What McDonald’s Needs to Learn from Starbucks’ Mobile App

By David Mostovoy

mcdonalds vs. starbucks.jpgOne of my least favorite phrases is “victim of its own success.” For instance, I remember that was the reason why a popular fireworks show on a riverbank was canceled. It was so popular and drew such large crowds that the police couldn’t handle the public safety demands. It became too costly—a victim of its own success.

I don’t know about you, but if a program is going to fail, I always want it to be an outright flop, not because it’s so popular that the infrastructure needed to make it successful isn’t there. However, that was the headline for Starbucks’ mobile ordering and pay app. By the numbers, 1,200 U.S. Starbucks locations saw a 20% jump in mobile pay and ordering during peak hours, which caused such bottlenecking at the counter, then sales were hampered and foot traffic fell. Let’s just say the spike in traffic got a little too hot for the coffee giant.

But a 20% jump in mobile pay and ordering? It’s an excellent problem to have, if you can handle it! As cited in the Chicago Tribune, a Deloitte study revealed that customer visits in fast-food increase by 6% and spending rises 20% when technology is used to place an order. You can see why more and more chains are pushing for mobile ordering.

When I heard that McDonald’s is about to jump on this bandwagon, I started to feel some mild level of concern. This is a chain that isn’t just preparing coffee, but a number of food items, and some of their problems with execution have, in recent years, been well-documented. But CEO Steve Easterbrook seems to understand the challenge ahead. "We've been very mindful that if we're going to be creating demand, can we meet that demand?" he told CNBC. “Can our kitchens keep up and our managers do a great job? So, we will actually link from end to end as you place your order, and it's integrated into our kitchen operation so we can actually meet the demand that we'll be creating, so we're confident there's no hurdles as we grow our business."

The Chicago Tribune reported on some specific adjustments McDonald’s is making as it tries to regain the 500 million U.S. customers it has lost since 2012, when it phased out the Dollar Menu. Kitchen assembly lines are getting shorter to allow for more volume, while rows of order kiosks are being added to scan phones and bring up personalized orders and custom offers. Parking lot spaces will be dedicated for curbside pickup.

Unlike Starbucks, McDonald’s will incorporate location-tracking technology to notify the kitchen when a customer arrives, and to therefore avoid filing an order too early. McDonald’s app will send a notification to mobile customers once they enter the parking lot, giving them a choice about how they pick up their food, counter or curbside. And perhaps the best feature—I say this as someone who once bought movie tickets for the wrong theater—customers can place an order and pick it up at any McDonald’s location. Now THAT is innovation and communication across a chain!

Meeting Operational Needs

Easterbrook has said mobile pay and delivery, which McDonald’s is also expanding, is about “meeting customers where they are.” I think McDonald’s has also learned it’s about meeting their restaurants’ needs where they are—hence all the preparation and store-level updates. From what has been reported, it doesn’t sound like Starbucks took enough precautionary measures to meet the elevated demand. Something was not measured and planned for correctly.

For McDonald’s specifically, this will come down to kitchen and counter execution because for fast-food, it’s really all about the food. Let’s face it: If you were going on a date, are you choosing the ambiance of Starbucks (and assuming it’s not a peak-hour rush) or a McDonald’s? But hey, maybe you ARE going to McDonald’s because you and your date want to try one of those new fresh burgers they’re cooking up. (In that case, you’ve found a keeper and my advice is to get married at the nearest chapel on the way home.)

But seriously, it all comes down to food and whether the customer wants to return. One thing you can say about McDonald’s: When you thought they were against the ropes, they’ve fought back by embracing new opportunities through technology. I’m rooting them on during their comeback.

Food for Thought

Are you a restaurant operator that’s exploring new technologies, particularly mobile technologies?

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