Episode 4: Restaurant Consumer Drive-thru Behavior & Loyalty Programs

Tracy Henderson:
Welcome to the newest installment of Revenue Management Solutions, Revenue Stream. I’m Tracy Henderson, founder of Center Reach Communications. I’m here with RMS’s VP of Consulting Services, Chris Norton and Christina Norton, RMS’s Director of Behavioral Research. It’s not a surprise that their names sound similar. They are actually married, and have worked together, since the 1990s. Kudos to both of you, and thanks for being here.

Chris Norton:
Thanks very much, Tracy wonderful to be here. 1990 sounds like ages ago and it…It really was.

Christina Norton:
Yeah, we’re happy to join and ready to share some of our recent insights.

Tracy Henderson:
Exactly, Christina, we’re here to talk about RMS’s most recent consumer survey. It’s the fourth in a series that RMS launched in April. To help give their clients something to go on, as the pandemic took over. This particular survey is focused on loyalty and drive-thru. and had 830 US consumers, that responded. So I was very surprised to see that 75% of respondents, had visited a drive-thru at least once in the past two months, 75%. And when you segment the data, those numbers went up to, 88% for families, and 85% for the younger generations, Gen Z and millennials. Chris, you work with some of the biggest brands in QSR today, where these stats surprising? And do you think these trends are here to stay?

Chris Norton:
Yeah, I think When we went into the COVID experience, Tracy, there were a lot of surprises awaiting us, because we really couldn’t predict what was coming down the pipeline. But, you know, the bottom line is that, in quick service, drive-thrus, play a predominant role in the revenue streams. As you noted, 60, 65 percent of revenue is with drive-thrus. And what we’ve seen with the… During the COVID pandemic is that, got up into the 80, 85 percent. I don’t believe that this is something that’s going to go away. I think that what happens in these types of situations is that, what was once a new behavior for a consumer becomes something that’s a regular behavior. And I don’t see that going away. I think that the whole concept of dining out, of getting your food has moved from, you know, six out of 10 drive-thru, four out of 10, going into the restaurants, it’s become more of a drive-through scenario. And I don’t think that’s going to change. I think that’s something that most of the big brands have recognized, even many have started before COVID, to focus on how to maximize the drive-thru experience, and maximize the revenue from the drive-thru experience. And those who did that before the pandemic, have certainly put themselves in a good position, but we’re… This is here to stay. This is not something that’s going away.

Tracy Henderson:
What are you seeing in terms of focus from some of your clients, as it relates to this new eight out of 10 consumer?

Chris Norton:
Well, again, I think, one of the things that we’ve seen and that we’ve talked about with these brands is, how do you take… How do you make the drive-thru experience into a personalized journey, for each of the individuals? I think that over the last number of years we’ve really looked at how the whole concept of marketing has moved away from marketing to the masses, to marketing to one. And I don’t think that’s changed at all. I think that has changed the whole drive-thru experience where in years gone by, you know, if someone decided to go to a drive-thru, here’s your static menu board, pick what you like, and hopefully, it gets into the bag everything that you’ve ordered, and then, you’ve gone away. I think what we’re seeing now though is the emphasis on, how do we ensure that when a consumer has selected our brand for a drive-thru, we can maximize the revenue of that consumer, when they come to us? As I mentioned previously, there’s several big brands who have got on the drive-thru focus, and how do we personalize that journey, even before COVID. And those are the ones who are in a wonderful position, because they got a head start. But, you know, we see the, when I talk about the personalized journey, we see, how brands are focusing on their consumer even before they’ve arrived at the drive-thru. We’ve talked about the geo fencing, and how you identify consumers that are in your area. And they use technology, which is essentially, through your mobile device. There’s a perimeter around your restaurant, that essentially alerts the restaurant that, a loyal customer, you know, we’re talking about loyalty, well, loyalty as well, a loyal customer is in your area with their app. And what the brand will try to do is to appeal to them, through that mobile device, to come and utilize the drive-thru experience. That’s just the step one. So they haven’t even arrived at the drive-thru yet. They’ve been identified as a potential consumer, who has some loyalty or has the app. They come to the restaurant to the drive-thru, and that’s the first step in that personalized journey.

