TIME IS MONEY: How Order for Pickup Delivers ROI

Executive SummaryThe bar has been raised: Today’s consumers want what they want, when they want it. And thosesky-high expectations can translate into frustration when there’s a hiccup with their on-demand experience. So how do operators solve this d mna for customers and the bottom line... Order for Pickup.

making the investment in shifting your mix towards Order for Pickup can make a considerable impact on driving ROI. 1. Improved margins from lower delivery commissions and

more upsell opportunities

2.

3. Faster wait times leading to more frequent, loyal customers

To better understand this impact launched to capture the

order experience across four major QSR brands.

surprising compared with customer expectations: Order for Pickup offers improved wait times—with service that’s up to 2.4X faster—thus creating an unparalleled

shifting consumer order habits towards Order for Pickup.

mix to Order for Pickup, and why utilizing the right technology

An investment in Order for Pickup can really payoff by:

Prioritizing Infrastructure and Technology

Promoting the Order for Pickup program

Shifting the order mix towards Order for Pickup

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Table of Contents

SECTION 1 How Order for Pickup Impacts Your Bottom Line

SECTION 2 Three Methods of Ordering—Customer Perception Vs. Reality

SECTION 3 Making Order for Pickup Work For You

SECTION 4 Key Takeaways

SECTION 5 The Rakuten Ready Solution

APPENDIX Methodology

SECTION 1

How Order for Pickup Impacts Your Bottom Line

Order for Pickup allows restaurants to serve customers and . Our study data favors that

the order mix provides an opportunity to capture valuable mobile customers more frequently and improve revenue—especially during peak hours when capacity is maxed.

And peak time is when restaurants are most likely to lose lucrative customers, who either assume the restaurant is too busy or choose to go elsewhere with perceived shorter lines and emptier parking lots.

Shifting customer behavior towards Order for Pickup increases revenue in several ways:

› Enables operators to capture sales from customerswho might otherwise go elsewhere due to long lines.

› Creates more loyal customers who come back becauseof the great brand experience.

› Offers the opportunity to serve more customers duringpeak periods because of shorter wait times.

› Allows upsell opportunities to more customers.

Drive-Thru Only

Drive-Thru + Order for Pickup

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SECTION 1: HOW ORDER FOR PICKUP IMPACTS YOUR BOTTOM LINE

horter customer wait times, which increases order throughput and drives more revenue.

Since these are mobile orders, the app canautomatically upsell (i.e. beverages and desserts) customers

help drive incremental revenue.

Additional revenue is possible from new customers whowant to use Order for Pickup but didn’t know it existed orpreviously went elsewhere due to the long lines.

Order for Pickup is the

in building out the necessary infrastructure, and effectively promote Order for

cost savings not possible with other order channels. For example,

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SECTION 1: HOW ORDER FOR PICKUP IMPACTS YOUR BOTTOM LINE

How Much ROI Can Increased Order for Pickup Generate?

Based on our observations, we noticed when you change the order mix towards Order for Pickup, the following impacts can be realized:

Increase in Order for Pickup orders as customers begin to realize it is a faster experience

Capture more revenue that would have been lost due to paying delivery commissions

Faster operational time via the drive-thru due to increased mobile usage

Our data established that Order for Pickup is fastest for customers and

What does that mean for the bottom line? We found results vary depending on the current order type mix. But the data is clear that the more orders that can be shifted towards mobile Order for Pickup, the better the financial picture.

The charts that follow will illustrate how shifting the ordering mix to Order for Pickup can have a positive impact on revenue.

