Digital restaurant orders growing at a double-digit clip

Dive Brief:

A new report from NPD Group shows that digital restaurant orders have grown by 23% over the past four years and now represents 3.1 billion visits and $26.8 billion — or more than 3% of the $863 billion industry. Digital orders are expected to continue the double-digit growth through 2020.
Most consumers order digitally for convenience. Other reasons include not having to waiting and earning rewards.
Mobile apps represent 60% of digital orders.

Dive Insight:

The positive trend line could explain why 70% of QSR operators plan to devote more resources to customer-facing technology like online or app ordering.

NPD's release paints a narrative that digital ordering's double-digit growth is surprising considering the bright spotlight shone on delivery as of late, and that may not be an inaccurate take. Delivery, however, is also growing at a double-digit clip, so perhaps a clearer picture is one that shows consumers wanting an omnichannel approach based on what is convenient for them at the time.

These growing conveniences also include click-and-collect, catering and order-ahead drive-thrus like what Chipotle is doing with its Chipotlanes and Cava with its pick-up-by-car service. Accordingly, 66% of restaurants now offer third-party delivery compared to previous surveys where 44% of restaurants were offering or considering it, while 67% say curbside pick-up operations are more important than it was two years ago.

Still, there's plenty of reason to focus on digital ordering. Deloitte Digital, which Chipotle consulted with on the development of its mobile app two years ago, said diners spend 13% more at fast-casual chains like Chipotle while ordering online.

Further, digital ordering can provide a comprehensive strategy for restaurants, particularly since most digital orders come from mobile. Brands can leverage the all-in-one functionality of mobile apps — including digital ordering, loyalty programs and payments — and mine the data from that full customer journey accordingly. The loyalty piece is a particular benefit, as the success of Chipotle's program has shown. Chipotle grew digital sales by 100.7% and accounted for 15.7% of sales, or $206 million, during the first quarter. For those restaurants that are fully built out with mobile order capabilities, CEO Brian Niccol said digital orders can make up to 30% of sales.

Focusing on digital ordering also allows a restaurant to cultivate brand loyalty against the growing number of third-party delivery apps. While restaurant apps or websites process 70% of orders versus 30% through third-party marketplaces, those same third-party aggregates make up 40% of the 20 most used apps. Any competitive advantage for restaurants against this rising competitive threat, particularly on the same mobile playing field, is worth an investment.