Constant changes are being adopted by Quick Service Restaurants to survive in the competitive market. This utilisation of intelligent technological advancements for their products is resulting in a positive growth story By Kahini Chakraborty
The online food delivery market is growing at a fast pace. A report by Internet and Mobile Association of India (IAMAI) recently stated that online food delivery market in the country has witnessed an impressive 40 per cent growth in 2014, reaching Rs 350 crore. It also highlighted that the food delivery segment has now witnessed a lot of traction, and it is not surprising that it is growing at a fast clip. Significantly, the online food delivery market constitutes 17 per cent of the overall other online services pie. Kedar Teny, director – marketing and digital, McDonald’s India – West & South highlights, “McDonald’s has therefore introduced a unique multilingual mobile app to enable consumers to place orders on-the-go and simplify the process of ordering food to a great extent. Today, it is important for brands to be present on multiple platforms and we therefore also have a web ordering system. Today of the mobile and web ordering contribute to 30 per cent of our revenues received from McDelivery service. We will continue to capitalise on technology initiatives to provide a relevant, contemporary customer experience.”
Another significant development in the quick service restaurant (QSR) segment, according to EatStreet, an online ordering provider, is that digital ordering is growing 300 per cent faster than the dine-in traffic. Focus on the use of technology for ordering has seen a boost and is on a rapid rise. Home deliveries have increased by an average of 30 per cent of many players while online sales have seen robust increases across the board for QSR. “Going forward, there is going to be a tremendous emphasis on mobile innovations such as apps that integrate loyalty programmes and convenient payment options to customers while placing an order online,” states Teny.
For Lite Bite Foods, in terms of business, around 17 per cent of the revenue is generated by app and online ordering. “For better understanding of the segregation, we can say that around three-four per cent of orders are generated by apps while the rest are placed through calls and online,” informs Sharad Sachdeva, CEO, Lite Bite Foods, adding that, “The company invests more than 45 per cent of their marketing budget for enhancing and expanding online ordering at the moment. We are also planning on launching our own food delivery app and change the ordering prospects for the business in the near future. Secure online wallets and ease of ordering is what we see as a big development in the next phase of the ordering space.”
Similarly Sanjiv Pandey, marketing manager, Subway Systems India says, “Subway is currently working towards introducing online ordering in India. However it will be some time before we are able to offer this option to our customers. The long term plan is to have ordering apps that will be integrated with Subway’s central remote order system.”
On the international front, according to Noah Glass, founder and CEO of Olo, the latest buzzwords in technology are geo-fencing, NFC, Bluetooth Smart or location-aware check-ins. Combined, these technologies and techniques make up a class called ‘mobile presence technologies’ that can communicate a customer’s proximity to a restaurant location. The available technologies and techniques fall into two segments which are automatic or user-prompted. With technologies such as Bluetooth Smart, Wi-Fi and geo-fencing, a restaurant’s branded mobile app can trigger an order automatically when the customer crosses a predefined perimeter or physically arrives on-site. User-prompted techniques achieve the same goal by requiring the customer to check in or scan a QR code using their mobile device when arriving at the restaurant. Instead of an app automatically alerting the kitchen when a customer places a mobile order, the user does it at just the right moment: as they arrive at your restaurant, or when they are a few minutes away. Olo is a fully managed software as a service platform designed for multi-unit restaurants of ten or more locations.
Glass opines that even though earlier many restaurant brands left mobile apps to their marketing or IT departments, the future demands a change in the strategy. A mobile app does increase brand awareness and loyalty, but these new tools are also a boon for operations. Through the use of mobile presence technology, restaurants can perfect the operational timing needed to maintain perfect food and beverage quality. The technologies improve order accuracy by removing error-inducing steps from today’s person-to-machine-to-person-to-machine ordering process, all while further speeding service time and increasing customer happiness.
Growth processes
According to Sachdeva, app ordering is at a very nascent stage at the moment. “We are facing a couple of challenges. Sometimes, there is a discrepancy in the orders placed by the customer and the order received at the outlet. But once this is done, we see app ordering to be feasible and better for the business as the customer satisfaction increases due to faster processing of orders. We see ourselves to be increasing the designated budget from 45 to 55 per cent in the next financial year,” he says.
Elaborating on the back-end flow and delivery processes, he mentions, “Once the order is placed through the app or call, it is sent to the kitchen team for processing. While the order is being prepared, we get in touch with our delivery agencies and update them about the delivery and generate the bill in the meanwhile. The customer gets a message with a link and they can check the status of the order. The last and the most crucial step in the process is customer feedback once the food is delivered. We take special care to take the feedback once the food is delivered.”
