Article

Subway franchisees explore off-site business via mPOS platform

The pay-at-location functionality has franchisees using the solution at community events and for catering.

November 12, 2013 by Alicia Kelso — Editor, QSRWeb.com

At the Money2020 Show in Las Vegas last month, Subway announced its implementation plan for ROAM's mobile POS solution. ROAM's software integrates into franchisees' existing systems, and its hardware connects to a mobile or tablet device. Everything is fully branded for Subway, including the backend system and the merchant-facing portal.

Subway's rollout is part of an emerging trend. A new study released today shows that the mobile commerce providers jumped from 17 in 2012 to more than 90 this year. The average QSR customer is 25 to 34 years old, and 62 percent of them have a smartphone.

During a Money2020 presentation, Evan Williams, Subway's VP3 of Credit and Loyalty Processing Platform for Subway's franchnisee organization, outlined the market drivers for mPOS' growth in the QSR industry, including speed of service.

Subway will focus on three of those drivers with its mPOS deployment:

• Business continuity in case of service disruptions;
• New revenue streams;
• Enhancement of customer service.

Business continuity

During Superstorm Sandy in 2012, many Subway franchisees in the Northeast experienced a POS service disruption due to outages. If an mPOS isn't available, it can lead to lost revenue and customer dissatisfaction.

The chain's franchise co-op, Independent Purchasing Cooperative, approached ROAM after the storm to learn about how they could be equipped with a device that continues payments processes during an outage, said Scott Holt, VP of Marketing at ROAM.

"Subway came to us and said they want their franchisees to be equipped with a device to continue the processing of payments if there is a disruption," he said. "That led to even more conversations. This single device, they realized, could be used for multiple cases and really expand Subway beyond its four walls."

New revenue streams

As a result, during the current "Phase I" of ROAM's mobile POS integration, more franchisees in the Subway system have begun exploring nontraditional, out-of-store revenue channels. The pay-at-location functionality has franchisees using the solution at community events, for catering, and at venues and stadiums, Williams said during his presentation.

"A number of franchisees have begun exploring popup stores, and using the solution at fairs, carnivals, sporting events, etc.," Holt added. "The solution focuses on customers who want out-of-store solutions and enables them to be able to transaction away from their physical store, locations that otherwise they couldn't get revenue from."

It's early in the ROAM rollout for Subway, but the demand is high. Franchisees, Holt said, like the idea of taking a large order of sandwiches into a community event and not having to only accept cash.

"From the outset, one of the reasons Subway selected ROAM was to innovate, and there are franchisees in the system really getting on board with doing new things because of this application," he said.

Customer service

Franchisees also expect the solution to enhance the customer experience. For example, Williams said that speed is the No. 2 reason customers choose a QSR, and that the average visitor only has 20 minutes to order and eat. mPOS can reduce wait time by about 7 seconds, which increases a QSR's market share by about 3 percent.

Customers, Williams said, value their time waiting in line to the equivalent of $40 an hour.

"Subway is a clear case of not just how to maximize speed, but to take a revenue stream and maximize that and add new revenue streams," Holt said.

What's next?

Phase II of the rollout is expected sometime next year and will be more integrated, with a tie-in to Subway's existing POS systems for real-time updates (for example, inventory data) across all devices.

"Overall, Subway is a forward-looking organization. It's still very early for them and they have to learn how to walk before they can run with this technology. But their franchisees have been very innovative and invest heavily in evolving the business," Holt said.

Since ROAM's announcement with Subway, other QSRs have generated interest in the technology. But the trend is moving quickly and operators are unsure of where to begin, Holt said.

"So much has been thrown at everyone in this space. Should companies implement wallets, marketing, payments for mobile? Subway is looking at it pragmatically," he said. "QSRs are unique for this. There is a whole range of potential there for mobile — delivery, line-busting, pickup. We'll see an uptick because it provides new services and more options for customers."

He expects full mobile penetration in the QSR space in two to three years.

Read more about mobile initiatives.

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