There’s no doubt about it, competition in the Australian foodservice industry is fierce and getting fiercer.
Increasingly, QSR customers can be both demanding and fickle. Busy with work, family, and the obligations of daily life, they’re choosy with how they spend their discretionary dollars. Their expectations are high and their loyalty low. The moment their favourite outlet fails to perform, they’ll defect to another. Winning QSRs must therefore play smart - starting with a nuanced understanding of customer needs, preferences, and habits.
According to recent research, two-out-of-three Australian retail shoppers have left a restaurant and abandoned their purchase(s) due to long lines and wait times.1 However, 41% report that a short wait or no queuing options would encourage them to choose one restaurant over another. Among QSR customers specifically, 9% say that short queues would heighten their loyalty. Getting customers through the door is no longer enough. In today’s tight market, operators must also find innovative ways to keep them there once they arrive - and perhaps spend a little more while they do.
Also, diners across all channels are choosing to order their meals in digitally-enabled ways. Although this behaviour is primarily seen in the millennial segment, whose preferred payment methods are almost exclusively digital, this behaviour is rising among almost every demographic, according to NPD CREST® data.
Against the backdrop of low wage growth, “enticing consumers to direct their limited disposable dollars toward out-of-home meals is a very real challenge,” explains Seton Leung, head of Australia Foodservice at The NPD Group.
Through the end of September 2019, the QSR channel experienced 1% growth in traffic and a 2% increase in average spend, with dinner driving more than half (61%) of those gains.3 Additionally, both food delivery and pick-up are on the rise, especially among families and groups consisting of only adults. These upticks suggest they still enjoy treating themselves to meals they don’t need to prepare themselves. This is particularly good news for QSRs capable of leveraging convenience and affordability, while catering to their consumers’ needs and desires.
Forward-looking QSRs who are in-it-to-win-it will seize opportunities to capitalise on emerging trends and digital capabilities that are already sweeping the retail vertical. By pushing the boundaries of the customer experience, and enhancing their on- and off- premise interactions through technology-driven business intelligence, these QSRs can delight customers and foster loyalty - and translate both into increased traffic, spend, and profit.
NPD CREST® data has uncovered five key trends in today’s Australian QSR space. Some are consumer behaviours; some are emerging technologies. At the intersections of both lie significant opportunities for growth. In this paper, you’ll discover a strong case for adopting a comprehensive digital strategy in order to remain competitive in a tight market.
QSRs looking to cash in on the kiosk revolution should consider how they contribute to the overall customer experience. Customising kiosks to offer the ability to personalise orders, pay with their preferred method, and offer add-ons with a simple tap will ensure happy customers - and happy customers return.
When looking to introduce kiosks, QSR operators should consider learnings from similar brands in the US which have found that:
Average order size increases by 21% (rising to 30% for the leading QSR burger chain). 5 Kiosks never fail to upsell, and customers who may otherwise feel self-conscious about adding items to their order - or increasing the size of them - need not worry about disapproval when ordering from a touch screen.
Individual transactions increase by at least $5. 6 Those add-on items mentioned above? They often come at a premium. But customers respond to relevant suggestions - such as adding avocado to their taco - and there’s less friction when they’re not interacting with a cashier or paying with cash.
Total order times decrease by nearly 40%. 7 Strategically placed kiosks mean that customers can more quickly and efficiently place and pay for their orders. Without the need for cash, QSRs can also redeploy staff toward higher-value tasks that increase ordering speed.
QSRs looking to gain in the delivery market should consider mobile apps as a means of building a base of loyal time-strapped customers. While initially costly, the return on investment will ensure that QSRs can drive revenue without increasing restaurant space and staff.
“Mobile apps are one area of tech that is second nature to many of us, especially the millennial generation, and this includes apps by the food industry,” says Leung. “Those within the industry need to consider their digital platforms going forward if they wish to stay competitive in the foodservice space and appeal to the new generation of consumers.”
QSRs looking to gain a share of the millennial wallet must prioritise convenience and context in the customer experience. Offering in-app ordering and payment coupled with pick-up and delivery options will drive customer retention and loyalty in this demographic.
While in-app payments comprise only 2% of the QSR channel currently, use is growing across all age groups - which makes a strong case for adoption on its own. The case further solidifies around millennials, who are currently worth $12 billion across QSR Australia and are driving much of the channel’s growth.
Millennials are extremely busy, more likely to dine alone than other demographics, often choose to eat at home when solo, and comprise the biggest segment of consumers who prefer digitally enabled ordering and payment. While their most commonly purchased meal (via all payment channels) is lunch, in-app payments among this group are growing across all timeframes.
Capturing the revenue opportunities inherent in these timeframes means capturing the attention of millennials. Coffee chains, for example, can capitalise on this demographic’s growing interest in weekday morning meals through a branded mobile app that fulfils their desire for convenience (ordering ahead), fast service (skipping the line), and deals. And almost any QSR can complement their on-premise meals with pick-up and delivery options supported by third-party aggregators - whose own ordering and payment apps provide the same capabilities and convenience consumers seek. While an overworked millennial is unlikely to sit in a restaurant on the way home from another long day, they are much more likely to purchase dinner from the train and have it waiting at the counter or delivered to their home.
QSRs looking to use coupons and deals as a means to build their customer base should consider investing in a system that unifies payment data across channels and allows them to unlock additional value from customers.
The power of promotions are multiplied exponentially when paired with a unified commerce platform.
It also supports several key avenues for growth:
Increased spend. Apps make it easy to highlight relevant add-ons such as chips or a beverage. And, when QSRs offer special add-on pricing available only via the app, consumers tend to order them.
