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Chipotle invests big in mobile payments

Chipotle has announced that it will be investing $10 million towards integrating mobile payments in its branded application, showing how the quick-service restaurant sees a great value in entering the space.

Chipotle’s chief financial officer John Hartung announced these plans during an earnings call in late January. A rough version of the mobile payment solution is already being tested by select employees, but the QSR is still experimenting before rolling out a public app update.

“Mobile payments, when executed properly, have demonstrated strong gains in line speed throughput,” said Drew Sievers, CEO of mFoundry at FIS, Larkspur, CA. “This is a critical component for quick service restaurants who are focused on driving volume through their points of sale.

“Putting the payment scheme inside of their branded app makes complete sense,” he said. “Historically, we have seen consumer dissatisfaction when a brand offers multiple apps.

“Ultimately, consumers don’t want three apps from the same merchant. They want one app that serves their needs.”

Mr. Sievers is not affiliated with Chipotle. He commented based on his expertise on the subject.

Chipotle declined to comment.

Mobile payments
Chipotle will be using the $10 million to redesign its technology network in addition to adding mobile payments to its app, according to a recent article published by Bloomberg.

The mobile app, which was launched in 2009, is available for free in Apple’s App Store and Google Play. Consumers can already place an order via the app, but soon they will be able to pay for that order in-store via the app as well.

Chipotle will be deploying in-store technology similar to Starbucks’ bar code readers that will be able to accept mobile payments. The QSR will spend a few hundred dollars per restaurant to add the readers, per the Bloomberg article.

The app will use bar codes and or Bluetooth to make payments. The idea is that this will speed up the process for customers.

Additionally, Chipotle will be able to push offers and other messages to the app.

The company has yet to announce a public release date for the mobile payments, but it is already being used by employees.

QSR rush
Quick-service restaurants have been known to be among the first to adopt mobile technology since the industry is founded upon speedy processes and mobile has the ability to expedite transactions.

Mobile ordering is almost table stakes in the QSR industry, and most companies have been moving forward to mobile payments.

Dunkin’ Donuts recently expanded its mobile payments program following pilots in select markets (see story).

Starbucks has long been seeing success with its mobile payment solution, recently announcing it is inching near five million weekly transactions on mobile (see story).

Papa John’s, McDonald’s, Domino’s, Chik-Fil-A and KFC are just a few of the many QSRs who have been experimenting with mobile ordering and mobile payments.

Consumer adoption of mobile payments seems to be highest among these types of merchants since small, frequent purchases drive consumers to see more value in a branded mobile wallet.

“The combination of mobile payments and loyalty, especially when encapsulated by an app, has proven to be a huge winner,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston. “Starbucks did over $1 billion in mobile transactions last year, according to the Yankee group.

Mr. Kerr is not affiliated with Chipotle. He commented based on his expertise on the subject.

“A roll-your-own, in-app mobile payment system can integrate with the point of sale and inventory control systems and, if all done in-house, is a much better solution,” he said. “A small menu and repeat loyal customers are the golden egg of mobile payments.

“Again, Starbucks has proven that they can generate incremental sales, build loyalty amongst their customers, streamline the in-store checkout process, and, most of all, harvest big gold mine of data points about what their customers are buying and when. Capturing all this data allows a quick serve restaurant like Chipotle to serve up special offers, introduce new products, dole out rewards for loyal mobile users and drive even more sales through the mobile channel.”

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York