Tracy Henderson:
Yeah, it was interesting, also from the survey, Christina, this might be something you wanna talk about, as the Director of Behavioral Research. Food ranked fourth, in the things that are most important about the drive-thru experience. That was really surprising to me.

Christina Norton:
Yes, that’s right. In our survey, food actually ranked fourth, in importance behind, speed, accuracy and service. I think, you know, we expected factors having to do with convenience and getting the order right, to be essential. But service is an interesting one, from our open text comments on our survey, we see how much customers actually value, a friendly voice, the audio quality of the speaker, the microphone, whether the order taker double-checked for verification and even like the final pleasant send-off. So these service details were clearly impactful and were top of mind. we also found that 50% of the consumers, would not return to a given drive-thru after a bad experience. So, they reported switching behaviors** as being, certainly perceived and relatively easy to do. So switching to another option or another brand. So service matters and experience matters. I think also, you know, convenience might be the word and was frequently associated with drive-thru. But wrapped in that, is the concept within convenience is, consumer seek an enjoyable and a seamless drive-thru experience.

Tracy Henderson:
Yeah. You know, you talked a little bit about, people being fickle. if they, like they had a bad experience, so, I imagine we didn’t talk about this, I imagine if there’s a line 10 deep, I don’t need to go to QSR one, I’m going to go to QSR two. Where does the loyalty play into that? And, was the survey helpful or insightful as it relates to the loyalty program?

Christina Norton:
Yeah, the loyalty program really is key. And you see the technology that goes with that loyalty program really enhances the experience. So greater convenience, less friction, and more of, like you said, personalized experience. And of course, the added bonus of those, the access to special promotions. That’s still number one, that’s the number one reasons, consumers report why they join a loyalty program. And loyalty programs are really the opportunity to grab, certainly market share, but particularly, a younger audience. And they are those younger audiences, say, Gen Z and millennials are more likely to join loyalty programs and they value the convenience. So they specifically point out that convenience factor that they provide. And I think it’s important to note, you know, many brands like Chipotle, record numbers of new members joining their loyalty program since the pandemic.

Tracy Henderson:
What were the numbers as it related to your survey respondents? Loyalty program or?

Christina Norton:
Yeah, 25% referenced a new program that they joined. So that’s, you know, its across all age groups, in general.

Tracy Henderson:
Interesting. Chris, you talked about geo fencing and the ability, because I’m a loyalty app user, you can track me coming into the parking lot. You know, how important or what other technology do you foresee, really, grabbing hold, given this, you know, rapid change we’re seeing?

