In the last part of this series, we learned that product innovation helps restaurants drive same-store sales. Increasingly, restaurants are also using technology to increase customer traffic and drive same-store sales. Let’s look at some of the initiatives on this front.
Recently, McDonald’s (MCD) rolled out Apple Pay nationwide to enable payment convenience for its customers. Some restaurant chains have moved to phone applications to drive promotions as well as maintain loyalty programs. According to Starbucks (SBUX), the company had 5 million mobile transactions per week in 2014.
Tim Hortons (THI) recently introduced new mobile applications along with barcode scanners to enable payment by swiping the phone. Read Why Tim Hortons introduced a mobile app and loyalty cards to learn more.
High technology footprint on sales
Domino’s Pizza (DPZ), one of the leading players in technology, took several initiatives in 3Q14 to improve the digital order experience. These initiatives include a full pizza customization option, tracking the delivery, and taking these functionalities to the iPad. The company also launched voice-ordering capabilities. Read Technology pushing Domino’s growth to learn more. According to management, Domino’s sales from digital orders in the third quarter were in the mid-40% range.
Darden Restaurants (DRI) introduced Ziosk in 11 Olive Garden restaurants. Ziosk is a tabletop tablet device that allows customers to place orders. Chili’s, under the umbrella of Brinker International (EAT), completed the rollout of its Ziosk device in the third quarter of 2014. Exchange-traded fund (or ETF) Consumer Discretionary Select Sector Standard and Poors depositary receipt (or SPDR) (XLY) also holds Darden Restaurants.
People are changing what they order and how they order their food. As we saw in the same-store sales performance parts of this series, the U.S. restaurant industry is experiencing a shifting trend with fast-casual restaurants doing better than casual, fast-food, or family restaurants.
Restaurants are increasingly becoming more innovative in order to increase same-store sales and improve incrementality. Next, we will discuss some of the initiatives taken in this direction.