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Archive for the ‘Fast Food’ Category

Last week I posted on the challenges Starbucks was having with an increasing number of mobile orders. Now, it seems that the company is going to test a different approach: A location that only takes mobile orders (Starbucks to test mobile order and pay-only store at headquarters, Mar 30, Reuters).

Starbucks’ headquarters has two cafes that serve the more than 5,000 company employees who work there. One of those cafes, which is available only to company employees, is among its top three stores in the United States for mobile ordering.

Mobile orders from the building will be routed to the new store, which will have a large window where customers can pick up drinks and see them being made.

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In a perfect world, technology solves problems instead of creating them. Things don’t always go that way. Take, for example, Starbucks’ mobile ordering. This is, in theory, a convenience for users of their app. They can place an order before hitting the store, pay automatically, and get their drink and food without waiting in line.

Or at least that is the theory. The reality is that a surge in mobile orders has created a bunch of headaches for the coffee chain. Here are some details from when they announced their earnings at the end of January (Starbucks Tempers Revenue Forecast, Jan 26, Wall Street Journal).

Mobile order-and-pay represented 7% of U.S. company-operated transactions in the quarter, up from 3% in the prior year. The number of its highest-volume stores for mobile order-and-pay, where orders placed via the app account for more than 20% of transactions during peak hours, doubled to 1,200 stores over the prior quarter.

The high rate of mobile ordering was blamed by Starbucks for increased waits and with that lost customers. In the last quarter, dollar sales were up because the average purchase size outweighed a 2% decline in transaction.

But just how bad is the delay? That’s the subject of a recent Business Insider piece. The headline pretty much lays out the article’s agenda: We went to Starbucks every day for a week to see how the coffee giant is dealing with its biggest problem (March 19). (more…)

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Would you be more likely to go to fast food restaurant if it guaranteed how long you wait at the drive thru? Some McDonald’s in South Florida are doing just that (McDonald’s offers a 60-second lunch guarantee on weekdays, Aug 4).

McDonald’s guests at participating South Florida restaurants will receive timers when paying for their order in the drive-thru. The timers are then returned to the McDonald’s crew member when their food is presented. This guarantee promises that customers will receive their meal within 60 seconds of paying for it, or receive a complimentary lunch item on a future visit.

The guarantee doesn’t apply all day. Indeed, it is only in effect for an hour — but it is the hour that matters, noon to one.

Let me acknowledge upfront that this is clearly a gimmick. McDonald’s has been in a funk and their drive thru times have been climbing (along with the time of many in the industry). So this offers customers some assurance and maybe puts a little competitive pressure on some of the other players in the industry.

But as gimmicks go, I kind of like this one. (more…)

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We have posted in the past on how the burrito-chain Chipotle has increased the rate at which it moves customers through its restaurants, or as an article on Quartz terms it, its burrito velocity (Chipotle continues to refine the science of burrito velocity, Apr 21). The numbers are pretty remarkable.

Over the first three months of 2014, the US Mexican-food chain saw an average increase of seven transactions per hour at both peak lunch and dinner hours—12 to 1pm and 6 to 7pm, respectively. On Fridays, one of its busiest days of the week, Chipotle fielded 11 more customers per hour at lunchtime on average across its stores, a roughly 10% increase. …

Some of Chipotle’s fastest restaurants currently run more than 350 transactions per hour at lunchtime, which equates to a ludicrous near-six transactions per minute. The nationwide average is currently somewhere between 110 and 120, according to Moran. But they’re getting faster, and faster, and faster.

So how do they accomplish this increase in speed? (more…)

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How long is too long to hang out at a fast food restaurant? Does it matter if we are talking about a McDonald’s instead of a Starbucks? Those questions are part of a spat between a New York McDonald’s outlet and a group of elderly Korean customers (Fighting a McDonald’s in Queens for the Right to Sit. And Sit. And Sit., New York Times, Jan 14).

For the past several months, a number of elderly Korean patrons and this McDonald’s they frequent have been battling over the benches inside. The restaurant says the people who colonize the seats on a daily basis are quashing business, taking up tables for hours while splitting a small packet of French fries ($1.39); the group say they are customers and entitled to take their time. A lot of time.

“Do you think you can drink a large coffee within 20 minutes?” David Choi, 77, said. “No, it’s impossible.”

And though they have treated the corner restaurant as their own personal meeting place for more than five years, they say, the situation has escalated in recent months. The police said there had been four 911 calls since November requesting the removal of the entrenched older patrons. Officers have stopped in as frequently as three times a day while on patrol, according to the patrons, who sidle away only to boomerang right back. Medium cups of coffee ($1.09 each) have been spilled; harsh words have been exchanged. And still — proud, defiant and stuck in their ways — they file in each morning, staging a de facto sit-in amid the McNuggets. …

“It’s a McDonald’s,” said Martha Anderson, the general manager, “not a senior center.” She said she called the police after the group refused to budge and other customers asked for refunds because there was nowhere to sit.

You can also check out this oddly awesome video.

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We’ve had a bunch of quick-service restaurant stories lately but this one on Panera is too nice to pass up. The Wall Street Journal reports that Panera has lowered its growth forecast in part because of poor customers service — long lines and messed up orders is costing them business (Panera Says It Can’t Handle Crush, Oct 23).  So what are they looking to do about it?

Panera plans to modestly pare its menu, which will reduce preparation time. The company also plans to migrate phone orders to the Internet to save time for workers who have to “drop everything” to handle phone orders, Mr. Shaich said.

The company also plans to create dedicated catering hubs in existing restaurants to handle catering for a few restaurants in order to free up the cafes from handling catering orders.

Next year the chain plans to introduce a new menu structure that will group items by price so that people who are looking to save money can easily find lower-cost options.

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Fast food is supposed to be, well, fast. But is speed everything? If you think about how different chains advertise, they are often emphasizing price or some expansion of their offerings. Essentially no one ever says that they will get you on your way in two minutes. Speed is taken as a given but there has to be some interplay between the range of what a firm offers and how fast they can serve customers.

That gets us to QSR Magazine‘s annual survey of drive-thru lane performance (The Drive-Thru Performance Study, Oct 2013). Drive thrus matter since they can account for 60 – 70% of sales and QSR’s survey is something of an industry standard since they have been at it for 15 years. You can find information on their methodology here and a paper co-written by Gady that uses this data here. The most interesting insight from the survey comes from comparing data on service times (i.e., how long does it take from when you get to the order board until you have your bag of food) this year with last year.

QSR DataAs the data shows, service times are getting slower as a whole. The industry average went up about 5% from 172 seconds to 180. What’s driving the increase?

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