Editor's note: This story has been updated to clarify some language and quotations.
The buzz over online and mobile ordering for quick-service restaurants has grown in recent months, but at least one industry analyst remains skeptical of the concept.
In August, The Melt, a gourmet grilled-cheese sandwich and soup concept, launched in San Francisco with online ordering. Some Sonic Drive-In restaurants in Arizona are testing online ordering. And service provider Snapfinger said it has developed technology to ensure the quality of pre-ordered take-out food.
In the past, quick-service restaurants avoided online or mobile ordering, as it seemed that the technology was unnecessary for the speedy establishments, unlikely to generate significant incremental sales, and could even cause food quality problems.
“It is an interesting idea,” said Brad Ludington of KeyBanc Capital Markets, which conducts paid investment banking services for Sonic Corp. “But something that is a big concern of mine [is] how do you guarantee quality? … If the food quality suffers, you run the risk of hurting the brand.”
Larry Miller, a managing director and restaurant analyst for RBC Capital Markets, said operators for several years have introduced technology to increase efficiency in the back of the house, such as kitchen display systems and automated labor scheduling software. “Where I think it can be most impactful currently is enhancing the customer ordering and customer service experience,” he said.
But Miller noted that the challenge with all customer-facing technologies, such as tableside touch-screen terminals, is that “the order needs to be fulfilled and food delivered seamlessly to complete the customer experience.”
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Despite such concerns, trials of online ordering by quick-service chains appear to be growing. A competitive market and the falling cost of developing or renting online ordering technology from third parties is fueling trials, as well as the need for quick-service brands to remain relevant to younger users, insiders with knowledge of the subject suggested.
At The Melt, created by Flip video camera developer Jonathan Kaplan and his Fish Six Restaurant Corp., guests who order and pay ahead online using a computer or smartphone receive a quick-response code that they can print out or store on their smartphone. Once at the restaurant, they scan the code to jump the service line without the risk of receiving soggy sandwiches or cold soup because they arrived late.
Fish Six representatives said when other The Melt restaurants open, the system will let guests pre-order and pick up the order at any location. They were unavailable at press time for further comment.
OLO Online Ordering is providing the online ordering service at 30 Sonic restaurants in Arizona testing such a system.
“We are excited to launch Sonic On the Go, and anticipate OLO providing both incremental sales and a platform for more expedited service for our loyal guests,” Jim Prentice, operations director for the units’ franchisee Mason-Harrison-Ratlif Enterprise LLC, said in a written statement.
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Prentice also noted that the technology was cost effective, as all orders are prepaid and integrate into the company’s merchant accounts.
Sonic Corp. officials declined to comment further about the test.
Service provider Snapfinger is testing an “extended drive-thru,” or EDT, that lets smartphone users order ahead and pay for quick-service meals.
The software uses geolocation technology to hold advance orders from the kitchen until the smartphone crosses a virtual boundary set by the restaurant, such as a six-block radius around the location.
Snapfinger officials said the new technology is not yet in use by a quick-service chain. News of pilot tests or other trials likely is three to six months away, they said.
Company representatives said they do not know how chains testing the EDT technology will deliver food to guests who order in advance, but they said the geolocation technology will let the company alert restaurants when those guests have arrived.
KeyBanc’s Ludington said he found Snapfinger’s EDT program “interesting.” But he said it could be counterproductive if it “adds complexity” to quick-service operations.
“It makes sense to examine every opportunity for your business, obviously,” Ludington said of quick-service restaurant operators and their interest in online ordering. “But it seems that there is a lot of risk involved with this model and QSR, and the question is, can you reasonably expect enough reward to offset that?"