Quick Service/Fast Food Restaurants

Part
01
of three
Part
01

Quick Service/Fast Food Restaurants: Competitive Analysis

Starbucks offers a deal called Starbucks Reward Program. Chick-fil-A One and Subway also offers a deal called Chick-fil-A One and Subway MyWay. Chick-Fil-A and Subway partnered with Doordash for its delivery services.

STARBUCKS

  • Starbucks offers free brewed coffee and tea refills to Starbucks Rewards members. They also offer exclusive, personalized deals for loyalty members.
  • Users earn stars on items they purchase at Starbucks. They can also earn bonus stars by playing games and participating in in-app offers.
  • As a member, you’ll collect stars on almost everything you buy and those stars add up to rewards, in as few as 2–3 visits.
  • Starbucks posts deals such as free tall (12 fl oz) brewed coffee on Veterans Day and Free Nitro Cold Brew Shots on August 2 on their social media account

How it works

  • For every 25 stars, members can customize their drinks (extra espresso shot, dairy substitute or a dash of your favourite syrup).
  • For every 50 stars, members can get free brewed hot coffee, bakery item or hot tea.
  • For every 150 stars, members can get a free handcrafted drink, hot breakfast or parfait.
  • For every 200 stars, members can get free lunch sandwich, protein box or salad.
  • For every 400 stars, members can get free selected merchandise or at-home coffee.
  • Every time a customer pays using a registered gift card or the app, the customer collects 2 stars for every dollar. Customers can even get stars at Starbucks stores at U.S. airports, Target and some grocery stores.
  • They also have a website called starbucks-stars.com, where members can earn stars by uploading the receipt for qualifying Starbucks products.
  • Coupons and other deals are also offered on the website called Groupon.

Delivery Options

  • The coffee chain partnered with Uber Eats to deliver coffee and other menu items.
  • Starbucks is rolling out delivery at roughly 2,000 US stores starting in early 2019.
  • According to Starbucks, only about half of its sales are traditional orders placed with baristas, as drive-thru, mobile ordering, and delivery flourish.

CHICK-FIL-A

  • Chick-fil-A One offers a tiered membership program that gives customers the ability to earn points with every purchase.
  • Members can receive points by placing an order through the Chick-fil-A App, an online catering order, or by scanning their Chick-fil-A One QR code at the register or in the drive-thru.
  • Coupons and other deals are also offered on the website called Groupon.
  • They also have deals posted on their social media account for events such as Cow Appreciation Day, Chick-fil-A offers free breakfast, lunch or dinner for anyone that wears anything cow-like.

How it works

  • Chick-fil-A One members can get $1 for every 10 points. Some benefits are free foods, birthday reward, gift rewards, college football and backstage tour tickets.
  • Members earn points for every purchase and use them to redeem available rewards of their choice. Each purchase brings a member closer to the next membership tier with increasing benefits.
  • There is no cost to join and anyone is eligible to create a Chick-fil-A One account may participate.
  • Members may receive surprise rewards from their local Chick-fil-A restaurants.

Delivery Options

  • Chick-fil-A partnered with DoorDash for its Nationwide Delivery Service.
  • The restaurant is offering delivery from over 1,100 of its restaurants nationwide as part of a partnership with DoorDash.
  • In celebration of the partnership, Chick-fil-A and DoorDash gave away up to 200,000 free Chick-fil-A chicken sandwiches.
  • To maintain both DoorDash’s commitment to high-quality service and Chick-fil-A’s food quality, deliveries are made to customers within a 10-minute radius of participating restaurants.
  • Companies such as GrubHub, Mr.Deliver, Postmates also offer delivery of Chick-fil-A One foods.

SUBWAY

  • Subway offers a deal called Subway MyWay Rewards, that will offer customers surprise treats and tokens that eventually mature into dollars.
  • Subway MyWay Rewards launched in the U.S. and Canada and are available at 28,500 Subway restaurants.