Retention and stewardship. NPD analysis shows that frequent restaurant visitors are most likely to be influenced to return through a digital service like an app. QSRs who can leverage in-depth customer insights to best appeal to these users can more effectively foster ongoing loyalty, which positively impacts the bottom line.
Beyond the convenience and speed that payment platforms can offer customers, they can also uncover useful insights that agile QSRs can leverage. By tying together an individual’s in-restaurant and online purchasing data, and storing that information in one place, these platforms help create a robust customer profile around which QSRs can build effective promotions. The ability to push these promotions out via app-based and other digital ordering methods, such as self-serve kiosks, increases the chances that consumers will respond.
While impacting the profit margin, aggregators can boost volumes by unlocking additional customers. QSRs looking to attract net new customers should consider aggregators as a means of marketing their offerings to new customers, allowing customers to “discover” the restaurant. QSRs concerned about the value proposition should consider the following:
As one leading QSR sandwich brand in the US is demonstrating, scalability applies to the big players, too. 17 By complementing its proprietary delivery services with third-party partnerships, the chain expects to realise “additive” incremental gains through fulfilling pent-up demand for its products among consumers who exclusively use aggregator apps.
Increasing popularity. Looking to the US aggregator apps comprise 40% of consumers’ 20 most used ones, according to NPD research. 18 Surveyed consumers cited “looking up items,” “paying for meals,” and “checking prices” as their primary drivers for using a third-party app versus a restaurant branded app.
Opportunity cost. As aggregators continue to permeate the market, outlets absent from leading platforms stand to lose business to competitors who appear on them.
Bob O’Brien, Global Senior Vice President, Foodservice at NPD
Intrigued by what these trends may mean for your future growth?
Harnessing the inherent opportunity of technology requires a comprehensive digital plan - backed by intentional implementation - that aligns with your strategic goals, budget, and operations.
While it may seem tempting to jump in and adopt the full complement of digital technology tomorrow, reality dictates a phased-in approach: one that supports market and consumer testing to ensure that each new digital sales channel performs as expected, and produces the desired result. For instance, if your presence on an aggregator platform fails to stimulate takeout orders, you’ll want to understand why before investing in and deploying a branded app.
Given that digital ordering necessitates payment capability, you also will need to rigorously evaluate potential payment platforms before rolling out your first - or next - digital channel. As you do so, look for a payments platform that is:
Ultimately, you should seek a payments partner that catalyses growth by providing the consumer intelligence you need to address your business goals.
Technology has changed everything from how products and services are sold and delivered, to how consumers behave and what they expect.
This on-demand economy has shifted the global commercial paradigm toward speed, efficiency, anxqd convenience, where immediate gratification is not only the outcome but also the goal.
In Australia, according to a recent report by 451 Research, 46% of consumers describe digital technology as essential to their daily lives - a statistic that rises to 60% among millennials. 21 Yet the QSR industry has been slow to respond with only 23% having deployed digital technologies that speed the customer journey. 22
Bucking this trend promises to be a sound business strategy - especially in light of the overall drivers of consumer behaviour in the Australian foodservice space, which were identified above. No matter the channel, QSRs who adopt a proven payments platform can:
Capture higher share of wallet from existing customers
Appeal to/capture growing demographic segments
Use deals and coupons to drive repeat revenue
Speed up the customer experience
Leverage aggregators to attract net-new customers
Capitalising on the opportunities can lead to positive growth in an increasingly competitive market.
Adyen (AMS: ADYEN) is the payments platform of choice for many of the world’s leading companies, providing a modern end-to-end infrastructure connecting directly to Visa, Mastercard, and consumers’ globally-preferred payment methods. Adyen delivers frictionless payments across online, mobile, and in-store channels. With offices across the world, Adyen serves customers including Facebook, Uber, Kogan.com, Aesop McDonalds, Joe & The Juice and wagamama.
The NPD Group offers data, industry expertise, and prescriptive analytics to help you grow your business in a changing world. With offices in 27 cities across the Americas, Europe, and Asia-Pacific, we help you measure, predict, and improve performance across all channels.
In partnership with Adyen, The NPD Group examined data compiled from over 60,000 consumer visits to commercial and non-commercial foodservice establishments in Australia through September 2019, as well as examples drawn from global markets. Analysis reveals that growth opportunities do exist - particularly among outlets best able to offer affordability and convenience. This white paper examines what the data uncovers about emerging trends in the Australian quick service restaurant space. It also reveals that QSRs willing to invest in digital technologies that enhance the customer experience stand to reap significant returns through reduced friction, increased efficiency, elevated sales, and heightened loyalty.
Download the full report
1 451 Research report commissioned by Adyen
2 451 Research report commissioned by Adyen
3 The NPD Group/CREST® Australia, QSR Traffic Share YE Sep 2019
4 The NPD Group/CREST® Australia, QSR Traffic Share YE Sep 2019
9 NPD Group/CREST®
10 From “The Digital Age of Foodservice in Asia Pacific,” January 2018: https://www.thenpdgroup.com.au/wps/portal/npd/au/news/latest-reports/the-digital-age-of-foodservice-in-asia-pacific/ (slide 6)
11 From https://www.mobilemarketer.com/news/mcdonalds-sees-daily-app-usage-jump-20-40/531176/
12 From https://www.retaildive.com/ex/mobilecommercedaily/mcdonalds-7m-app-downloads-highlights-effectiveness-of-welcome-incentives
13 NPD Group/CREST®
21 McKee, Jordan. “Unified Commerce: Capitalising on Australia’s $92BN Retail Opportunity.” 451 Research, July 2019 (p.6).
22 McKee, Jordan. “Unified Commerce: Capitalising on Australia’s $92BN Retail Opportunity.” 451 Research, July 2019 (p.21).