The next great battle for digital mindshare will be the restaurant apps.
In order to survive in a pandemic world, restaurants are quickly ramping up their order online, pick up in store operations. They hope to drive more business through their locations as well as build direct relationships with consumers.
Longer term, restaurants need to build their digital presence to avoid being disintermediated by the delivery/pickup aggregator apps like DoorDash and GrubHub, which are booming during the pandemic. If restaurants don’t build their own apps, they may eventually find themselves at the mercy of the aggregators, who will control a large portion of their orders and take a hefty commission.
So look for a battle for app downloads in every arena from tossed salads to burgers to coffee.
Innovative restaurant chains have proven they compete. Sweetgreen was a pioneer here well before the pandemic. Customers can order their salad on the Sweetgreen app, pay, and then pick it up at the appointed time. As anyone who has seen the lines in New York’s Sweetgreen salad stores knows, the app has become essential.
Sweetgreen isn’t alone – and all the other big restaurant chains are emulating their success – even faster now due to COVID.
Starbucks has had the pre-order app for a while. But to reopen during the pandemic, they are refactoring their whole store experience around online pickup. With social distancing limits the ability to hang out in the store and no one wanting to wait on a line, it seems inevitable that the effort to drive app downloads for Starbucks (and the other QSRs) will surge.
App pre-ordering was already a big winner pre-pandemic because the experience is great for consumer and the restaurant.
Consumers save time and money. Besides being able to skip the line, users can save payment information and their favorite orders. They also benefit from loyalty programs that reward frequent buying.
COVID turbocharges the existing trend. Consumers want to avoid lines while restaurants need to maintain throughput. The notion of standing in line for a salad or sandwich and then exchanging money seems unthinkable right now. Look for both consumers and restaurants to drive adoption.
Longer term, restaurant chains need to recognize the risk from the aggregators. While the bigger ones may not need orders from GrubHub today, they should view the online publishing analogy as a cautionary tale. All but the most powerful publishers ended up relying on Google and Facebook for traffic – and losing out on most of their value.
Doordash and GrubHub may become the Google and Facebook for takeout and delivery – being the single place users go to order food. Consumers typically only use a handful of apps, so it is unlikely consumers will rely on more than a couple of providers – giving aggregators a natural edge. It is no surprise that Uber sees this as a valuable opportunity to turbocharge their Eats business and is trying to acquire GrubHub.
Only brands with the deepest of customer relationships and most powerful products (think Disney with Baby Yoda for content, Sweetgreen with Kale Caesar for lunch) can compete with easy access to everything that aggregators provide.
It is also another case study on how the pandemic advantages larger companies Large chains can invest in the technology to create an excellent user experience. They also can blanket a city with multiple locations so customers can use the same app at home and at work. Finally, personalized attention – an advantage of smaller independents – is lost, when a masked attendant hands you your coffee from behind a mask.
It isn’t immediately clear to me how independent operators can solve this conundrum. Perhaps vertical specific aggregators like the Slice app (which just raised serious cash) can help. But it will be another challenging hurdle for the independent restaurant.
The Great Refactoring 