We made the following assumptions:

››››› Focus on peak periods which offers the greatest

opportunity to capture revenue

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Example #1: Drive-Thru is the Majority of RevenueAn Operator with Drive-Thru as their primary on-premise order channel knows it is a bottleneck, and anything they can do to remove

SECTION 1: HOW ORDER FOR PICKUP IMPACTS YOUR BOTTOM LINE

Existing Order for Pickup Mix = 5%

New Order for Pickup Mix = 25%

Delivery

In-Person

Delivery

In-Person

Drive-ThruDrive-Thru

Order for Pickup

Order for Pickup

REVENUE IMPACT

20% INCREASEDAILY

1 SITE

MONTHLY YEARLY

$50.73MM

$25.37MM

$507,350

$4. MM

$2. MM

$4

$.14MM

$.07MM

$1,390

Note

The revenue impact from Order for Pickup is calculated from average improvements seen by Rakuten Ready customers. The revenue model summarizes the calculation of the increase in new Order for Pickup orders, diversion of orders from Drive-Thru to Order for Pickup, revenue that was lost due to lack of parking or drive-thru being too busy, and a reduction in delivery costs.

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SECTION 1: HOW ORDER FOR PICKUP IMPACTS YOUR BOTTOM LINE

Drive-Thru Accounts for Half of RevenueIn this scenario, Drive-Thru and In-Person are the main on-premise order channels, yet we still see a substantial opportunity

Delivery

In-Person

Delivery

In-Person

Drive-ThruDrive-Thru

Order for Pickup

REVENUE IMPACT

15% INCREASEDAILY

1 SITE

MONTHLY YEARLY

$38.2 MM

$19.10MM

$38 ,155

$3.1 MM

$1.5 MM

$31,

$.10MM

$.05MM

$1,047

Regarding Drive-ThruDrive-Thru accounts for a majority of the revenue at a QSR. By moving the ordering mix around, we see these types of effects around Drive-Thru

› Customers who were planning to order via Drive-Thru nowOrder for Pickup, which frees up a spot for someone whodecides to use Drive-Thru since the line is shorter.

› Drive -Thru times also speed up due to some ordering viathe mobile app in an Order for Pickup manner, but picking uptheir food via the Drive-Thru instead.

Order for Pickup

Existing Order for Pickup Mix = 5%

New Order for Pickup Mix = 21%

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Why Order for Pickup over Delivery? Before we get too far, let’s address why we did not include third-party Delivery observations in our study... quite simply, delivery isn’t delivering. In fact, Order for Pickup is growing four times faster than delivery heading into 2020.

While delivery is likely to always be part of the mix, most

With delivery:

› Operators lose control of the brand experience.

› Food quality can be impacted or compromised.

› Delivery is slow and impacts the customer experience.

› It’s expensive because of commissions orcompensating delivery employees.

A mere 4% of consumers told Rakuten Ready that delivery was their preferred method of ordering at a fast-casual restaurant.

Even more telling, nearly 80% of customers said they would be willing to choose Order for Pickup over Delivery if they knew their food would be ready the moment they arrived.

So for the purposes of this study, we focused on the channels directly controlled by Operators: Drive-Thru, In-Person and Order for Pickup.

Growth Forecast: QSR’s Order for Pickup vs Delivery

GROW

TH R

ATE

13%Delivery CAGR

57%Order for Pickup CAGR

Source: BI INTELLIGENCE / Statista [platform to consumer delivery. 4-year CAGR]

4x Growth

What is your preferred way to order at a fast food/fast casual restaurant?

Drive-Thru 47%

37%

11%

4%

1%

In-Person

Order for Pickup

Delivery

Other

Source: Rakuten Ready ROI Study 2020

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SECTION 2

Order for Pickup is Fastest. Customers Think Otherwise.In most consumers’ minds, perception is reality, but the truth is that their perception is hurting sales. Since we know that Order for Pickup can have a major impact on revenue, it needs to be prioritized. Brands must promote it to their customers to drive usage so they begin to understand it is the fastest channel. Customers are not yet convinced...

When we surveyed consumers about their wait time expectations during peak times they ranked In-Person and Drive-Thru as faster methods for getting their food order than Order for Pickup.

However, according to our research, Order for Pickup is really the fastest

spend less time on-site getting their food than what they had perceived.

Let’s dive into each of these three methods in more detail to see why convincing customers to use Order for Pickup is the optimal solution to

During peak times (breakfast, lunch or dinner), which method do you think is the fastest to get your food?

