U.S. food service operators are feeding the growing appetite for online and app-based services by expanding loyalty rewards programs and providing consumers with new ways to order digitally.
When it comes to digital ordering, growing access to delivery has garnered the most marketplace and media attention. According to a new report by The NPD Group, however, restaurant delivery is not as big as digital ordering, which has steadily grown by double digits across all service modes.
Food service delivery accounts for 3% of total industry traffic. While this number is growing, digital orders overall represent 8% of food service industry traffic. Meals or snacks ordered via mobile apps, the internet or text messages have grown by 23% over the past four years and now represent 3.1 billion visits and $26.8 billion, according to NPD. NPD anticipates digital orders across all service modes to continue growing at a rapid pace through 2020.
“Digital ordering has raised the bar on convenience and with it the customer experience,” says David Portalatin, food industry adviser at NPD. “Digital ordering overall and apps have provided a path to market to consumers on a one-to-one basis and offer them a restaurant experience customized to their needs.”
Convenience is the top reason consumers choose digital ordering, according to NPD. Other top reasons include no waiting and the ability to order, pay and have food ready at your own pace.
Sixty per-cent of digital orders are sourced through mobile apps, with restaurant apps dominating over third-party apps. Users of leading restaurant brand apps are drawn to this mode for its affordability, customization and ease of use, according to the report.
Loyalty rewards have been particularly successful for restaurant brands in getting consumers to use their apps. Over half of restaurant visitors ordering through digital channels participate in loyalty programs.
Such programs compel consumers to carry many restaurant apps on their phones and ensure the success of new entrants in gaining phone real estate.