Subway is learning that to get people into its stores, its mobile app has to be every bit as compelling as its menu.
"Forty-seven percent of the people who eat lunch at our restaurants make that decision an hour before they eat, and a majority of that percentage use the mobile device to make that decision," said Carman Wenkoff, Subway's CIO and chief digital officer, who is overseeing an acceleration of the chain's mobile strategy, which includes an influx mobile commerce specialists.
Subway has hired about 20 technologists from Avanti Commerce, a Vancouver-based company that develops Web-delivered digital ordering, engagement and payments technology. Subway, which is also acquiring a portion of Avanti, plans to add more technology staff as it transforms its acquisition into part of Subway's digital group.
For the quick serve category, mobile is an increasingly competitive channel. Patrons use mobile devices to find a local spot to eat that's within walking distance of their jobs, and to make this decision they want to see menus, pricing and delivery options. All of this has to be incorporated into the chain's mobile app, because it's very easy for people to simply choose another place to eat, Wenkoff said.
"Having all of that be user friendly is strategically important for the brand. If we can't reach people on that front, we'll lose market share quickly," Wenkoff said.
The Subway digital group is working on several different products, including new in-store scanners to power payments and digital couponing, e-commerce, mobile ordering, data-driven marketing and fraud prevention.
"The e-commerce plus payments integration will be a great thing for our franchises," Wenkoff said, adding the user experience for card-not-present and contactless mobile in-store transactions will be the same, and the loyalty programs accessed in one channel will be easily usable in another.
The new technology is not finished yet, but it involves a lot of integrating different experiences such as marketing, store location and transaction processing. Another goal is to tie geographic searches to data-driven user profiles, which then access menus, coupons and payments—all at the same time.
Avanti's specialty is building middleware, or technology that connects different platforms that power a business. The middleware will tie the mobile and physical points of sale to payment processing systems, consumer data management and marketing, all during the same consumer interaction.
"When we're done we'll have a different app with a more personalized experience and different interfaces that will be tailored toward a customer's preferences and habits — and what they have been doing at our restaurant and on our site," Wenkoff said.
Mobile payments have been generally slow to catch on with consumers in most merchant categories. But the technology has gotten the most robust adoption at quick serve restaurants, partly because the business and customer service model best fits the argument in favor of smartphone-driven commerce.
McDonald's, for example, has deployed mobile payments in markets around the world; and Starbucks receives nearly a quarter of its U.S. in-store transactions through mobile, in part by closely tying loyalty to emerging payment options.
Other quick serve chains such as KFC and Burger King launched contactless payments very early on. In some cases, quick serve restaurants are adopting experimental new technologies such as Pizza Hut's use of robot servers.
As for Subway, the new app is an acceleration of its relatively long history in mobile development. The chain used technology from Paydiant to power loyalty programs several years ago, and Mastercard's mobile technology as early as 2011. Subway was also quick to add Near Field Communication contactless payments so that it could accept Apple Pay shortly after the mobile wallet's launch.
"Subway has been proactive in adopting digital payment technologies such as Apple/Android Pay, Softcard and Paydiant," said Rick Oglesby, president of AZ Payments Group. "The quick serve space has seen some of the strongest adoption of mobile solutions, including at Subway, due largely to the ability enable consumers to pre-order, pre-pay and skip the checkout line. That’s a real-life, compelling improvement in consumer experience that works in today’s market."