Facing falling sales, fast food turns to mobile payments

Burger King says it will introduce its mobile payment platform for smart phones next month, and Wendy's has been testing its own mobile payment app. Can the technology help reverse falling sales for major burger chains? 

Mobile ordering/payment apps are the current hot buttons, but will they provide the meaningful sales boost that quick-service burger-chain sales need so badly?

After lengthy field testing, Burger King says it will introduce its mobile payment platform for smartphones next month and will have it available systemwide by year-end. This push is in line with comments made during  last year’s Morgan Stanley Global Consumer Conference by Burger King CFO Josh Kobza: “Consumers are going to expect ordering online, and coupons on mobile. It’s something we all have to do. There are still open questions, but I expect to see it in the industry sooner than later.”

Wendy’s, too, has been testing mobile payment and now says it also will have the capability rolled out this year. McDonald’s continues to test its MCD app that provides discounts and news but doesn’t allow for online ordering or payment.

Quick-service restaurants are leaking customers. McDonald’s U.S. guest count was down 1.6% in 2013. I assume most of those departures are by higher-income and suburban consumers since lower-income and center-city diners have fewer options from which to choose. Will mobile payment bring back high-end defectors? And how likely are current QSR heavy users to use mobile payment?

Technomic data finds that 11% of consumers have paid for a restaurant meal using mobile technology and 46% of those users say the ordered through a restaurant’s app. That’s all restaurants, including pizza restaurants where most orders are made by phone.

Starbucks says that 14% of its U.S. in-store transactions now involve mobile payment. But that’s Starbucks, which draws the kind of consumer who has moved away from fast food. McDonald’s average drive-thru time of 189.49 seconds in last year’s QSR magazine study was its slowest ever, but will mobile platforms really speed that up?

Recall McDonald’s CEO Don Thompson’s remarks last October: “In the U.S., we continue to experience a bifurcation of the consumer base. McDonald’s core customers skew towards those customers whose disposable income is not rising as much and are spending a little bit less in QSR.”

Certainly some customers will use mobile ordering/payment apps from the burger chains, but I still believe the introduction of a popular new burger like the Big King, Ciabatta Bacon Cheeseburger or Bacon Clubhouse will do more to help sales than will anything digital.