Drive-Thru 33%

34%

28%

3%

2%

In-Person

Order for Pickup

Delivery

Other

Choose another restaurant

I would still go15%

18%

67%Decide based on if the parking lot/drive-thru looks full

How would long lines impact your decision regarding which fast food restaurant to go to?

Source: Rakuten Ready ROI Study 2020

Source: Rakuten Ready ROI Study 2020

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METHOD 1: Drive-Thru

Note: Drive-Thru wait times were tracked from the time the person ordered their food to when they got their food. Order for Pickup was measured from the moment they left the car until they received their food.

Drive-Thru ObervationsBesides wait time, additional factors can cause consumer dissatisfaction with Drive-Thru:

› While there may be few cars in line, drivers withcomplex orders make it impossible to gauge the wait.

› Talking on the speaker seems impersonal and oftenlacks clarity.

› Perceived pressure from cars behind can make acustomer feel rushed.

› A long line at the Drive-Thru can make it impossibleto even enter.

Perception› Nearly 50% of respondents reported Drive-Thru was

their preferred way to order making it the top choice.

›

RealityActual Drive-Thru times ranged from 3.9 to minutes. When compared with the Drive-Thru, Order for Pickup, on average, was 1.7X faster:

› 1.4X faster at Burger King

›› 1.4X faster at McDonald’s

›

SECTION 1: THREE METHODS OF ORDERING—CUSTOMER PERCEPTION VS. REALITY

Order for Pickup is faster than Drive-Thru

1.7XF A S T E R

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METHOD 2:

In-PersonPerception› Nearly 40% of respondents reported this was

their preferred way to order, making it the secondmost popular choice.

›method for getting their food during peak times.

RealityActual times ranged from

› Wait to order: 1.9 to 4 minutes› Wait for food: 3.3 to 3.9 minutes›

When compared with in-person ordering, Order for Pickup, on average, was 2.4X faster.

› 1.9X faster at Burger King

›› 1.6X faster at McDonalds

› 3.6X faster at Taco Bell

In-Person ObservationsMany factors can cause dissatisfaction with In-Person ordering:

› A full parking lot.

› The line isn’t always an accurate indication of wait time.

› Hard-to-read signage or menu boards.

› Confusion over where to stand while waiting for food.

Note: In-person wait times were tracked across two metrics: from the time it took to wait in line to order, and from the time it took to complete their order and receive their food.

SECTION 1: THREE METHODS OF ORDERING—CUSTOMER PERCEPTION VS. REALITY

Order for Pickup is faster than In-Person

2.4XF A S T E R

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SECTION 1: THREE METHODS OF ORDERING—CUSTOMER PERCEPTION VS. REALITY

METHOD 3: Order for Pickup

Perception

› Only 10% of respondents rate Order for Pickupas their preferred way to order, making it the third choice,just above delivery.

› It was ranked as the third choice in what they believedwould be the fastest method for getting their food during peak times.

Reality

› upto 2.4X faster by eliminating the wait time to order in-person.

› In addition, 75% of customers report that skipping a long line is thetop reason they would choose Order for Pickup.

There were numerous factors that contribute to a superior customer experience with Order for Pickup:

› Much faster wait times and additional order throughputsince food is ready the moment the customer arrives.

› Food quality at its peak – given that it wasfreshly prepared.

›better brand experience

› Ability to verify order and correct any mistakes.

› A better value since the customer does not pay anydelivery fees or higher menu prices

Order for Pickup

faster experience— Up to 2.4X FasterComparison Chart of Total Wait Times by Channel (in minutes)

Drive-Thru In-Person Order for Pickup

Burger King 3.9 2.9

Chick-Fil-A 8.1 2.7

McDonalds 4.7 3.3

Taco Bell 1.6

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THE CLEAR WINNER:

Order for Pickup14

SECTION 3

Making Order for Pickup Work For YouEvolve the Infrastructure.A successful Order for Pickup program often comes down to the logistics and training that play into a top-tier customer experience. Something as simple as the location of customer pick-up areas, signage or designated parking area for mobile order customers will not only lower wait times, but will have a positive impact on customer perception.

