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Burger King & Wendy’s Play Catch-Up in Mobile Payments

May 1, 2014         By: Jane Genova

Fast food is in a competitive squeeze and mobile payments may be the solution.

Some customers are shifting to higher end fast-casual dining spots – leaving fast food businesses to try to figure out how to get more people through their doors.

In 2013, fast-casual grew 8%, compared to 2% for the restaurant industry as a whole. At the lower end, consumers are finding their money goes further in convenience stores, where there is also more of a selection of fresh produce.

Food industry research firm Technomic reports that 34% of those surveyed said they had purchased food at a convenience store instead of going to a restaurant.

So, how can fast food get its mojo back? One response has been for businesses to imitate Starbucks and introduce mobile payments.

An early adopter in mobile payments back in 2011, Starbucks has managed to position and package mobile payment apps as a natural extension of its “experience economy” ethos.

Customers enjoy being part of the cool. The Starbucks app not only handles paying, but functionality has been constantly updated and expanded and customers can now also leave a tip.

In addition, they can check on their loyalty rewards and find stores in other locations.

Starbucks reports it transacts 14% of in-store business in the U.S. through the mobile payment app.

The question security analysts watching the stock prices of fast food companies ask is this: Will piggybacking on Starbucks’ embrace of mobile payments boost traffic at fast food?  After all, this migration to mobile is late in the game while fast food is a mature industry.

Whether or not mobile payment apps trigger comebacks for fast food companies, the strategy is getting plenty of attention directed at Wendy’s and Burger King.

Wendy’s

The Wendy’s app is supported at 5,800 of its locations. In addition to transacting payments, it allows customization of food orders including specifying premium ingredients. The display has nutritional information, and while you can use it to pay, there is currently no support for loyalty rewards.

The friction point is at the drive-through window. Instead of holding their smartphone out their car window to be scanned which could result in some unfortunate phone accidents, customers must verbally tell the check-out the numeric code associated with the app, and may put a hamper on the “fast” in fast food.

Burger King

Burger King has introduced its mobile payments to more than 7,000 U.S. stores.  This app drills down deeper into the customer experience than does Wendy’s.

For example, in addition to transacting payments, the app developed by Tillster Inc. facilitates pre-ordering. That means fast pick-up inside the store, and the app also supports loyalty rewards.

The blip in all this, as with Wendy’s, is that at the drive-through window, customers will have to recite the app’s numeric code, instead of having technology handle the payment.

Playing Catch-Up

From the get-go, Starbucks managed for its introduction of mobile payments to enhance its iconic branding.

Starbucks has an unmatched level of stickiness thanks to the company’s ubiquity, while the Starbucks mobile app has a level of exclusivity thanks to its rewards system.

However, those imitating the mobile payment approach already seem to be failing to capture this same recipe for success.

The encouraging news on the fast food front is that mobile payments have always been, including for Starbucks, a work in progress. The friction at the drive-through may be solved by using Bluetooth low energy beacons that can automatically capture payment details transmitted nearby.

The fast food restaurant industry could get smart fast and front load into the app the essence of cool.