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Food ordering could be an engagement tool for Facebook

Mobile Order Ahead
Mobile Order Ahead

(BI Intelligence)

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Last week, Facebook announced a new functionality, called “Order Food,” that will allow customers to order and pay for meal delivery and pickup from select restaurants without ever leaving the Facebook app, according to TechCrunch.

The move, which is related to Facebook’s partnerships with Slice and Delivery.com, improves on an existing feature that allows users to order directly from select restaurant Pages. Order Food is currently available for only some Facebook users, but an eventual full rollout is expected.

Facebook is likely hoping to capitalize on a growing trend in order to improve its payments functionality.

  • Mobile order-ahead and delivery are on the rise. BI Intelligence forecasts that mobile order-ahead sales will grow at a 57% CAGR to reach $38 billion by 2020. Likewise, in Q1 2017, GrubHub, one of the largest delivery services, saw a 26% annual increase in both active diners and gross food sales.

  • That could incentivize more people to add payment information to Facebook or engage with the firm’s payments offerings more frequently. The popularity of mobile order-ahead and online delivery, and the added convenience of Facebook’s service, could be a tool for Facebook to improve engagement, particularly with its payments and commerce offerings. Rising usage positions Facebook for indirect revenue gains, because it gives the company insight into consumer commerce behavior that could be used to attract advertising partners.

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:

  1. 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

  2. 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.



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