While on the McDelivery website or log-in to the McDelivery app, customers are prompted to select a nearest McDonald’s restaurant as per their address. After they place their order, customers are given an order number and the restaurants receive an alert on their system which is specifically allocated towards the McDelivery service. Once the order is accepted by our restaurant and is in process, customers can track their order. “We have observed that a significant amount of revenue received from McDelivery is being driven due to the online app and the online website and is growing very rapidly due to the e-commerce push. However, as a global policy we cannot share the revenue break-up of our brand extensions,” points out Teny.
Faasos is in the business of food technology. It is the only vertically integrated food business in the country, Faasos technologically operates all the three important aspects of a ‘Food on Demand’ business, viz. Ordering (the most convenient ordering app in the country), Distribution (availability of food across different cities) and Fulfillment (delivery through the company’s own logistics or delivery boys). Jaydeep Barman, co-founder and CEO, Faasos states, “We at Faasos aim to serve those people who, because of their fast-paced lives, end up not having four meals a day. Apart from delivering lunch and dinner, we recently expanded our product offering and are the first to deliver breakfast along with evening tea and snacks. We operate in 11 cities viz. Mumbai, Delhi, Bengaluru, Gurgaon, Noida, Pune, Ahmedabad, Chennai, Hyderabad, Indore, and Vadodara. Upon opening the app, customers can view the menu for breakfast, lunch, tea-snacks or dinner which is specific to their area. The menu displayed on the app is location centric and is tagged to a physical location, what we call a fulfilment centre. We have 140 fulfilment centres pan India.” While ordering through Faasos, once a customer places an order, it reflects at the nearest fulfilment centre. Depending on various factors such as preparation times, packaging and the distance between the fulfilment centre and the consumer location; delivery time reflects on the app (e.g. time taken to deliver a biryani is anywhere between 20 – 30minutes). For further convenience, consumers can also track their order on the app on real-time basis, do cashless payments, order meals anytime and relish the food items which change daily. “The entire chain – from click to tap (clicking to place the order to tapping on the door for delivering the order) is seamless. We are the first company in India to do so, thus making the entire experience user friendly and convenient for our customers,” opines Barman.
The company (Faasos) over the last six months has seen a substantial growth. At the moment, Faasos clocks nearly 10,000 orders a day pan India on the app and has recorded a month-on-month growth rate of 20-25 per cent. Faasos is also the first food- tech company to go app only as we realised 97 per cent of our customers were solely placing food orders via the app as opposed to online ordering.
Tech upgrade
Technological advancements are imperative in the QSR industry today as they significantly simplify operations and aid in providing convenience. McDonald’s has therefore adopted technology to this end and has also deployed the D180 MPOS device in India to speed up the ordering process and ensure smooth business operations. HRPL has partnered with FortunePay, an innovative Indian payment and commerce company, to integrate the D180 by Bluetooth communication with Android tablets enabling McDonald’s staff across West and South India to take orders from customers. “When the customers are in queue the Tablet Order Taker (TOT) takes the order and swipes the customers debit or credit card on a cashless hand held device. This helps in reducing queues during peak hours and improves operational efficiency. TOT is only activated during peak hours across high traffic restaurants. We are constantly looking at making use of technology effectively and our investments remain substantial. We understand technology is a key enabler, however, as a global policy; we cannot share a break-up of our investments under separate vertical heads,” informs Teny.
Excluding bigger brands as McDonalds, Dominos and Pizza Hut, most of the QRS do not have any such application. They are totally dependent on their resources and manual system. They are not much aware of the benefits of using IT in their sector. According to Sudhir Bhakri, sales manager, Foodera.in, an online food ordering portal, following are the benefits of the single point solutions that QSRs can use and reach out to the masses:
Access to information: Customers can check their menu online and can place their order, thus saving involvement of their phone attendant
Utilisation of resources: Menus can be updated on real-time basis and so as the offers. This saves the time of QSR in explaining all the offers over phone
Order management: QSRs do not need to panic for advance orders. Users can place their order in advance, which can be forwarded to them accordingly
Cost benefit: They need not maintain huge servers and costly hardware at their premises. This SaaS based solution saves cost
Customer database: Foodera facilitates QSRs in maintaining their customer’s data online, which can be utilised for knowing their preferences, prior orders, sending promotional offers, etc.