How it works

  • To begin earning Tokens and Rewards when ordering any of Subway sandwiches or other products, the customer can enroll through the Subway website or the App.
  • For every dollar customers spend at Subway they earn 4 tokens. When customers reach 200 tokens, they receive $2 in Subway credit.
  • The $2 Reward expires 90 days after Subway issues it.
  • Their social media post are mostly about food that they advertise, there's no coupon/deals offered by their social media accounts.

Delivery Options

  • Subway offers delivery at 9,000 Locations.
  • Subway partnered with four delivery providers to bring the chain’s iconic menu to customers nationwide.
  • Subway partnered with UberEats, Grubhub, DoorDash and Postmates to deliver products to the customer's home.
Part
02
of three
Part
02

Quick Service/Fast Food Restaurants Industry: Overview

GENERAL OVERVIEW

  • According to First Research, the major fast food restaurants in the US are McDonalds, Wendy's, KFC, Pizza Hut, and Chipotle.
  • Hamburger restaurants account for about 40% of sales among US limited-service establishments.
  • The US fast-food and quick-service restaurant industry has about 275,000 restaurant locations with $225 billion total annual revenue.
  • The US quick service restaurant industry is highly fragmented, with the 50 largest companies accounting for about 20% of the total revenue.

INDUSTRY SEGMENTATION

SEGMENTATION ACCORDING TO QSR MAGAZINE
  • Asian food
  • Burger
  • Chicken
  • Mexican
  • Pizza/Pasta
  • Sandwiches
  • Seafood
  • Snack
SEGMENTATION ACCORDING TO FRANCHISE HELP
  • Hamburger-focused restaurants
  • Pizza parlors
  • Sandwich shops
  • Chicken restaurants
  • Mexican restaurants

DRIVERS TO FAST FOOD RESTAURANT INDUSTRY'S SUCCESS

RIGHT LOCATION PLAYS A BIG ROLE
  • The location of the fast food restaurant plays important role in its success.
  • It should be located in high traffic area because people won't travel long to buy fast food unlike special restaurants.
  • Locating outlets in shopping malls or on a busy road can gain business advantage and impulse purchase from customers who had no preplanned patronage to visit the quick service restaurant.
BRANDING IS AN IMPORTANT KEY
  • McD, Burger King, and Wendy's are well-known fast food restaurants. Their logo can be easily recognized from afar and their slogans are easy to be remembered.
  • Fans of fast food love predictability and they want to get the same experience by knowing what a specific fast food restaurant brand offers. The experience of a McD in NYC is pretty similar to that of a McD in Beijing.
  • The brand must provide consistent, easily recognizable, simple yet easy to remember experience.
  • The brand can be promoted through TV marketing, radio commercials, or social media to ensure customers remember the brand when they pass the fast food outlet.

CHALLENGES TO THE FAST FOOD INDUSTRY

CUSTOMERS NOW WANT TO ORDER FROM THEIR HOMES
  • The fast food industry faces challenges because of technology disruption from companies such as Grubhub; the customers wants to consume food from their homes.
  • The main drivers include weather, traffic problems, longer working hours, and lack of time so the customers tends to prefer meal delivery services.
  • Alternative foods that offer meal deliveries are gaining traction, which forces fast food restaurants to innovate.
PEOPLE SHIFT TO HEALTHIER FOODS
  • Fast food is known as and unhealthy or junk food, although people still eat the carb-rich fast food.
  • However, healthier foods and lifestyle has been gaining a lot of popularity recently.
  • This increasing awareness of fitness and health make people more health conscious by limiting junk food and switching to healthier food options.
  • People nowadays prefer naturally sourced food products and it makes this a challenge for fast food industry to offer such products at affordable prices.

