Mobile Payments in Transition

If one term could describe the state of mobile payment in the restaurant industry, “moving target” is it — at least based on operator uncertainty as to how to embrace the trend. However, research indicates a willingness among diners to embrace mobile payment technology. For example, roughly 25 percent of consumers queried for the National Restaurant Association’s (NRA) 2015 Restaurant Industry Forecast deemed technology options important features that factor into their choice of restaurant, up from less than 20 percent the previous year.

Restaurant operators are taking notice: Of QSRs polled by the NRA for its 2014 Restaurant Trends Survey, 35 percent said they have already deployed mobile or wireless payment technologies, and 20 cited plans to follow suit within the next year. Fifteen percent of fast-casual restaurants also reported having mobile or wireless payment technologies in place, along with 14 percent of family, and 11 percent of casual and fine-dining establishments respectively. Twenty percent of QSRs that had yet to take the mobile/wireless payment plunge claimed they will do so over the next year, as did restaurants in the fast-casual (14%), family (10%), casual (7%) and fine dining (3%) segments.

“There’s no question that mobile payment” via smartphones and tablets, as well as at the table, is growing in importance, says Jackie Rodriguez, a senior manager with research firm Technomic ( Thirty-nine percent of respondents to a survey conducted by the firm last year said they were “interested” in mobile payments. Such interest appears to be particularly marked among younger consumers. When asked whether they had any interest in making payments via a mobile platform, 56 percent of Technomic survey participants ages 25 to 34 answered affirmatively.

Smartphones require smarter business practices
Not surprisingly given heavy smartphone penetration (70 percent of all adults in the U.S. own these devices, according to the NRA’s 2014 Technology Innovations Consumer Study), smartphone-based mobile payment platforms are exhibiting traction. In its 2014 Restaurant Trends Survey, the NRA found that 11 percent of adults had paid for a meal using a smartphone, with nine percent claiming to do so once a week and 26 percent a few times a year.
Whether operators implement mobile wallet acceptance — as has been the case with McDonald’s ( and Subway (, which now accept mobile payments via ApplePay —  or incorporate payment acceptance capabilities into their own white label apps, they won’t maximize the potential of their platform without going further to appeal to customers. This means integrating other features to the payment component such as loyalty and order-ahead capabilities.

“We’re finding that mobile payment often isn’t enough to get consumers to download apps, because they only have so much ‘real estate’ on devices,” Rodriguez notes. There needs to be a “push.”

Some operators are getting the message. As part of its Panera 2.0 initiative, which also involves the deployment of in-store ordering kiosks and the introduction of table service, Panera Bread ( rolled out a Rapid Pick-Up (RPU) program wherein customers can use a Panera-branded iPhone app not only to pay for takeout orders, but also to place these orders before arriving at a Panera store and finding them on designated shelves. During a February 2015 earnings call, Panera founder and CEO Ron Shaich said initial customer reaction to the app warranted the fast-tracking of  RPU from limited to chain-wide rollout — ahead of kiosk and table service.

Additionally, in a presentation delivered during the Forrester Research ( CXNYC 2015 conference this past June, Blaine E. Hurst, executive vice president and chief transformation and growth officer at Panera, said the chain receives some 45,000 digital orders daily, and that more than two million customers have downloaded the app. Digital orders account for nine percent of all orders placed.

Starbucks (, which reportedly processes nine million mobile payments per week chainwide, is poised to launch an enhanced version of its mobile payments app by year-end. With this new version, customers will be able to order customized beverages as well as view wait times in individual stores before deciding where to pick up their drinks.

Meanwhile, Wow Bao (, the five-unit fast-casual arm of Lettuce Entertain You Enterprises, teamed with Mocapay ( to develop a mobile payment app that functions as a mobile wallet but also incorporates loyalty, gift card program and other functionality. Customers earn one point for joining the loyalty program and one point for every dollar spent at Wow Bao. Once patrons have accrued 50 points, a $5 credit is automatically provisioned to the app via the mobile wallet component. Other features include, but are not limited to, the ability to purchase, reload and send gift cards through the app; receive in-app messages about promotions, campaigns, specials and new products; and request payment tokens for secure payment.

Geoff Alexander, Wow Bao’s executive vice president and managing partner, said in a statement that the company perceives the app as a means of engaging existing customers and attracting new ones while simultaneously giving consumers the payment flexibility they demand.

Mobile Transactions Transition to Tableside 
The smartphone-based mobile payment platform isn’t the only one that’s changing to meet customer and operator preferences. Operators are looking at alternatives to traditional mobile payment platforms used to settle checks at the table. Dickie Brennan & Company (, operator of four restaurants in New Orleans, (Dickie Brennan’s Steakhouse, Palace CafÉ, Bourbon House and Tableau) comprises a key example.

Dickie Brennan wanted to increase serving efficiencies and accommodate customers’ desire for alternative payment methods. Another goal was enabling the company to accept chip-enabled cards before the EMV liability shift took hold in October 2015. After this point responsibility for fraudulent card present transactions would fall on its shoulders if its point of sale system could not accommodate chip-based card payments, explains Derek Nettles, director of IT. The company also wanted an aesthetically pleasing solution that would be easy to use and therefore more acceptable to a wider base of diners.

The operator eventually deployed RAIL, a Wi-Fi-enabled platform from TableSafe ( Unlike tablet-based mobile payment systems for pay-at-the-table applications, the RAIL units look like leather-bound folders used to present diners’ checks. To settle their tabs, diners open the folder, choose from among payment methods presented on the screen (credit or debit card, cash or PayPal), add a tip and sign the screen with their finger. A default tip option of 20 percent is offered, and the system allows bill-splitting among patrons. An LED light on the outside of the folder — a customized feature added to the system at Dickie Brennan’s request — indicates which stage the transaction has reached.

 “Customers want to be able to handle payments this way, but they don’t like it when the server has to hover around the table trying to figure out when the check has been paid,” Nettles states. While some older diners prefer to pay “the old-fashioned way,” he notes, most have embraced the system and the high volume of customers from Europe, where pay-at-the-table is the norm, say “it’s about time fine dining got on board” with such technology.

 “One concern about mobile payment is data security, but the data is encrypted, which takes care of that issue,” Nettles states. He adds that the system has increased table turns by five to eight minutes and boosted tips by two to three percent because 85 percent of patrons opt for the default tip. The untraditional configuration of the mobile payments platform also permits Dickie Brennan to harness it to elicit diner feedback. The system maintains a bank of 25 questions pertaining to the overall dining experience, food quality, service quality and more. Each diner is presented with three “yes and no” or multiple choice questions along with the check. Two questions are randomly selected. The third is always about the dining experience, with customers asked to rate it “excellent,” “good,” “fair” or “poor.”
Nettles believes mobile payments in general, and mobile pay-at-the-table systems, will become a staple for fine-dining establishments. “Customers are demanding it, and systems will be adapted,” as Dickie Brennan’s was, to meet specific needs, he concludes.
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