“We have more than 300 outlets in Delhi and Gurgaon including restaurants and QSRs as US Pizza, Pizza Factory, The Grill, I Spice, King’s Kitchen, 34 Chaurangi Lane, Chowrangee X-Press, Sanskriti, Chawlas Square, The World of Aladin, Nawabs, Fresh Chicken, Just Punjabi, Kolkata Fast Food, My Food Factory, etc,” adds Bhakri. (These QSRs do not need to make any additional setups, etc.). By adding restaurants in their database, one can start the services in just one day. Speaking on the cost saved from these solutions, he says, “The cost benefits would depend upon the scale of an outlet. Considering the application saves time of both the resources and hardware cost. This could be Rs 2.5 lakh to Rs three lakh per annum besides the benefit of getting 30 per cent more orders.”
A few technological items that could be standard fare in the new world of QSRs:
Touch screen ordering and transactions at the table: This is the future. Customers will order food and complete credit card transactions at the same place they eat their meal via touch screen digital ordering devices. While the restaurant saves money from a staffing perspective, customers are happier as orders will be more accurate and tipping (if applicable) will not require extra time crunching numbers.
The table as an information and entertainment centre: Digital devices at each table will also provide information about ingredients, diet and nutrition — something that is likely to soon be a legal requirement. These devices will not only be a way for customers to learn more about the food they are eating (and the brand they are buying it from), but also be used to entertain them with games and contests.
Integrated digital training platforms: The customer experience depends on well-trained employees. QSRs will meet the challenge of high employee turnover with video training and education systems delivered through classroom, in-store, or mobile channels. Many QSRs will also have digital training rooms where employees can learn via text, video, and audio the latest on everything from food preparation, personnel management, and the latest regulatory requirements.
Intelligent drive-through: QSRs will link mobile devices to the drive-through window. By establishing a link between the store and the customer’s mobile device, QSRs will communicate with customers about promotions, sales, featured menu options, and loyalty programmes. At a drive-through outlet, customers will swipe loyalty cards or scan a bar code from their phones allowing QSRs to track customers, incentivise, and reward brand loyalty.
Automated inventory management: Managing inventory is a headache, it is particularly challenging if retailers are managing multiple stores in multiple locations with something as perishable as food – time is literally of the essence. In the future, all QSRs will have automated inventory racks so management always knows when and what to order.
QSRs are based on unique operational systems designed to provide customers with efficient and responsive services. The system consists of three interdependent subsystems: input, processing and output. The success of the operational system is directly related to the degree of co-operation and co-ordination among these three subsystems. Any attempt to improve the efficiency, quality and responsiveness of the operational system must focus on these subsystems and their interactions.
Marketing strategies
At present, Lite Bite Foods employs third party websites to host its brands on their portal and has social media handles to promote online and in-app ordering. “We send regular emailers to our clientele and also try to tap into home-delivery and app ordering by providing attractive offers to our customers on home delivery. Apart from these, we also display the offers on tent-cards inside the outlets. We create mobile-friendly content for our customers and work on our SEO and social signals for better results,” points out Sachdeva. With regards to McDonald’s, the company aims to replicate the success achieved globally for its mobile and digital strategy in India. “We will further build our online platform as well, in order to enhance customer interface and we expect this momentum to continue in the years ahead,” says Teny.
What QSRs can do with retail IT solutions:
- Increase sales by influencing the purchasing decision of the users
- Increase profitability with better pricing and offers
- Enhance your customer’s shopping experience by giving them better and quick services
- Great control on operations
- Automate procedures, thus cuts cost involved in manual work, and
- Secured means, no loss of sensitive data.
Challenges to overcome
Sachdeva strongly feels that one has to be innovative with the QSR business. “The old-beaten track doesn’t generally work well with QSRs. The initial challenge is to build a credibility and a brand image which people trust. Maintaining the quality service and improving delivery time, monitoring multiple outlets are some of the major concerns of the business from the supply perspective. The major concern of the customers is health and hygiene along with all the competition we face from the local players in the market. Also, the barriers at the entry level is very low as compared to CDRs and hence difficult to track,” he opines. While for McDonald’s, Teny says, “We have been turning in profits for a while now so the issue is not so much about the profitability of the business as the need to balance profitability and expansion. Every new restaurant turns profitable after a gestation period of anywhere from two to three years. That is more or less predictable. Profitability also depends on macroeconomic issues such as management of inflation, GDP growth that brings new customers to the market and so forth. For example, in 2003, Indians were eating out roughly three times a month. In 2013, the number went up to 8.5 times. During this period, GDP was also growing between six and nine per cent, which led to an increase in purchasing power. The footfalls went up and all of us were growing well. When GDP growth dropped to 4.5 per cent, consumption took a beating. So it is not just one factor but a combination of factors that drives profitability.”