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Mobile commerce grabs hold of takeout ordering

Mobile smartphone apps are quickly becoming the go-to platform for ordering takeout. According to a new eMarketer report, “Mobile Fast Food Marketing: How QSRs and Fast Casuals Are Getting Quicker and Faster,” more consumers are making their dining decisions en route via the smartphone. “We are entering the age of mobile commerce, when ordering and paying for things via your mobile phone is becoming the norm,” says Noah Glass, chief executive and founder of OLO, an online and mobile ordering technology provider for fast casuals and QSRs.

In 2005, only 10 percent of takeout orders for OLO-branded restaurants originated from a mobile phone, while 90 percent were online through the restaurant websites. Now, says Glass, it’s about 50 percent mobile, 50 percent online. “While both are growing, mobile is growing at a much faster rate—a trend that will continue,” predicts Glass.  

As of third quarter 2012, global smartphone use reached 1 billion, according to research firm Strategy Analytics. 

Initially, interest in OLO’s mobile ordering platform was focused on casual/fast casual restaurants, says Glass. The company partners with more than 150 restaurant brands, totaling 3,000 individual operations and engaging more than 2 million end users. OLO's also affiliated with serveral online restaurant ordering sites; it's the exclusive partner of www.grubhub.com, a leading consumer online ordering platform. OLO’s end user customers, which can already pay with Google Wallet and major credit cards, will soon be able to pay for takeout using PayPa, which is set to invest in the company. 

With the forces aligned toward smartphone use, OLO is making a big push into large-scale QSRs; four large (5,000+) chains are about to close deals with the digital commerce provider. QSRs interest in our platform, says Glass, is partly due to transaction speed and partly due to customer convenience.

“It’s a sign of the times: as customers move into smartphones it makes what we do more relevant for QSRs,” says Glass.

OLO is right on track: 44 percent of consumers who eat fast food at least monthly owned smartphones in the last quarter of 2011, according to foodservice research firm Sandelman & Associates—14 percentage points higher than eMarketer’s estimate of overall smartphone ownership for the same period.

Five Burgers and Fries, which has just over 1,000 locations, is already well-entrenched in smartphone ordering; the burger chain reports 625,000 downloads of its mobile app, launched March 2011.

Benefits all around

Mobile smartphone ordering, like online ordering, is taking off for a variety of reasons—convenience and speed for the customer, and, for the restaurateur, a way to increase throughput, control waste and gather customer data.

“With mobile ordering, customers have a faster experience and they also tend to place larger and more frequent orders. Restaurants have an increase in throughput while being able to offer better service,” says Glass. “If a customer can order and not have to wait, it moves sales better.”

Using the OLO mobile branded app—or online—customers can see the menu, add in special instructions for time pick-up and include credit card data for payment. “It all feeds directly into the restaurant’s POS system; the info is delivered exactly at the right time so the food is ready for the designated pick-up time,” says Glass. Plus, restaurateurs don’t have to be concerned whether or not customers pick up--and pay for--the food they ordered—it’s all prepaid. “The onus is on the customer to pickup his food,” notes Glass.

Prior to the installation of its online/mobile ordering platform, Five Guys and Fries threw out takeout food totaling $200 per week on average/per store—that’s $10,000 per year, 1 percent of revenues—from phone call orders that never materialized,  reports Steve Teller, Five Guys project manager for the online ordering initiative.

Mobile ordering also lets customers—especially loyal customers—feel like VIPs.

“We find that about 20% of those that sign up for mobile ordering are associated with a loyalty account, and those with a loyalty account are four times more likely to takeout food than those without an account,” says Glass. “So now, you can let these loyal customers be VIPs, they can skip the line, leading to them ordering even more frequently. Those waiting on line will aspire to be like those who can breeze on in and place their order. It’s free for consumers, and it gives them that special, ‘I am a VIP experience.’”

Mobile ordering also gives the restaurant great visibility into its customer base, and can inform outbound marketing toward that customer, or at the very least a better level of insight on how loyal customers use your brand. Does this customer always come during the same daypart? Does she like to try new things? Does he always order bacon burgers?

"Now, when you launch a new BLT, you'lll know this is a good person to tell about the bacon product.," says Glass. "It gives you the ability to custom market."

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