Insofar as the pandemic accelerated existing trends that demand digital transformations, those who were unable to rapidly adapt and thrive were canaries in the coal mine, as it were, for the business trends of the 21st century going forward.
For quick service restaurants (QSRs), the rapidly changing conditions of the lockdown period proved a particularly demanding, sink-or-swim scenario, where a sector that had arguably long been behind other industries on the integration of digital technologies suddenly had to adapt, fast.
Indeed it did, yet despite the crunch, many QSRs found a way to come out on top against their sit-down, full-service rivals, and it all had to do with a keen understanding (and rapid response to) the rapidly changing consumer preferences the pandemic produced.
Examining how successful pandemic-era QSR chains managed to survive one of the worst economic periods of the last century is key to understanding where the road to success in the digital era lies for QSRs both playing catch-up and planning their next move, whether internally or with the help of a partner such as Ingenico, an innovator in seamless checkouts.
Understanding the Best Solutions Always Starts with the Customer
It is well-established that the pandemic changed customer behavior in dramatic ways. Customers rapidly became more demanding along four main vectors: loyalty, value, personalization, and convenience. For now, we will focus on loyalty.
Much has been written on how new consumers are ‘no longer loyal’ or that there has even been a ‘death of loyalty’ in the retail and food service space.
The trouble, as I and others have argued, is and has long been outdated thinking at the conceptual level; the pandemic proved a ‘critical juncture’ for how businesses decided to move forward strategically to generate loyalty.
Loyalty once meant that, for example, someone who bought a Ford would always buy Ford. People staked out consumer ‘territory’ as it were, and in some cases, would stick to that for their whole lives.
Loyalty now must be understood as earned, but not through brand recognition alone, for there are nigh-limitless brands (and the modern consumer is as empowered and spoilt for choice as ever). The brands’ customers will remain loyal to are those businesses that can provide value, convenience, and optimally, omnichannel personalization.
While loyalty concerns every corner of the service, food, and retail sector, for QSRs, many of the pandemic’s changes provided industry-specific challenges.
As QSRs—like the rest of the industry—bolted to strengthen their digital service channels, they found they had to develop a data infrastructure that could leverage the new data capture capabilities of their system.
This helped in the development and deployment of a range of new delivery, takeout, and curbside modalities to better suit the socially-distanced needs of their customers, and all of it required mobile app optimization unlike anything consumers demanded before.
Indeed, a myriad of solutions arose, all aimed at meeting the need for safety, convenience, accuracy, and personalization. For example, interactive kiosks allowed guests to place their orders while minimizing staff interaction during a labor crisis (one that lingers to this day).
In other cases, AI and machine learning processes were able to quickly and efficiently answer customer questions or ensure order accuracy automatically, to name but two applications of a technology set to turn much of the world on its head.
Yet, as these innovations multiplied to respond to the challenges of the lockdowns, customer expectations responded in turn by rapidly shifting toward a greater reliance on digital ordering that would prove longer term, an example of a permanent change in consumer preference.
The pandemic-mandated shift to curbside was a clear example of the sort of adaptation that resulted in that longer-term change, from the use of QR codes to smartphone-powered menus to the increasingly sophisticated apps that powered it all (and the new ‘deal economy’ those apps created to incentivize their use).
Additionally, the increased reliance on apps (which nigh-invariably include built-in loyalty program participation) increased customer expectations for restaurants to provide loyalty programs, and indeed, those restaurants that had robust loyalty programs best weathered the pandemic.
Notes Barney Wolf for FSR Magazine (citing a 2022 Paytronix Loyalty Report):
“The portion of customers using at least one restaurant loyalty program jumped to 47.4 percent from 43 percent…About 80 percent of adults—even more of Gen Z and millennials diners—said they likely would join a rewards program if it was offered by their favorite local restaurant,” going on to emphasize that it was QSRs that saw the biggest gains in loyalty-program participation.
“At the same time, 57 percent said they would spend more on food at a restaurant if it had a loyalty program…most loyalty programs boost members’ visits and the amount they spend by 18–30 percent,” Wolf continues.
So, while customer loyalty programs have become an obvious investment for QSRs, executing them properly remains a challenge for many businesses.
Furthermore, there remains a significant demand pressure on QSRs that haven’t yet developed their loyalty programs to continue building them up, making them more efficient and accessible in order to stay competitive.
