This story was delivered to BI Intelligence "Payments Briefing" subscribers. To learn more and subscribe, please click here.
Kentucky Fried Chicken has informed its 1.2 million UK loyalty rewards program members that some identity related information may have been compromised in a hack, according to Forbes.
Although no payments information is stored in the loyalty program and KFC has already started implementing security features, the possibility that users' names, dates of birth, and addresses could be in the hands of hackers will likely concern the quick-service restaurant's (QSR) consumers.
Security issues are always a concern for companies, but this can be even more significant when it affects a major digital channel.
- Loyalty programs are an important digital channel for QSRs to push offerings. Loyalty programs have proved to be major drivers for QSRs. For context, Starbucks rewards and loyalty program has 12 million active members, Among those, 8 million pay via mobile, and roughly 4 million use Starbucks' mobile order-ahead feature. And they do so regularly — in Q3 2016, over one in four US Starbucks transactions came from its mobile app. Alienating these consumers could potentially lead to significant lose for KFC.
- Security issues could hinder some of the digital momentum KFC has built with its consumers. KFC has been aggressive in growing its digital offerings, which include accepting mobile payments through Apple Pay, Samsung Pay, and Android Pay, as well as a mobile order-ahead feature in partnership with AIRTAG and PayPal in the UK. However, if consumers in and outside the UK don’t trust that their information is secure, its unlikely they would be willing to adopt these digital features or future ones.
This security hack is news other QSRs should take note of, especially if they rely heavily on digital programs to attract consumers. Major QSRs, like Starbucks, Dunkin Donuts, and McDonald's, are heavily pushing digital offerings to drive up sales, traffic, and ticket size. In addition, it's becoming increasingly popular to add payments capabilities to these programs, which exacerbates any associated security risk.
In order to continue pushing successful features, these companies must invest in limiting consumer security concerns, especially when payments information is involved and with loyalty programs that have proven to be quite lucrative. Finding ways to neutralize this threat, especially when loyalty and mobile offerings are in the spotlight, could go a long way in attracting consumers and maintaining support.
Quick-service restaurants (QSRs) — also known as fast-casual restaurants — such as Starbucks have been turning to mobile order-ahead apps to extract higher sales, intensify customer loyalty, and heighten foot traffic.
Mobile order-ahead refers to a consumer-facing mobile payment platform that allows customers to order food remotely, pay for the items on their phone, and pick up their order at a specific restaurant location.
Leading QSRs in the U.S. are beginning to adopt these platforms at an accelerated pace and are benefiting from them. Taco Bell sees 30% higher average order values on mobile compared to in-store, and Starbucks' Mobile Order & Pay already represents 10% of total transactions at high-volume stores, directly contributing to increased company sales.
Mobile order-ahead is still in its early days, but will be a $38 billion industry by 2020, accounting for 10.7% of total QSR industry sales. This will be driven by full adoption among the top QSRs in the US, the growth of mobile commerce, QSR adoption through aggregators like Grubhub, loyalty programs, higher average order values, and new buy buttons.
BI Intelligence, Business Insider's premium research service, has compiled a detailed Mobile Order-Ahead Report that profiles the companies that have proved the mobile order-ahead concept and analyzes the trends contributing to this new industry's growth.
Here are some key takeaways from the report:
- Mobile order-ahead apps — platforms that enable consumers to remotely purchase menu items for in-store restaurant pickup — are on the rise among quick-service restaurants (QSRs). We expect sales on these platforms to reach $38 billion by 2020, representing a five-year compound annual growth rate (CAGR) of 57%.
- Mobile order-ahead will ultimately have an additive effect on the QSR industry. Mobile ordering platforms have been proven to intensify customer loyalty, increase purchase frequency, and lift average ticket sizes through order customization and easier checkout options. This means that mobile ordering is not a simple substitution for in-store purchasing, but a channel that can enhance the lifetime value of QSR customers. This makes mobile order-ahead a critical channel contributing to the growth of the QSR industry.
- Alternative commerce solutions will help propel mobile ordering. Aggregators like Grubhub will onboard smaller fast-casual restaurants into the mobile ecosystem by offering them an existing app to integrate into, lowering the upfront costs of creating a mobile channel of their own. And in-store self-service kiosks will help popularize remote ordering and accustom users to less traditional forms of payment that don't require a cash register.
In full, the report:
- Forecasts the growth of the mobile order-ahead industry in the US from 2015 to 2020, including its share of total QSR sales.
- Profiles brands that are leading the migration to mobile ordering.
- Examines the alternative commerce solutions that could help popularize mobile order-ahead.
- Explains the risks and drawbacks to launching a mobile commerce platform.
- Assesses the ways both large and small brands can create a mobile order-ahead platform.
- Determines which types of fast-casual chains are in the best position to benefit from mobile order-ahead.
To get your copy of this invaluable guide, choose one of these options:
- Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
- Purchase the report and download it immediately from our research store. >> BUY THE REPORT
The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of mobile order-ahead.