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A look at restaurant online ordering trends

Cornell study: Online ordering tools most prevalent among fast-casual, pizza, and sandwich chains

Fast-casual chains lead the restaurant industry when it comes to offering online ordering tools, according to a new study by Cornell University.

Nearly half, or 48.5 percent, of the fast-casual chains surveyed by Cornell researchers offered online ordering, compared with 23 percent of chains across all segments, according to the study on online, mobile and text ordering trends in the restaurant industry.

Quick-service restaurants had the second-highest rate of adoption of online ordering technology, at 22 percent, the report found, followed by casual-dining operators, 18 percent, and midscale full-service chains, 8.9 percent. None of the fine-dining operators surveyed by Cornell offered online ordering.

SOURCE: The Center for Hospitality Research at Cornell University

Cornell researchers studied the websites of 326 leading restaurant chains for the study, including 100 casual-dining chains, 100 quick-service chains, 66 fast-casual chains, 45 midscale full-service chains and 15 fine-dining chains. The study used data from Technomic Inc. to identify the largest chains in each segment to survey.

The research, which was sponsored by Nation’s Restaurant News, appears in the March edition of the Cornell Hospitality Report, which is affiliated with the Cornell University School of Hotel Administration’s Center for Hospitality Research in Ithaca, N.Y.

Highlights of the study:

The upside of online ordering

The study’s authors, Cornell professor Sheryl E. Kimes and graduate student Philip F. Laque, said online ordering offers sales opportunities for restaurant chains.

“Over 40 percent of U.S. adults have ordered food online, and restaurants using electronic ordering report increases in both average check and order frequency,” they said. “Setting aside customer expectations, the advantages of electronic ordering — improved order accuracy, improved productivity and enhanced customer relationship management abilities — will probably offset the costs and operational challenges for most restaurant types.”

Possible operational challenges include the potential for online ordering to contribute to the overwhelming of the kitchen during peak hours, Kimes and Laque said.

Tech deployment rates, upselling practices

Among the surveyed chains, pizza chains, with a 60.7-percent adoption rate, and sandwich purveyors, at 61.9 percent, were the most likely to offer online ordering. Mexican-concept operators, at 44 percent, were not far behind in their rate of adoption, according to the study, followed by Asian or noodle bar operators, 33.3 percent, and chicken concepts, 30.8 percent.

SOURCE: The Center for Hospitality Research at Cornell University

About 36 percent of restaurant chains surveyed maintained an upselling screen within their online ordering interfaces.

The study found 75 percent of the midscale full-service chains surveyed included such suggestive selling screens, compared with 50 percent of casual-dining operators, 30 percent of fast-casual chains, and 27.7 percent of quick-service players.

Online payment, development choices and Facebook tools

According to the study, 47 percent of the surveyed chains gave customers the opportunity to either pay online or at the restaurant, 32 percent permitted only online payment, and the remaining 21 percent did not offer online payment options.

While about 80 percent of the fast-casual and quick-service chains that offered online ordering supported online settlement, just 40 percent of casual-dining chains with online ordering granted that option, the study found.

Of the surveyed chains, 34.2 percent with online ordering capabilities relied on custom-built systems, while the others used the systems or services of third-party vendors.

While 96 percent of the surveyed chains had Facebook pages, only 3 percent permitted consumers to order food from those pages, according to the study.

Smart phone apps with ordering tools still rare

The authors of the Cornell study said smart phone apps “present a great opportunity, given that only 16 percent of the restaurants surveyed offered them.”

Quick-service chains led in this area, with 22 percent of the surveyed chains in that segment offering smart phone apps, followed by the fast-casual group, 18.2 percent, fine-dining operators, 6.7 percent, midscale full-service organizations, 6.5 percent, and casual-dining, 5.0 percent.

“However, offering an app didn’t mean that customers could order using their smart phone,” Kimes and Laque said. “Of the 34 quick-service and fast-casual [chains] that offered smart phone apps, just 35.2 percent had ordering capabilities.”

More than half, or 58.3 percent, of the smart phone apps offered by fast-casual chains supported ordering, compared with 22.7 percent of the apps associated with quick-service chains. The study noted that all of the quick-service chains that offered online ordering via smart phone apps were pizza concepts.

The complete study, including the chains surveyed, is available at http://www.hotelschool.cornell.edu/research/chr/pubs/reports/2011.html.

The chain website survey is the first of three reports to be released in the near future, Cornell said. Future studies will examine U.S. consumers’ attitudes toward different electronic ordering options and a survey of how U.S. fast-casual and quick-service restaurants are using online ordering processes and what experience they have had with these technologies.

Contact Alan J. Liddle at [email protected]
 

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