By Tyler Baks
Today’s foodservice consumers are looking beyond food. They are looking at more than just innovative meals and menu items, past healthy alternatives, and the ambiance and the environment – all of which have become the norm, the standard cost of entry for any operator within the Canadian commercial foodservice marketplace. In today’s digital age, consumers expect excellent service, a great experience, short wait times, and they want this to be as convenient as possible.
With a heavy reliance on technology and efficiency – in the way people shop, communicate, manage relationships, and spend their leisure time – consumers want to be able to use technology within the foodservice marketplace. This means using mobile apps for quick restaurant reservations, browsing menus online, checking the nutritional and health information of a dish before even stepping foot in the door, and having delivery options right at their fingertips. Consumers want what technology offers – convenience, information, and access – and they want it for their food.
The ubiquity of technology and mobile apps is the new reality, and people are spending more and more time glued to their smartphones. This shift in consumer behaviour means that mobile apps are moving beyond being an innovative novelty and are becoming a must-have for operators looking to increase customer satisfaction, traffic, and spend.
The “digital door” is a term coined by the NPD Group to describe any customer who accesses a restaurant through the Internet or with a mobile device. Currently in the Canadian commercial foodservice industry, the digital door accounts for a mere two per cent of restaurant traffic, yet this has tripled over the last four years, and is still on the rise, up five per cent compared to a year ago. Mobile technology alone within the foodservice industry is growing at more than 10 per cent annually. Technology within the Canadian foodservice industry is only going to continue to get bigger, more advanced, and more synergistic, as evident by the fact that entering through the digital door represents $1.1 billion annually.
New marketing opportunities
An increase in mobile app usage has created many new marketing opportunities for operators and restaurateurs to improve customer experience, attract new clientele, drive traffic, and boost sales. Operators who are willing to invest in mobile technology must offer seamless experiences for those customers who either wish to order their meal on their smartphone and have it ready for carry out — thereby effectively cutting down on their wait time — or those customers who are looking to order online and have their customized meal delivered right to their door. Digital ordering for delivery is a growing trend amongst consumers; especially those consumers who are constantly on the go but still expect the same great service and experience. Delivery accounts for 55 per cent of digital orders, compared to 30 per cent for carry out. Ordering through a mobile app for delivery is up 14 per cent on the year, and will likely continue to drive strong growth in the coming years.
Digital technology has previously been utilized by FSR operators, but now inroads are being made within QSR. Think of three foodservice brands that you know of who utilize digital technology. Would Starbucks, Domino’s, or Boston Pizza come to mind? What about Papa John’s, Swiss Chalet, or Pizza Pizza? Whichever brands you listed, did you effectively name more Quick Service Restaurants (QSR) than Full Service Restaurants (FSR)? That’s the new wave of technology in foodservice. Digital has been adopted by many QSR operators and has successfully helped to drive more traffic and boost sales.
Pizza at your fingertips
Companies who are investing in and embracing digital platforms are growing in spades. One example is Papa John’s, who recently announced to Business Insider Intelligence that in its first-quarter 2016 earnings, 55 per cent of their total sales are now coming from digital means, and 60 per cent of those are through mobile ordering. What we know to be true is exactly what is happening – consumers are pulling out their smartphones more frequently when ordering, and this convenience and efficiency is encouraging more digitally-driven traffic.
Papa John’s, like many other pizza operators, is marketing their digital platforms in order to drive customers to their available offerings. With continued focus on digital and smartphone usage, mobile will become even more prominent amongst pizza operators and continue to spur their growth. Pizza operators have been early adopters in the mobile marketing space and have invested heavily in mobile technologies, platforms, and campaigns, but their venture into digital has, in some cases, stemmed from declining traffic and sales.
Creating a digital presence
Over the past few years, the QSR pizza category experienced continuous losses in traffic, with an average loss of one-per-cent traffic decline year over year. However, due to the adoption of mobile technology, traffic to QSR pizza has finally seen gains in the latest year, growing visits to the category in Canada by half a million versus last year. While this number may not seem substantial, it is a notable feat to a category that has seen continuous declines for the past five years. Foodservice is now noticing a trend of other heavy-hitting pizza restaurants focusing on their digital presence and beginning to heavily fund their mobile strategies, with very profitable ROIs.
Domino’s is a perfect example. Domino’s has had many tech surges within the last few years, winning both new and old customers with their easy and simple tap-tap-order process. With their latest technological breakthrough, the brand has consumers one step closer to munching on their piping hot pizza with their “Zero Click” ordering app. This newest innovation follows on the coattails of their other consumer-friendly and efficient mobile ordering modes, such as voice, smartwatch, AnyWare, car, TV, and tweet-and-text ordering with a pizza emoji. While all these digital modes may seem extensive, this is certainly not for nothing. In the latest year, a significant portion of Domino’s traffic was driven by digital, which continues to drive strong growth at a fast pace. Even more impressive is that orders through digital platforms garner higher cheques.
So, how can a digital door strategy help today’s restaurateurs? In a challenged foodservice market where consumers continue to cut back on dining out of home, focusing on areas of the market that are growing is a simple strategy to increase sales and engage sought-after younger consumers. Enticing consumers to enter through the digital door provides new innovative platforms for payment methods and garners interaction with a restaurant brand.
Strategy is key
To successfully launch a digital door strategy, operators must be aware of how consumers will engage with their digital platforms. Consumers want multiple touch points with today’s restaurant brands, and they want to be able to share their experiences with others. This is why digital and mobile have become so relevant in today’s interconnected world. While creating a digital door seems like a complex undertaking and requires large investments, it is now the harsh reality and cost of entry for quick service operators that want to win with young, tech-savvy consumers. Realistically speaking, it is simply the most current and innovative tactic to increase the consumer experience with a brand.
Going digital will help a brand to engage with their consumers in a convenient, flexible manner; it is a way to provide faster service, enhance the consumer experience, and ensure satisfaction and accuracy. The digital door gives today’s restaurant brands the opportunity to drive more engagement via loyalty and rewards while giving you an opportunity to harness and leverage key data and informational insight.
About the author
Tyler Baks is Account Manager, Foodservice Canada for the NPD Group. The NPD Group has more than 25 years of experience providing reliable and comprehensive consumer-based market information and insights to leaders in the foodservice industry. For more information, visit www.npd.com or contact Tyler at Tyler.Baks@npd.com.