Why that digital ordering app isn't profitable: part 1 of 2

Why that digital ordering app isn't profitable: part 1 of 2

Digital ordering is paramount in the restaurant industry and continues to experience exponential growth. According to the data from Yahoo's Flurry analytics, consumers spend 90 percent of their mobile time in apps. 

That percentage serves to provide key insight for businesses deciding whether to launch a mobile app or approach this task through a mobile-optimized website. 

Restaurateurs must ensure that online ordering helps both the customer and the brand, in terms of profitability and the following will give you some actions to take to get the most out of what digital ordering offers.

Mobile ordering vs. winning mobile app solution  

Big brands are making mobile ordering a critical part of their strategies now thanks to a flood of examples of major QSR brands which have used mobile ordering apps to increase sales. For speed and convenience, this is a no-brainer for customers and why the popularity of these apps is skyrocketing. 

Mobile ordering gives your brand a millennial-friendly makeover, because this generation of digital natives are joined at the hip to their smartphones and want to use their convenience to bring meals to them. 

For proof of this, look no further than the findings reported by Boston Consulting Group at the 2017 Franchise Consumer Marketing Conference which show millennial consumers account for about 45 percent of online orders, as opposed to 30 percent of all restaurant orders.

Another interesting aspect associated with online ordering is the criticality of an accompanying delivery services. For instance, BCG's survey showed a strong connection between a brand's usage of online ordering and delivery capabilities.

Still, even though mobile ordering continues to gain traction, many restaurants see less than spectacular results after implementation and some even lose money. Invariably, the reason behind this revolves around an overall lack of customer engagement in the mobile ordering app's use.

But, creating engagement while relying solely on online ordering is nearly impossible, so it's worth checking out a complete mobile app solution with the types of features that can convert those "once-in-a-while" digital ordering customers into profitable loyalists. 

That means, digital ordering alone cannot be seen as the ultimate formula for success, but just one piece of the puzzle. For instance, last April, Starbucks said that 29 percent of its sales were made digitally in the previous quarter. 

But, the company has been focusing on digital sales for several years and had  recently updated updated its mobile ordering app to include ordering for pickup. Thus one good reason for the app's popularity and success was the combination of digital ordering with the brand's effective loyalty program. 

Audience coverage is only 3 to 10 ppercent of your customer base when you employ only a transactional digital ordering feature in your app. But, by using a complete mobile app solution you can cover as much as 40 percent of your base – a significant difference. 

And while mobile ordering alone doesn’t guarantee you'll see an impact on revenue, an effective mobile loyalty program can boost same-store revenue growth by 12 percent, while helping achieve multiple other business goals like new revenue stream creation and "lost customer" retrieval, to name a few.        

3 profitable perks of total solution app

So to wrap things up in this part of this series, here are three reasons a total mobile app solution far excels over a standalone online ordering app: 

  1. Easier ordering pushes more frequent purchases anytime and anywhere, as well as higher checks. 
  2. Extends app audience to more millennials and frequent online orderers through social network reporting of positive experiences. 
  3. Brands can integrate social media referrals to convert word-of-mouth marketing into new customers.

Please come back to QSRweb on Wednesday for the second part of this series Wednesday on the pieces your mobile ordering app must include to deliver the sales results you want. 

Daniel Rubinstein serves as chief business development officer at LoyaltyPlant where he empowers restaurant innovators to build meaningful customer relationships with their guests through mobile-first marketing strategies.

Photo: iStock


Topics: Marketing / Branding / Promotion

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