That leads us to another key change that has proven longer-term: the consumer demand for frictionless experiences; frictionless shopping ties into that need for convenience, yes, but also value (time spent vs. utility gained) and personalization (the customer freedom to decide how they want to check out).
In order to ensure you can provide a consistently smooth, efficient visit for customers at a time when loyalty has become so focused on the customer experience, you need to ensure your PoS system is not only up to the task but provides that better overall experience.
Why a Frictionless Customer Experience is Key to Generating Loyalty
Notes one report by Deloitte and The Wall Street Journal, “To maximize the value of loyalty programs, restaurants can move beyond the “earn and burn” model of rewards to deepening emotional [connection with customers].”
At a glance, it may not be clear how frictionless retail models help to create better emotional connections with customers as compared to, say, excellent customer service agents, dazzling in-store displays, and so on.
However, it’s best to remember what creates loyalty at a core level for most consumers: the feeling that they not only had a good experience, but got what they needed quickly, efficiently, and in a manner that bettered the quality of their life.
Businesses ultimately want to convey reliability and trust, and they can do so through innovative service systems (which one study has shown are positively correlated with customer loyalty in QSRs), including the latest frictionless PoS.
In that sense, frictionless payments in-store, on the go, and via self-checkout kiosks/tablets are a way to cultivate customer loyalty by increasing their quality of life while in the store environment.
After all, if a customer is frustrated by the checkout experience, they’ll associate your business with frustration, and that will be the impression they leave with.
And, while yes, many QSRs already do provide loyalty programs, too many are out of date: a report by Publicis Sapient notes that “many restaurant loyalty programs are missing key capabilities and solutions that only digital capabilities can provide,” and frictionless, smart checkout systems are a key part of that puzzle.
One example of that puzzle piece is Ingenico’s AXIUM solution, an Android-based PoS system with a wide application portfolio, global API integration, and built-in estate management and security functions.
Solutions like AXIUM help to not only provide the digital PoS service you need to facilitate smooth transactions for the loyalty programs that have become so critical to QSR performance and resilience, but integrate with other systems to create a holistic service modality for your clients and customers.
This has been essential for businesses such as BJs, 7-Eleven, Wendy’s and Domino’s Pizza, where a more seamless and efficient payment ecosystem has made payments easier for customers who demand that ease-of-access now more than ever; for example, notes one report, “75 to 80 percent of Wendy’s customers choosing the drive-thru as their preferred ordering channel.”
That, ultimately, is what frictionless commerce is all about.
Simply Put, Digital Loyalty Programs are Essential for Competitive QSRs
Continues Public Sapient’s report on QSR loyalty programs, “The goal for many QSRs in this era is no longer simply getting customers to keep coming back. They must now win back loyal customers who have become more cost-conscious.”
That speaks to something every business leader must keep front and center (and it can only be emphasized again and again): that ultimately, loyalty programs—and competitive business strategy—have to continue focusing on value-added for customers in a cash-strapped, inflationary environment.
When customers have less and businesses have thinner margins, efficiency is what’s left on the table, and digital transformations are the ever-evolving answer to a conundrum that yet has no end in sight.
Continues the report, “QSR customers are on-the-go and often spend limited time in restaurants, which makes loyalty and engagement more challenging. Early loyalty adopters in the QSR industry have seen the payoff in business growth,” emphasizing that any modern loyalty program will include a ‘value exchange system’ (e.g., points, so on), a way to collect data, and varying methods for digital engagement.
This is, in fact, where there’s cause for optimism: not only are QSRs incredibly popular with younger adults (further notes Public Sapient, 70% of U.S. millennials visit a QSR once per week), the results for QSRs that have taken the steps to create modern loyalty programs are remarkable.
For example, a late 2021 report by Forbes notes that even in the midst of the pandemic, QSRs such as McDonalds, Taco Bell, Chipotle, and Starbucks have seen remarkable ROI in building their loyalty programs:
“During StarbucksSBUX Q3 call in July, CEO Kevin Johnson said, ‘It is very clear that our Rewards program has accelerated our recovery in a meaningful way.’ Starbucks Rewards members now represent 51% of all U.S. transactions, up 8% from pre-pandemic levels.”
Returning to the importance of the customer experience, it all goes back to making customers feel good about their visit, to creating that emotional connection, and loyalty programs are increasingly at the core of those experiences.
Though the task may seem daunting, QSRs should feel empowered to know that the means to fully leverage the next generation of consumer loyalty is well within their grasp.
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