Consumers are showing an increased interest in smartphone software – or “mobile apps” – that makes it easier for them to spend money in restaurants, according to two third-party aggregators of Internet foodservice business.
Both Kudzu Interactive, operator of the Snapfinger.com online ordering portal for restaurants, and OpenTable Inc., whose OpenTable.com is a real-time restaurant reservation and marketing destination, found that mobile apps are having a growing impact on how foodservice operations conduct business.
A number of restaurant chains already have proprietary apps for iPhone, Android or other operating system smartphones, including Culver’s, Domino’s Pizza, Pizza Hut and Starbucks Coffee, while other systems, like Papa John’s Pizza, have such software in development.
The small-footprint software apps used in the foodservice industry let consumers use their smartphones to do things like discover the frozen custard of the day at their local Culver’s, find the nearest Domino’s, compile or call up a favorite Pizza Hut order and place it, and add value to their Starbucks Card. Some work on other Wi-Fi enabled devices, such as iPads.
Some chains are avoiding the self-development route, however, and are getting mobile apps from their third-party service providers. Among them are the Hungry Howie’s chain, which relied on ONOSYS Online Ordering to serve up a mobile app, and the subscribers to the Snapfinger.com and OpenTable.com portals.
Mobile apps and portal user developments
Kudzu said its proprietary Snapfinger Apple iPhone app went live in December 2009, followed by the launch of an Android app in March.
In the first six months they were available, the Snapfinger mobile apps were used to generate $10 million in aggregate take-out and delivery sales from the 28,000-plus chain restaurants linked to Snapfinger, Kudzu said.
But it added that the volume of mobile orders has grown to the point where it now represents about 17 percent, or $5 million, of the $29 million in monthly orders being processed through Snapfinger at this time.
In terms of orders placed, Alpharetta, Ga.-based Kudzu said Snapfinger-related mobile apps now are used to generate about 200,000 of the one million transactions processed through the portal monthly.
In addition to featuring Snapfinger-branded mobile apps, Kudzu said it has developed branded iPhone apps for some of its clients, including Baja Fresh Mexican Grill, California Pizza Kitchen, Carrabba’s Italian Grill, Outback Steakhouse and Subway.
OpenTable Inc. estimated that its mobile apps, since their introduction in May of 2008, have helped consumers book visits to 15,000 subscribing restaurants. Those operations had associated aggregate dining sales of about $250 million. Representatives of the San Francisco Internet, marketing and guest-management services company said about 10 percent of all reservations made through its portal are booked on mobile devices.
As of Sept. 30, OpenTable said, more than 5 million diners have been seated via reservations booked on its mobile applications for the iPhone, Palm, Blackberry, Android, iPad, Nokia and Windows operating systems.
As is the case with a growing number of mobile apps, the users of both the Snapfinger and OpenTable apps can leverage the geo-location feature of their smartphones to identify restaurants near their current location.
Broader research findings
Technology research specialist Gartner Inc., which recently named mobile applications and media tablet computers one of 10 technologies of strategic importance to business in 2011, estimated that by the end of 2010, 1.2 billion people will carry phones capable of conducing sophisticated mobile commerce. Garnter pointed to hundreds of thousands of mobile apps already in existence.
“The quality of the experience of applications on these devices, which can apply location, motion and other context in their behavior, is leading customers to interact with companies preferentially through mobile devices,” Gartner said. “This has lead to a race to push out applications as a competitive tool to improve relationships and gain advantage over competitors whose interfaces are purely browser-based.”
However, research from the Pew Internet Project, which incorporated some data or findings from the Nielsen’s Mobile Insights survey of cell phone subscribers, suggests that the development of apps, and even the downloading of those apps by consumers, does not necessarily guarantee a positive outcome for restaurants and other businesses with apps.
Pew surveyed 2,252 U.S. consumers 18 and over in April and May, while the Nielsen research involved 3,962 adults surveyed in December 2009.
Pew discovered that while 35 percent of U.S. adults have apps on their phones, only 24 percent use them. It also said that 11 percent of adults are not even sure if their phone has any apps.
Kristen Purcell, associate director for research at the Pew Internet Project, said the research suggested, “The apps market seems somewhat ahead of a majority of adult cell phone users.”
However, Roger Entner, vice president and head of research and insights for the telecom practice at Nielsen, said the whole apps phenomenon “is a pretty remarkable tech-adoption story, if you consider that there was no apps culture until two years ago.”
“Every metric we capture shows a widening embrace of all kinds of apps by a widening population,” Entner said. “It’s too early to say what this will eventually amount to, but not too early to say that this is an important new part of the technology world of many Americans.”
Additional incentive for foodservice apps exploration
Such conclusions, when combined with foodservice-specific research about early technology adopters and their dining habits — such as was conducted by Technomic Inc. — are likely helping to spur further investigations into the development of proprietary apps, or consideration of using third-party apps, among restaurant operators.
Technomic found that 23 percent of 1,000 consumers surveyed might be classified as “innovators” or “early adopters” of new technologies like mobile apps, and that 72 percent to 83 percent of that combined tech-hungry crowd ordered from a quick-service restaurant weekly, versus 65 percent of other consumers.
It said 35 percent to 53 percent of the tech-centric group ordered from a fast-casual restaurant weekly, compared with 20 percent of other consumers.
Contact Alan J. Liddle at [email protected].
