While Millennials are credited with leading the digital charge, restaurant customers of all ages are embracing digital technology as a way to stay connected to their favorite brands. And as both digital technology and the end user continue to evolve, restaurant operators must grow and change with them.
Mobile phone applications, online and tablet ordering, and digital menu boards each drive customer engagement in its own unique way and, when tied together, can create a user experience that drives both retention and new trials.
To gain insight into the new digital customer and the technology driving their dining experiences, FastCasual.com spoke with Noah Glass, founder and CEO of online ordering firm OLO.
Fast Casual: Who is the new digital customer?
Noah Glass: Often restaurant operators – and many marketing and business professionals – falsely assume that Millennials are the only ‘digital customers.’ The largest group since the baby boom and the first to grow up with the Internet, personal computers, and mobile technology, Millennials truly are 'digital natives,' but they are not alone in their digital use or the digital data that is tied to them. When it comes to the general population, operators need to recognize that every customer can and should be viewed as a digital customer.
Smartphones are just one avenue for customers to connect with their favorite restaurants, but with the rate of smartphone adoption outpacing both the PC revolution of the 1980s and the Internet Boom of the 1990s, they are a critical factor in the overall discussion of the digital customer. According to a recent Nielsen report, fifty percent of all U.S. mobile-phone users—which equates to about 40 percent of the U.S. population—now use smartphones. The mobile boom is notable because it is greatly enhancing the quantity and enriching the quality of digital data and causing a new inflection point both in the kinds of data that restaurant operators can collect and the ways in which customers and restaurants can interact.
FC: How are they using digital technology?
NG: Today when customers are searching for restaurants, they equally split their time between searching the Internet on a computer and searching on a mobile device. However, the usage trend is increasingly mobile because of the staggering proliferation of smart mobile devices. Consider this: analytics firm Flurry estimates that, by the end of 2012, the cumulative number of activated iOS (iPhones and iPads) and Android devices will surge past 1 billion.
So how are customers using mobile? When on their smartphone, potential customers are increasingly using apps. Roughly 40 billion applications have already been downloaded from the App Store and Android Market and in 2011, the average smartphone user, for the first time ever, began spending more time using mobile applications than browsing the web. Despite this rapid adoption, only 16 percent of restaurants offer a mobile app, highlighting a largely untapped market opportunity for operators to meet the digital customer on his own turf.
FC: In what direction is digital technology headed?
NG: Digital technologies like smartphones are just tools, but they are good indicators of behavior. Through the use of smartphones and apps, customers can increasingly control their experience. The smartphone is a customer’s canvas — allowing them to curate what they see, who they communicate with, who has access to their personal information. Restaurants are no longer just where a person has dinner or meets up with friends; they are part of a customer’s personalized brand.
Additionally, mobile technology has made customers expect everything on-demand and in real time. Experiences must be intuitive and seamless to keep a customers’ attention. In OLO’s world of mobile ordering, this means that a restaurant’s mobile ordering app must allow customers to order and pay for their favorite orders in just six keystrokes.
FC: How is tablet ordering changing the customer experience?
NG: The self-service trend has fundamentally changed behavior in nearly every aspect of our lives. We go to the ATM instead of a bank teller. We buy our airline tickets online. We print our own movie tickets for the next blockbuster hit. We download our books instantly. We never have to ask for directions. Tablet ordering providers like Ziosk have taken that self-service experience to the casual dining environment. Customers can now choose what and when to order and pay, a new tool that fits into the self-service experience we have all come to expect.
FC: How is it changing the employee experience? (countertop ordering, drive-thru)
NG: The great fear is that this inevitably leads to the end of true hospitality because it necessarily means a reduction in staff, but this concern is largely unfounded. Since the technology empowers the customers, it allows restaurants to re-allocate their hospitality resources to those customers that are (still) seeking personal service, while those customers that choose to order independently can do so happily.
Moreover, the tablet enhances what the server can offer the customer. For example, servers can show customers how to look up pictures or nutritional information for unfamiliar foods or special dishes, avoiding send backs or indecision.
FC: What is the environment supporting these new digital platforms and what are some of the barriers to faster adoption?
NG: As it relates to mobile and online ordering, integration to the point-of-sale system is critical for both the operator and customer. When an order is made through an integrated mobile/online ordering site or app, if linked to the POS system, the order fires seamlessly past the cashier into the prep line and is held until the exact time necessary for back-of-the-house employees to begin preparation so the order is ready for the customer at the desired pickup time. This limits any burden on management or the kitchen staff to remember the order. This also ensures the customer has a seamless experience, they can pick up their exact order, fresh and ready at exactly the time they want it.
A barrier preventing faster technology adoption of POS-linked online and mobile ordering is the interface. Today, many POS vendors are writing proprietary interfaces that limit or complicate access for other technology providers. The Association for Retail Technology Standards (ARTS) recently released an open standard for self-service ordering and payment to POS integration, helping to overcome the integration challenges that exist today, but there is still work to be done in gaining widespread adoption of this new open standard.
FC: How can operators leverage a digital platform to drive sales?
NG: Smartphones, tablets, apps can all feel like “add-ons” to an operator with big price tags and unknown ROI. But all of these technologies have the capacity to increase profits and decrease costs. Consider these advantages:
- Attract new digital customers: A recent study by BIA/Kelsey found that 97 percent of customers use the Internet when researching local buying decisions. Online ordering links these browsers directly to a restaurant’s branded ordering site where they can order up lunch, dinner, or a late-night snack.
- Increase check size: Most restaurant brands report that online orders are 25 percent larger in average check size than orders placed over the phone. This increase can be attributed to the ease of ordering, broader marketing, and, with some systems, suggestive selling logic built into the online ordering software. Similarly, restaurants using tablet ordering have seen a jump in check size when customers can instantly order it without waiting for the server (42Gears Mobility Systems).
- Increase order frequency: In a recent study by Cornell University’s School of Hotel Administration on the state of online ordering, restaurant respondents also reported “considerable increase in order frequency” (Sept. 2011).
- Generate customer loyalty: When a customer places an order through the self-service ordering platform, they are offered a chance to opt-in for the restaurant’s email database program. On average, OLO’s customers add 250-500 new email users per location simply by introducing the new mobile and online ordering capability. Further, the online ordering platform keeps a detailed account history of online orders for each customer, so savvy marketers can target customers with just-right promotions based on their ordering behavior.
Noah Glass is the founder & CEO of mobile and online ordering provider OLO. Highlighting OLO’s innovation, Glass has been featured on Good Morning America, The Wall Street Journal, ABC World News, and The Big Idea with Donny Deutsch.
* Photo by Marc van der Chijs