Mobile Payments Prove Appetizing For Fast Food Diners

by Raymond Pucci 0

Mobile payments are becoming a regular menu item for fast food restaurants. As the following article shows, First Data reports an impressive 75% increase for mobile orders in that space year-over-year.

The volume of mobile payments in the fast-food industry have grown 75% this year from 2016, payments technology provider First Data said in a webinar. That growth may mean that 10% of all quick-service restaurant sales are made through a mobile device in the next few years, said Glenn Fodor, head of strategic intelligence at First Data, per a story from Nation’s Restaurant News.

The rise in mobile payments among quick-service operatives will spread to other food-related industries, including casual-dining restaurants and grocery stores, First Data predicted. Amazon’s purchase of Whole Foods was a major indicator of the e-commerce giant’s aspirations to integrate digital ordering with brick-and-mortar distribution.

Voice-activated shopping with smart speaker devices like Amazon Alexa, Google Home and Apple HomePod will accelerate the move to mobile payments. About 3 million voice-activated devices were shipped this year, a number estimated to rise to 15 million by 2020, First Data said.

As First Data noted, 2017 has been a “tipping point” for mobile payments in the restaurant industry as consumers grow more comfortable with using their smartphones for purchase transactions. While the technology is hugely popular in China’s urban centers, U.S. consumers have been slower to adopt mobile payments when plastic credit and debit cards are so easy to use.

Among the quick-service chains highlighted in the report, Starbucks sees 30% of transactions from mobile devices, while mobile ordering makes up 9% of its total volume. Dunkin’ Donuts has about 7 million members in its DD Perks loyalty program that can downloaded for free from mobile app stores. McDonald’s is rolling out mobile order and pay to 20,000 global locations this year. In the pizza category, Domino’s and Papa John’s receive 60% of orders from digital channels. Among those channels, 70% are mobile for Papa John’s. Chipotle’s online orders grew more than 50%, and the company is planning to revamp its mobile app.

Fast food or quick service restaurants (QSRs) are the sweet spot for mobile payments, especially of the order-ahead-and-pay variety. Add in loyalty and marketing offers to mobile apps, and customers become highly engaged by visiting frequently and spending more. Coffee and pizza QSRs have capitalized on mobile payments, but most major burger joints have been late to the table. This will change as McDonalds is completing a nationwide mobile ordering rollout by the end of 2017, including in-store kiosks. Hungry and thirsty diners will be lovin’ it.

Overview by Raymond Pucci, Associate Director, Research Services Advisory Services at Mercator Advisory Group

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