A key innovation at Starbucks and Chipotle is turning into a major problem
In January, Starbucks reported that transactions, an important measure of customer traffic, dropped 2% in the most recent quarter, in large part due to problems caused by mobile ordering.
Mobile ordering allows customers to order and pay on their smartphones, and in theory, skip the line in stores. But the new technology has created bottlenecks as workers struggle to fulfill orders on time.
Starbucks recently admitted that some of its customers say they have walked out of stores after seeing the crowds waiting for mobile pick ups.
CEO Howard Schultz said he wasn't worried about the issue, and that the chain would quickly find a solution. However, Starbucks isn't alone in its struggles.
Customer complaints about wait times averaging 20 to 30 minutes forced Chipotle to invest in a new system to fulfill online orders, which the company rolled out in late February. During testing, the new system decreased wait times by 50% and resulted in a "record" increase in digital orders, according to the company.
Shake Shack, which launched its Shack App nationally in December, said Thursday that the influx of app orders can have a "slowdown impact" at its busiest locations at peak hours. On Tuesday, the fast-casual salad chain Sweetgreen was forced to email customers who had ordered from a New York City location to say that mobile orders had been delayed roughly 15 minutes.
Business Insider
"We are working to identify the root cause of this backup, as this is not the level of service we stand by," Sweetgreen said in an email to customers impacted by the delay. "We are committed to building systems that make eating healthy, fresh food as effortless as possible."
For the last couple years, mobile ordering has been seen as the savior of fast-food - a high-tech way to boost how much customers spend and serve more customers at a faster pace. On Wednesday, McDonald's announced it would launch mobile order-and-pay technology in all 14,000 of its US restaurants by the fourth quarter of this year, a major change that the chain is hoping will give its traffic a much needed boost.
Mobile ordering is expected to be a $38 billion industry by 2020, accounting for more than 10% of total fast-food sales, according to a BI Intelligence report.
However, if chains want mobile ordering to succeed, it isn't as simple as just adding an app. These chains will need to create an entirely new ordering experience, inside and outside of the store.
As Panera developed its 2.0 reboot, which has significantly driven digital orders at the chain, the company made changes across the board, including redesigning kitchens and reworking the assembly line in addition to implementing new tech.
"It's about a systemic solve," Blaine Hurst, Panera's president, who was heavily involved in the development of Panera 2.0, told Business Insider. "A lot of people say, let's just do this, let's just do that. I believe you have to look at the whole system - or it will break."
Mobile ordering has the potential to revolutionize the fast-food industry, but it's not a band aid fix that chains can simply slap on with an app update. Instead, as many chains are realizing now, it's something that can cause just as many problems as solutions.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Catan adds climate change to the latest edition of the world-famous board game
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- JNK India IPO allotment – How to check allotment, GMP, listing date and more
- Indian Army unveils selfie point at Hombotingla Pass ahead of 25th anniversary of Kargil Vijay Diwas
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market