As smartphone technology leaps ahead, are apps destined to replace traditional POS equipment?
It’s an exciting time in the world of mobile technologies, restaurants and particularly fast-food outlets. Applications (apps) that allow customers to order and take advantage of specials and loyalty programs on the go are the latest thing in Australia and abroad—and these are starting to link up with point-of-sale equipment to reduce duplication and human error.
Although still in the early stages of growth, restaurants are increasingly investing in apps as a way of maintaining market share, increasing outreach and improving the customer experience. Once systems are streamlined, going mobile also means things can be done more efficiently, with customers able to view previous orders and re-order ‘the usual’ or alter depending on their mood, receive specials based on their preferences or even order and pay via iPad at their table—a smart, albeit expensive, menu.
Those who have made the leap are sold on the benefits of the technology, and it is not necessarily expensive. In fact, restaurants can be included in aggregate apps for no upfront cost. Rather than competing with others, some restaurants are investing in their own apps, which can cost around $15,000-$20,000 to develop but these can be made available for a monthly fee or even thrown in, for example, when buying expensive POS equipment.
RedCat, an integrated POS, accounting and business management solutions provider, has recently begun tailor making cutting-edge multi-function apps for a number of businesses. Six customers at the time of writing were preparing to launch their apps, including a fast-food chain, while one customer—a gelato, juice and smoothie bar, the Cool Change Chilli Club—already launched their app early this year.
National sales manager Spiro Vournazos says RedCat has been doing a lot of research including marketing research to understand what is happening overseas in the mobile market and how best to take advantage of it. For example, in the United States, there was a 25 per cent increase in digital coupons in 2009 compared to 2008, this increased more than 70 per cent in 2010 and jumped 200 per cent in the first half of 2011. Redemption rates for these coupons—that are redeemable with a mobile rather than having to print the special out—are often more than 50 per cent, compared to less than half a per cent for print-based versions, mostly because they are more effectively targeted.
Hospitality apps can typically be grouped into two kinds—those that are purely for marketing purposes, listing contact details and the like, and ‘menu replacements’. Like in the US, some restaurants here are flirting with the idea of in-house apps, which allow customers to place an order virtually from their table—Vournazos knows of two restaurants trialling it locally—but it is more gimmick than practical, with the order tending to come via email rather than through the POS system. Vournazos says the challenge is to integrate the app seamlessly with the POS so that, for example, the order can print out in the kitchen at the right time. RedCat’s new apps can include a number of features, including coupons—delivered direct to the customer’s phone and redeemable via the POS—and a loyalty, or membership system that uses barcodes and is able to record information such as customer allergies and VIP status, and can be paid for by gift cards or redeeming loyalty points, in addition to credit cards. Although apps can add invaluably to hospitality businesses, Vournazos explains, “These applications will never replace the point of sale because of their limited functionality.” Particularly where Apple technology is concerned, there is a lot of control, and therefore limitation for businesses, regarding the look, feel and how they work. Vournazos says apps should be embraced as an important tool to complement the significant capabilities of POS systems.
Redemption rates for these coupons–that are redeemable with a mobile–are often more than 50 per cent, compared to less than half a per cent for print-based versions.
Apps that allow mobile orders to be placed are becoming increasingly popular in the Quick Service Restaurant industry. In June, Domino’s launched what it says is the most advanced QSR mobile ordering site in Australia, including the ability to use vouchers, customise the pizza from base to topping and track its estimated time of delivery. The week following the launch, the mobile site achieved more than $1 million in mobile sales. Domino’s predicts it will have more than half its business coming from the digital side of its business over the next three years.
The Mobile Ordering Site launch comes some five years after the chain enabled its online ordering and follows the successful Domino’s iPhone app launch in late 2009. Online marketing manager Michael Gillespie explains that the Mobile site adjusts its settings to suit different non-Apple mobile devices. Gillespie says the aim is to ensure the new applications can give customers the same experience without compromising on quality. “We try to put the best functionalities for the customer,” he says.
Smaller organisations that cannot afford to custom-design and market their own app may consider services provided by businesses such as Menulog.com.au, which has about 1200 restaurants in Australia signed up and boasts over a quarter of a million frequent diners. Participating restaurants not only receive mobile orders through the POS but can also automatically send customers an SMS confirming delivery time through the app and restaurants can tailor their marketing to the customer base—done via the Menulog-held data, with restaurants also having the ability to add their own customer details into the system. For consistency, branded online ordering functionality can also be enabled at a lower commission rate than the standard 10 per cent.
Menulog was set up in 2006 to fill a gap in the market and started solely as a restaurant guide and locality service. It then incorporated home delivery and takeaway in 2007 and last year also introduced loyalty functionality, with the system able to track the customer accounts including meal specifications and notifying the customer and restaurant regarding redemption. Menulog managing director Dan Katz says the market for multi-function apps is growing rapidly. “It’s great for marketing, more and more people are using it and once people start using it they become regular customers,” he says.