with, Graves said it's necessary now to try; that a solid mobile presence — one that adds to the guest experience — is how brands will maintain relevancy.

"Customers are developing expectations and habits on how they want to interact with brands. Our customers rely on mobile technology to make their lives easier," he said.

Read more about mobile initiatives.

Photo provided by philcampbell.

Topics: Loyalty Programs, Marketing / Branding / Promotion, Mobile Payments, Online / Mobile / Social, Trends / Statistics

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

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