Anthony Edwards, the second-year player for the NBA’s Minnesota Timberwolves, asked members of the press to hold off asking questions after a game earlier this month. The reason? He wanted to order McChicken sandwiches from McDonald’s, using his app.
The order provided the burger giant with a bit of free advertising. It was also a demonstration of consumers’ rapidly growing use of their phones to make their fast-food orders.
More than a quarter of the sales at McDonald’s restaurants in its six biggest global markets are now coming through digital channels, for instance. The biggest driver of that, executives said, is the company’s MyMcDonald’s Rewards loyalty program, introduced last year, which now has some 21 million active users.
Yum Brands, the Louisville, Ky.-based fast-food giant, last year generated $22 billion in digital sales alone. That was an increase of 25% over 2020. A lot of that is coming through delivery—more than 45,000 of the company’s 53,000 global restaurants in its four brands now offer the service.
“We’ve seen strength across all our brands,” CFO Chris Turner told analysts. “Delivery has continued to grow. Carryout has grown over the two years. And, of course, people have come back to the dining rooms, so we’ve seen growth in the kiosk business.” That’s been particularly helpful at Taco Bell, which now generates 20% of its sales through digital channels, including its self-order kiosks.
Restaurants have been pushing their digital channels for years, with consumers demanding convenience and just about all of them equipped with tiny pocket computers with Internet access. Yet, for the most part, they found themselves well behind pizza chains on the digital front.
While companies like Domino’s, Papa John’s and Yum’s Pizza Hut got a majority of their orders through digital channels, traditional fast-food chains’ growth on that front was slower. The pandemic changed that. And in 2021 consumers flocked even more toward digital as they largely avoided walking into fast-food restaurants.
It’s worth noting that digital orders are far more popular in some other markets than they are in the U.S. KFC in China, for instance, gets 46% of its orders through digital channels. Starbucks in China got 38% of its orders from digital channels in the last three months of 2021.
Restaurants love digital orders. They are as a rule more profitable because an employee isn’t the one taking the order, the customer is making it. Those customers also take more time making the order and will often add products they might not get if they were standing at the counter. The mobile app never forgets to suggestive sell. And the companies get the data from those orders to make future decisions.
The shift toward digital orders has played a role in the increase in average check at fast-food chains. Customers are coming in less often but ordering more when they do—and, of course, paying higher prices in the process.
Brands have thus focused much of their marketing on the digital side. A lot of that is focused on loyalty programs, such as the one at McDonald’s. Yet even older loyalty programs, such as the one at Starbucks, are seeing strong demand. The coffee giant said it saw strong growth for its loyalty program last quarter and it now has 26 million members.
Starbucks has traditionally had a strong digital presence. But it has combined that with a growing use of more traditional convenience-focused ordering, notably its drive-thrus, to drive takeout sales. More than 70% of the chain’s U.S. sales now come from mobile order and pay, drive-thru and delivery.
Digital-only products and offers have proliferated. Taco Bell, for instance, launched a “Taco Subscription Service” on its app, giving customers a taco every day for 30 days for the price of $10. The chain also has a handful of online exclusives, such as the Quesarito.
McDonald’s, meanwhile, has been increasingly aggressive in its digital-only orders. For instance, its recent “Menu Hacks” promotion included one such hack, the “Surf + Turf” combination of the Double Cheeseburger and the Filet-o-Fish, that was available only on the company’s app and delivery.
And many of these chains are devising new strategies to boost digital orders even further and take some pressure off drive-thrus, which have been packed since the outset of the pandemic. KFC in the U.S. debuted its “Quick Pick-Up” service that combines mobile ordering with curbside service in an idea it believes could help customers avoid the drive-thru lane.
It’s an idea that was in place at Domino’s, which introduced its “Curbside Delivery” service during the pandemic, in part, to compete more directly with restaurants that have drive-thrus.
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