Chris Norton:
Yeah, I think one of the things that I have been very impressed with in terms of, the drive-thru strategies that we’re seeing in the implementation of technology is just, the focus, as we talked about, that personalized journey. But, the focus on getting the right content at the right time, based on real-time data. Okay, so, we’ve established the fact that geo fencing which is the perimeter around the restaurant that identifies when an app user is in the area, where an offer could come up to entice them to come. Once they get in the drive-thru and you’ve taken that first step in their personalized journey. It’s that as, as you rightly mentioned, it’s understanding who your consumer is, as early as you can in that process. And there’s various technologies that exists. One of them is the license plate recognition. Where the consumer comes in, and again, this is permission-based, it’s still in the early stages. But once they come through your drive-thru, they can be identified by their license plate. And with that is, it’s their ID tag to say, hey, here’s your loyal consumer that’s shopped with you or purchase from you, X amount of times over the last number of weeks. Here’s what their purchase habit has been, which will drive into this thing called a suggestive sell engine. The suggestive sell engine, is the technology that, the majority of the quick service brands are developing right now, that enables the brand to, while the consumer is making their purchase decision or while they’re giving their purchase decision, this suggestive selling board, which is on their digital menu board, is in real-time suggesting to that consumer, based upon their, combo number one, for example. That here are some other items that we suggest, might be appropriate for that purchase. And those suggestions can be based on things like, time of day, the current weather, the days of the week, you know. So it’s really getting deep into, or, you know, when I talk about the weather, it’s freezing cold out, so a hot drink or something more of a comfort, might be something that’s suggested but it hasn’t been ordered. So, the whole suggestive sell engine, is really, a very technologically driven way for the personalized journey to be developed, as well as build revenue, right. It’s an upsell, essentially what’s happening. In fact, that even starts before they get to the main menu board, that starts at pre-board, at the pre-menu boards. So if you’re waiting in line and there’s three, four, five cars, you get into that line, how can you keep that consumer interested in what they’re doing and how can you start to plant in their mind, perhaps changing their order? I think there’s this statistics that, I think Christina and the survey came up with that. Was that, 78%, never or rarely change their order based on the drive-thru operator, yet 61% are influenced by menu boards. So if you’ve got six out of 10 of your consumers with the opportunity to trade them up, or to have, you know, additional add-on items, that’s a huge opportunity for a brand, in terms of driving that revenue. So, the pre-board can plant in the mind of the consumer and need state, whether that’s a drink that’s being poured, whether that’s just the look of a really tasty burger. And then as they move to the digital menu board where, you know, the huge percentage, actually know exactly what they’re going to purchase, but how can you get them to alter that behavior in terms of trading them up or, having that incremental, additional add-on ? That’s what that suggestive selling engine does. It takes those macro environmental factors in, temporal factors in, and really does a good job in enhancing that purchasing experience, as do the confirmation boards, the menu confirmation order board, where you can see when you’re making the order, with your order taker, what is coming up, in terms of the overall order. So, the technology in terms of that is really really growing in leaps and bounds. And the ultimate objective is, to increase the revenue spend and to ensure that the consumer understands what their options are, without slowing down the speed of the drive-thru service.

Tracy Henderson:
Christina, you’re the…. You know, “human” part of this equation. “Do you want fries with that?” Doesn’t seem like it’s relevant anymore. And it seems like, based on those stats that Chris just mentioned that, the human touch is far less effective, in, you know, at least maybe driving check size. What is your opinion on, you know, are we turning into bots?

Christina Norton:
I would say not exactly. So, you know, the drive-thru experience can be overwhelming, and it’s multi-sensory, it’s also multitasking. Imagine you’re reading the menu board, while you’re listening to the order taker. So, that’s challenging, especially for a first time user. And when you look at the reported reactions and behaviors from the survey, to me they suggest, the consumer refers to the menu board and advertising panels or pre-menu boards, when it comes to influencing their menu choices. And I think they seek the human touch for creating the positive experience. So, I described that as like, putting a smile on your face or in your voice, and you know that’s the hospitality component. That’s how I read the results of our surveys on that front. You know, we also, Chris mentioned, you know, the incentives and the suggestive selves, and that’s really important, no doubt, but, it certainly, also initially attracts a customer, when you talk about loyalty programs and these type of incentives. But, you know, we’re also talking about creating bonds with the brand and that’s, I think the key for bringing people back. And that goes beyond being loyal to the loyalty program. If you know what I mean?

Tracy Henderson:
Yeah, I was surprised we talked a little bit about this that loyalty users of the younger generations were more likely to engage with, social media for that brand, perhaps say, they’re going to be users of social media more than a Gen X, or like me or a baby boomer, but, is there a sense of, you know, finding a community in this isolation? Christina Norton:Yeah, and so we saw 60% of Gen Z and, or over 60% of gen Z and millennials, engage with these brands on social media. So, absolutely I think you’re right. They seek community, a greater connection to the brand. And I should also say to the culture, that comes up in the open text comments quite regularly. And also not minimizing the impact that, and the value that the younger generations attribute to the convenience, through technology. So I think those are two key differentiators that we see coming out of the younger generations. And how they, what they’re looking for and how they describe the benefits of a loyalty program.