› Provide clearly marked, exclusiveparking spots and designated parkingarea for mobile order customers

› Add easy-to-read signage showingcustomers where to pickup orders

› Properly identify dedicated pickuplines that help cut wait-time andimprove customer experience

› Establish separate prep lines formobile orders

Optimize Technology.Technology is a key part of making this shift a success, and an important component is bringing in technology from an outside partner as needed. Prioritizing the app experience and adopting other innovations like predictive arrival technology offer a

› Alerting employees to exactly whencustomers will arrive so the order isready at peak quality

› Delivering a great experience forcustomers by allowing them to “skipthe line” and have their order waitingfor them.

› Contributing to fewer order mistakesand better customer experience.

› Personalizing or upselling an orderbecause of ownership of thecustomer data.

Promote It.It’s essential to put promotional muscle behind the program to entice customers to try Order for Pickup to realize the advantages of saving time and receiving fresh food faster.

Here are some ways to encourage trial:

›customers with a discount.

› Provide a free item with purchase forOrder for Pickup customers

› Develop special mobile order menuitems that are only available on the app

› Extend extra reward or loyalty pointson Order for Pickup purchases.

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SECTION 4

Key Takeaways: Seizing the OpportunityToday’s on-demand consumers are more demanding than ever. They are raising the bar constantly, hoping that their favorite brands can keep up. Our research highlights key insights into how to succeed with Order for Pickup:

Improve ROI by shifting the customer order mix towards

Order for Pickup with a frictionless ordering experience.

Change customer perceptions about the Drive-Thru experience so they will shift their behavior towards mobile ordering.

Accommodate Order for Pickup growth by reprioritizing infrastructure, technology and resource decisions.

Focus on shorter wait times and more accurate orders,

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SECTION 5

The Rakuten Ready Solution

Increase demand. Grow revenue.Drive brand loyalty and revenue with promotions to a high-value audience of

that bring customers into your locations.

No more waiting customers. No more late orders. Rakuten Ready ARRIVE decreases wait times and increases operational

Using real-time data, sophisticated algorithms and machine learning,

employees – eliminating the guesswork, so orders are ready on time.

Know your data. Wow customers. ARRIVE includes real-time, customizable alerts to manage your arrival queue to assist with streamlining your operations, reducing backlog and increasing personalization. An analytics dashboard makes it easy to dig into key metrics, including dwell time and length of time at the site, to ensure data-backed decisions on how to improve your customer experience.

LEARN MORE

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APPENDIX

MethodologyOrder for Pickup

›Time Study.

› Pickup was done in the store, and required the customer to interact with an employee to retrieve their online order.

›gather this data. In order to collect this information, Rakuten Ready commissioned a group of test shoppers (aka “secret shoppers”) who

grocers, retailers, and QSRs to pick up their orders, all while capturing 16 data points to assess the order pickup experience.

Drive-Thru › Data was sourced from QSR Magazine’s Drive-Thru

Performance Study.

› Source: https://www.qsrmagazine.com/drive-thru/fast-food-drive-

In-Person

Rakuten Ready commissioned a group of test shoppers (aka “secret shoppers”)

McDonalds, and Taco Bell). These secret shoppers also measured the wait

Our secret shoppers purchased a meal - drink, entree and a side. The observed orders ranged from drink-only orders to multiple meal orders. The average of these wait times was utilized in this study.

Revenue CalculationThe underlying revenue assumption is focused around peak time in a moderately sized QSR. During this time, QSRs have an opportunity to capture customers by reducing the friction around the other ordering channels to a faster wait time experience – Order for Pickup.

With this in mind, QSR can attain revenue growth due to two main areas:

1.

• Organic growth due to word of mouth around the faster Order for Pickup experience

• Line skippers who use Order for Pickup once they arrive when they see longer Drive-Thru or Order In-Person lines

• Increase in revenue from customers who now choose Order for Pickup over delivery.

• Order for Pickup orders are being picked up through these existing channels

• Additional revenue is now captured since the line moves faster and throughput increases

Research PanelAn online market research panel was conducted with SurveyMonkey. The

who have visited a QSR within the past month. The respondents resided in the United States and represented a cross-section of the population.

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