Fast food brands become even faster
Pick-up and delivery meet digital era expectations
To meet changing expectations and drive customer traffic, brands turned to data, day parts, and delivery, personalizing the fast food experience with the meals people wanted, when they wanted them, and with level of convenience they expected.
Self-service kiosks linked the orders of loyalty program members with their transaction history, revealing food preferences and eating schedules that helped brands personalize menus and determine limited time offers and other promotions. For many leading brands, digital innovation facilitated a rapid shift to takeout and delivery service with the outbreak of the Covid-19 pandemic.
Although Covid-19 delayed timing, McDonald’s expected all of its US restaurants to be updated with kiosks and pick-up stations as part of a larger remodeling initiative intended to make its outlets more inviting, with communal seating and electrical power outlets for charging mobile devices.
Improvements in personalization and convenience were most evident in China, where Starbucks opened self-serve Kiosks in some of Alibaba’s Freshippo stores. The kiosks operate like mid-century automats updated for the digital age. Customers order and pay on their smartphone and swing open the window of a small locker to retrieve their order.
To accommodate health and wellness concerns, restaurants added more vegan entries, including vegan meat substitutes and non-dairy milks. Meanwhile, the “Battle for Breakfast” supplanted the “Burger Wars” of the 1980s. The fast food category declined 2 percent in value, following a 5 percent increase a year ago.
Delivery adds convenience
Influenced by e-commerce shopping habits, delivery became an expected convenience in fast food and a core business during pandemic. Having inaugurated its delivery initiative with one partner, Uber Eats, McDonald’s added three more: DoorDash, Grubhub, and Postmates. Dunkin’ added Grubhub in certain markets. Starbucks rolled out delivery in the US and planned to experiment with it in London and other parts of Europe.
The Starbucks delivery initiative began in China with Starbucks Delivers, a collaboration with Ele.me, a delivery service owned by The Alibaba Group. Starbucks in China also introduced express stores called Starbucks Now, which substituted the “third-space” experience of a Starbucks location with an efficiency focus designed to match the high convenience expectations of Chinese consumers and the rapid takeout system of its Chinese rival, Luckin’ Coffee, which, following a rapid rollout, faced a financial.
In an effort to counter competition from delivery services like Uber Eats, Domino’s Pizza plans to introduce GPS pizza tracking in the US during 2020. The technology enables customers to track the progress of their pizza delivery. Domino’s also experimented with using autonomous carts for delivery, as did Pizza Hut in a venture with FedEx.
AI and drive-throughs
With the acquisition of an Israeli startup called Dynamic Yield Ltd., McDonald’s implemented a technology that uses AI to update menu boards with item suggestions. The technology is intended to increase the average ticket.
Drive-through customers, recognized by their license plate or cell phone, can receive personalized recommendations of additional menu items based on time of day, the weather, or purchase history. Domino’s Pizza and Chipotle Mexican Grill were among chains experimenting with using voice AI for handling phone orders.
Chipotle opened its first walk-up window, in Chicago, as part of the chain’s broader strategy to increase convenience and reduce friction by growing digital sales. The strategy also includes “Chipolanes,” drive-throughs for picking up food ordered online.
Chipotle’s digital strategy, along with supply chain changes and a loyalty program, drove the same-store sales growth that propelled the chain’s rebound from the food safety problems it encountered five years ago. Digital initiatives of Domino’s Pizza now enable customers to order on Facebook Messenger, using Alexa and other home virtual assistants.
Health and wellness
Fast food operators continued to address health and wellness concerns by introducing healthier choices and menu board labeling, which has increased transparency about the calories and nutrition.
Taco Bell added a vegetarian section to the menu boards of its US restaurants. A refinement to Taco Bell in-store kiosks enabled customers to select Veggie Mode and find an extensive menu of vegetarian items. Taco Bell also featured a taco filled with a plant-based meat substitute.
Burger King introduced its signature Whopper without artificial ingredients or preservatives. A time-lapse ad showed the ingredients aging over a month, ending with a colorful moldy sandwich and the tagline “The beauty of no artificial ingredients.”
Burger King also offered a meatless Impossible Burger and its sister chain, Canada-based Tim Hortons, also owned by Restaurant Brands International, added a meat-substitute breakfast sandwich and a burger to its menu. KFC experimented with a plant-based menu item called Beyond Chicken. Dunkin’ had a meatless sausage patty.
Breakfast remained a critical daypart because it is a habitual meal that drives reliable repeat business, and it was the only meal where fast food chains, in general, witnessed traffic increases, until the pandemic when commuters stayed home.
Usually, breakfast is also the least indulgent part of the day, which increases the perception of healthiness. Prior to the pandemic, fast food brands attempted to leverage these advantages and fulfill customer preferences by serving breakfast all day.
Known for its meat-heavy menu, Wendy’s launched its breakfast offering by emphasizing sandwiches loaded with bacon and sausage. McDonald’s, with over 20 items on its breakfast menu, added several promotional Southern-style chicken dishes during a US promotion timed for the Wendy’s launch.
In part to build its breakfast business, Panera introduced a subscription program. Called “Your cup is always full,” the program entitles loyalty rewards members to unlimited coffee or tea for $8.99 per month.
Covid-19 | Impact
Digitization meets the Covid moment
Ongoing digitization strategies to improve the fast food experience helped some brands cope better when restaurant locations closed to slow the spread of the Coronavirus. Many brands previously had enabled customers to order on an app and have their food delivered or ready when they arrived at a drive-up or walk-up widow or an in-store pick-up station. Digital leaders such as McDonald’s, Starbucks, and Chipotle maintained value better than the fast food category overall, which declined 2 percent. Domino’s Pizza, in particular, met the moment. Having built its brand in part by investing in the technology to deliver food quickly and still hot, Domino’s Pizza led the category in value increase, 12 percent. The fast food results reflect a larger cross category trend: Few brands escaped the impact of Covid-19, but brands that aligned with how people live today, maximizing convenience, for example, enjoyed an advantage.
Brand Building Action Points
- Recognize opportunities
While navigating an event as devastating as the Coronavirus, it is natural to be caught up in the all-consuming demands of trying to stabilize a business while taking care of employees and customers, sometimes in new ways. No one has a playbook, so be open to new ideas that may come from anywhere, especially from customers and employees. Because no one knows what to expect, this is a good time to try the unexpected.
- Be responsible
Advances in AI will enable fast food brands to offer customers add-on items based on their prior preferences or simply the time of day. This facility can help raise average tickets, which is important during periods of flattening traffic. And, in principle, suggesting a side of fries in a QSR drive-through is not much different than recommending another glass of wine in a fine dining restaurant. The key is to use the power of suggestion with moderation. That is better for the customer and, ultimately, the brand.
- Be personable
Digital technology has enabled fast food brands to dramatically improve the restaurant experience with mobile or kiosk ordering and fast pick-up that removes much of the friction. There may be opportunities to add what design company FITCH calls positive friction, moments where a personal touch gains customer appreciation and perhaps an opportunity to present another offer.
- Be long-term
Be thoughtful and genuine in selecting the influencers to represent the brand. Think beyond the momentary trend and select individuals who represent the deeper core values of the brand and can represent it over time in ways that resonate with people.