Why mobile ordering is the next big thing for retailers

As more people turn to their mobile phones to order food and drinks on the go, retailers are adapting their stores and operations to meet growing demand.

July 03, 2017

Mobile ordering has become the next iteration after the quick-service restaurant drive-thru lane to provide speed and convenience for customers. In 2015, mobile ordering comprised 1.5 percent of quick-service restaurant sales at under $4 billion. That volume is expected to rise to 11 percent to $38 billion by 2020.

“With anything that people want to get quickly, and there’s a queue involved, it makes sense that customers will want a mobile ordering option,” says James Cook, Americas Director of Retail Research at JLL.

Here’s how it works, using Dunkin’ Donuts as an example: Customers download the Dunkin’ Donuts mobile app. They then open Waze, a navigation app for their phone, and locate the nearest Dunkin’ Donuts. Tapping the Dunkin’ Donuts icon within Waze allows customers to place and pay for their order and then pick it up at a dedicated counter when they arrive to Dunkin’ Donuts.

Meeting demand

As mobile ordering becomes more popular, retailers are rethinking how they can accommodate their ‘grab and go’ customers to avoid long waits and crowded pickup stations.

“The key is in the details of getting it right,” says Cook. One of his favorite examples of a store getting it right is Chick-fil-A. “What I like so much about the Chick-fil-A app is that it uses GPS. You place your order in advance, and when you get on the premises, it knows you’re there. That’s when they start making your order so that when you get it, it’s still fresh.”

At peak times, however, catering for both mobile and walk-up customers can prove tricky both in terms of getting customers their drinks in a timely manner and managing store space.

Take Starbucks, for example. “They’ve become a victim of their own success,” says Cook. “In certain locations during the morning rush, as many as 20 percent of orders are made using Starbucks’ web app. Now you’ve got a high percentage of people skipping the regular ordering queue and going straight to pickup, which leads to crowding around an area that wasn’t designed to accommodate those numbers.”

Even if mobile ordering customers are served quickly, wait times often increase for walk-up customers. And for many time-poor customers, the sight of long queues and crowded areas is enough to make them leave without buying.

As such, food and drink retailers are coming up with new store concepts to cater for growing numbers of mobile orders. Starbucks is creating a store in its corporate headquarters in Seattle, Washington, dedicated to serving only customers who use mobile ordering. “It’s also redesigning certain stores to have more room in the pickup area,” says Cook. “Store layout and design for mobile ordering should allow ample space and signage for people who are ordering ahead so they’ll know where to go and then have enough room to stand and wait for their orders,” he adds.

McDonald’s, meanwhile, is testing mobile ordering in 80 U.S. stores before doing a complete roll out to its more than 14,000 locations.

Staying on top of the tech

It’s not just store space which needs rethinking; another variable to mobile ordering is having to download an app for each retailer. “There are only so many apps people can keep track of,” says Cook. “What may happen is that some aggregator app will come along in the future and have the ability for people to order ahead at multiple locations through a single app. But for now, all the apps are proprietary.”

While food and drink retailers continue to work to optimize their mobile ordering operations, Cook believes the concept is very much here to stay. “If food and beverage operators want to stay on the cutting edge and be competitive, they need to offer this service,” he says. “Everyone needs to have mobile ordering if they want to compete.”