OPPORTUNITIES

FAST FOODS MAKE INNOVATIONS IN HEALTHIER FOODS
  • More than 50% of US consumers said that they love the trend toward healthier fast food and lifestyle so there are additional opportunities for fast food restaurants.
  • Some successful examples include Burger King’s grilled chicken sandwich, their tendergrill, and Wendy's baked potatoes.
  • By making healthier food, fast food restaurants can be more interesting in the eyes of customers. Doing more frequent oil replacements or eliminating trans fatty acids is seen as a positive thing by the customers.
MOBILE ORDERING LETS PEOPLE ORDER ANYWHERE
  • According to a survey by Market Force Information, about 40% of the consumers placed a food order using a smartphone within the past 90 days.
  • By using a mobile app, it provides a greater convenience and increases the restaurant's remote ordering capabilities.
  • This opportunity can reduce employee labor and increase sales volumes.
REWARDS TO DIGITAL APPS CAN BUILD CUSTOMER LOYALTY

Part
03
of three
Part
03

Quick Service/Fast Food Restaurants Industry: Trends and Best Practices

Quick service restaurants generate about 50% of the revenue earned from the entire restaurant industry in the United States. For a long time, these restaurants have had a bad reputation for providing junk food, which is considered unhealthy. However, this is changing as many restaurants have started to adopt food products with low additives and low fat. Also, on the menu are vegetable meals, salads, and beverages with low sugar. Also, they are diversifying their menus by including foreign delicacies and providing convenient means for customers to purchase their meals. More restaurants have also invested in different loyalty programs that are promoting their competitiveness. The programs are also being used to drive customer satisfaction.

CURRENT TRENDS

INCREASE IN FOREIGN DELICACIES

  • The multi-cultural mix in the United States has led to the rise in demand for foreign cuisines. Recently there has been a rise of Persian, Korean, and Filipino cuisines in quick-service restaurants. Also, ingredients and flavors from the Middle East and Africa have been gradually gaining importance in the industry.

A CONTINUAL OFFERING OF HEALTHIER MEALS IN THE MENU

  • Provision of healthy meals and ingredients is on the rise. The restaurants are continuing to source for more fresh ingredients with minimal additives. Recent reports also claim that about 50% of quick-service restaurants that provide organic meals have a check size that averages $5 to$7.
  • Restaurants like Wendy's are using more fresh avocados and root veggies like yuca in their menus. White Castle has also been experiencing great success in its 377 restaurants by having plant-based protein as an alternative to meat in all its burgers. Carl's Jr has also successfully implemented their plant-based burger.
  • According to Liz Moskow, the director of culinary at the Sterling-Rice Group, " there is this plant-based movement happening, not just for healthier way, but to bring more variety and texture."

REDUCTION OF LABOUR COST

  • In 2017, about 37% of members of the National Restaurant Association had recruitment and retaining of talent as their primary challenge. This issue is still a concern to several restaurants that cannot maintain their employees in the long run due to high labor costs.
  • Several franchises are working towards reducing their cost of labor by leveraging on technology. This is evident in the rise of mobile apps and self-serve kiosks that allows customers to order and make payments. In turn, the restaurants are able to lower their cost of labor and also ensure efficiency in service delivery.

DISRUPTION IN FOOD DELIVERY

  • The use of online platforms by customers to place orders has created more investment opportunities in the industry. With more consumers preferring to have their meals at home, food delivery apps have emerged. According to David Portalatin, the vice president of the NPD group, "50% of dinner meals purchased from a restaurant are consumed at home."
  • Postmates, Uber Eats, and DoorDash are some of the delivery apps that have emerged to meet such consumer needs.
  • According to a report by BRP Consulting and Windstream Enterprises, 38% of dining experiences have been made easier through mobile devices. As a result of using the technologies, digital sales have been projected to increase from 6% of the total sales in 2017 to 30% by 2025

BEST PRACTICES RELEVANT TO LOYALTY PROGRAMS AND PROMOTIONS.