Tracy Henderson:
Yeah. That makes sense. Well, and speaking of the younger generation, you know, ladies first or men first, what do you both see on the priority list for restaurants in 2021 and beyond?

Chris Norton:
Well, I think that, you know, if we think about what we’ve been through, since the middle of March, in term of our experience at restaurants, certainly safety has become one of the, you know, I think one of, the top, the number one topic or concern that consumers have. You know, when you think about, even when, you know, we focus on drive-thrus, there were still many consumers who are hesitant to go to the drive-thru, because it’s not contactless. Because the bag is still being handed out the window, to the person who’s purchasing it. That’s something that’s, certainly, is certainly a focus on the changing role of the drive-thru and how we can maximize that experience. But, I think safety is a big piece in terms of priorities, moving forward, as, you know, as we get through this pandemic, but I don’t think it’s going to change in terms of, the consumers and how they approach that experience.

Christina Norton:
I just want to jump in there. I was truly interested in, and it’s positively so, in finding out that the results of our survey, when it comes to safety protocols and best practices, the results showed that respondents really have a high level of confidence in restaurants and the restaurant industry, and particularly large chains and how they’ve handled COVID. And I think, you know, asking what is the priority for restaurants, you know, definitely going to the data and more than ever how important data is, it in terms of, not only, imagining that personalized, and realizing that personalized journey that we talk about. But, you know, looking at actual behavior and responding to those trends that we see, enable restaurants to change and adapt very creatively. And again, that comes down to the data.

Tracy Henderson:
Yeah. Chris, you mentioned data earlier, any final thoughts?

Chris Norton:
Well, I mean, you know, we’ve… We know that data is the most valuable currency in the world right now, cause that’s, In order for the things that we’ve spoken about today, be it loyalty or be it the drive-thru, data is the engine that drives the technology that really is utilized to make more money, and to create a better experience for the consumer. It’s the lifeblood, it’s the DNA of any brand. You know, we talk about with RMS and pricing, the POS data, that we receive on a weekly basis from the brands that we work with, at a restaurant level, it’s that restaurant’s DNA, right? It’s the uniqueness of that individual restaurant and the consumers that visit that restaurant. So data is the driving force behind any of the technology, that is developed, in order to ensure that the consumer is having their expectations met, and that the restaurant is maximizing the revenue opportunities. One thing to keep in mind though, is that, you know, even data and even, you know new technology is not gonna speed up the kitchen process per se. Because, you’ve got people back there. Christina was talking about the order taker. You know, we know we have… You know, we have ways of actually going, getting around the order taker with technology in terms of natural language programming, where we say something and then it’s automatically into the POS. That might take that individual out. But, right now, in terms of the kitchens and what’s going on in the kitchens, where we have great technology, where we’ve got the data that we can maximize, if what’s going on in the back of the house, isn’t up to speed or following what’s going on with the technology and the data. There’s still a big challenge here. So, for me, when we talk about, what are the trends, I mentioned safety, I think it’s data. But the marriage of data and the human element in order to then deliver that product, cause you have to have those people who are making the product and delivering it in terms of the brand promise.

Tracy Henderson:
This has been so interesting for me and I think gives a little more data, for operators, your clients, and really all of us, to think about, as we drive forward into this strange new land. Thanks for being here with us.

Christina Norton:
Thanks so much, Tracy.

Chris Norton:
Thank you, Tracy.

Tracy Henderson:
Thank you for joining us today. To stay up to date with Revenue Stream, and RMS’s new insights, go to, revenuemanage.com, or follow the brand on LinkedIn, Twitter or Facebook. Thank you for being here.