PROVIDING CONVENIENCE TO CUSTOMERS WHEN THEY WANT TO PLACE ORDERS, DINE, AND MAKE PAYMENTS

  • This is practicable when quick-service restaurants make their points of sale to be accessible from their websites, mobile apps, and in-store. On the other hand, customers get to earn rewards for using any channel of purchase.
  • Subway has successfully implemented a mobile app and a touch-screen ordering kiosk that allows its customers to place their orders fast. They can also get their orders delivered to them or dine in-store, and make in-store or mobile payments. Members of their loyalty program get to earn points for making purchases on any of the available channels and then redeem the points for free beverages and food.

LEVERAGING CUSTOMER DATA PROVIDED WHEN SIGNING UP FOR LOYALTY PROGRAMS

  • Quick service restaurants can leverage customer information provided in the loyalty programs. They can use the data to help them know who their clients are, determine their frequency at the restaurant, and their preferences. The restaurants can use the information to develop incentives that will ensure future orders from prospective customers, consequently leading to an increase in business profitability, customer loyalty, and satisfaction.
  • Panera Bread uses its loyalty program to monitor the spending culture of each of their customer. They then offer discounts to their clients whenever they buy their favorite meals, thus increasing their purchase frequency.

HAVING OTHER PLATFORMS FOR CUSTOMER ENGAGEMENT BEYOND THE PHYSICAL RESTAURANT

  • Quick-service restaurants need to ensure their presence in other avenues other than the physical restaurant. For instance, having web and mobile platforms that allow potential clients to access and sign up for loyalty programs, analyze and evaluate menus, and earn rewards, among others.
  • Quiznos uses its loyalty program, also known as Quiznos Toasty Points, to provide its members with several ways to engage with the brand. For instance, members get location finder, special promotions, and exclusive insider news. Also, they earn points whenever they share the loyalty program app on social media and referring friends who have downloaded the app.

RESEARCH STRATEGY

To provide the current trends in the quick-service restaurant industry, we leveraged information from sources like QSR, Franchise Help, Restaurant Dive, and Brandon Gaille that discussed the current trends in the industry. After a thorough analysis of each trend discussed from each source, we chose the trends that are repeated across all the sources. Also, we used sources like Crowd Twist that provided an analysis of best practices relevant to loyalty programs and promotions in the quick-service restaurant industry.




Sources
Sources

From Part 02
Quotes
  • "The US fast-food and quick-service restaurant industry includes about 275,000 restaurant locations with combined annual revenue of about $225 billion. Full-service restaurants and specialty eateries such as coffee shops are covered in separate industry profiles."
Quotes
  • "Branding is Big Deal. McDonald's, Burger King and Wendy's are examples of extremely well-known and highly successful fast food brands. Their signs, logos and slogans are recognizable around the world. Fans of fast food like predictability, and they want to know exactly what they are going to get before they go through the doors."
Quotes
  • "Fast Food Industry Challenges. The fast food industry will face a slew of challenges as consumers prefer to order and consume food within the comfort of their homes. Factors such as weather conditions, traffic problems, lack of time, and longer working hours will give momentum to alternative options such as meal delivery services, convenience foods like ready to eat meals and ready to cook products. "
Quotes
  • "People’s shift to healthier lifestyles. It is no secret that ‘unhealthy’ is a synonym for fast food, it is not called ‘junk food’ for no reason. But that doesn’t stop our glutton monsters from devouring these carbs-rich food items. Lately, there has been a noticeable change in this trend, especially with the increasing awareness of fitness and a healthy lifestyle."
Quotes
  • "Mobile is not the future. It is the now, as more consumers are picking up their smartphones when the hunger pangs strike. In a recent survey by Market Force Information, nearly 40 percent of consumers said they had placed a food order using their smartphone within the past 90 days—a marked increase from 2015, when only 11 percent reported using mobile order-ahead offerings."
  • "Quick-service restaurants outperformed the fiercely competitive broader market in 2018 despite static sales within the industry and major shifts in customer demands. As 2019 revs up, restaurant chains will be faced with elevated customer expectations and new opportunities to drive growth through differentiated digital experiences."