ARCHIVES: This is legacy content from before Industry Dive acquired Mobile Commerce Daily in early 2017. Some information, such as publication dates, may not have migrated over. Check out our topic page for the latest mobile commerce news.

Taco Bell wraps up mobile ordering with 20pc higher order values

While Taco Bell’s parent company Yum! Brands saw an $86 million fourth-quarter loss, the taco chain is heating up sales thanks to its new mobile ordering app, which is seeing the average order come in at 20 percent higher than in-store orders.

Taco Bell engaged in heavy social media marketing tactics for the launch of its mobile ordering app, which enables users to customize their orders, pay via smartphone and pick up orders as soon as they arrive at Taco Bell bricks-and-mortar locations. The brand’s high digital orders are due in part to consumers’ preferences of purchasing additional ingredients through the app, such as sour cream and nacho cheese, which cost at least $0.30 per add-on.

“Mobile ordering provides a few benefits,” said Thad Peterson, senior analyst at Aite Group, Atlanta, GA. “First, there is a lot of room to display variations and alternatives and the app is well designed to present them.

“Second, the app can remember preferences so ordering a favorite is easy and fast. Lastly, the app gives the customer something that they don’t generally have when in the store, time,” he said.

“There is time to browse alternatives without the pressure of a service person waiting for your order, or worrying about people behind you in line. The combination of exploring more choices and controlling the pace of ordering results in more opportunities to buy.”

Showcasing the menu
Taco Bell executives believe that one aspect of the app’s success can be contributed to the fact that it showcases the entire menu via the user-friendly interface, including often-forgotten side dishes or lesser-known items as well as add-ons, such as onions, cheese and sauces. In-store menus do not typically highlight all of these offerings, and instead focus on more popular dishes.

The app also provides suggestions as consumers create their desired meals, a tactic that analytics firms are claiming is paramount to combatting mobile shopping cart abandonment (see story). Users prefer to receive in-app recommendations and assistance options that will not require them to leave the branded app.

The Taco Bell app prompts customers with impulse add-ons, such as potato side dishes or chips, while they are completing the checkout process.

The mobile ordering app heavily plays on personalization capabilities, as Taco Bell finds that 70 percent of its consumers already customize their orders (see story). Users can also pay within the app with a credit, debit or gift card, and can select pick-up location to be at the drive-through window or in store.

Steadily rising sales
Yum! claims its earnings per share dropped by 29 percent, due to continued sales weaknesses in the Chinese market. However, Taco Bell, as well its sister brand KFC, saw a slight increase in sales, with same-store sales in the fourth quarter increasing by six percent.

The brand credits its breakfast menu options for increasing same-store sales to 7 percent in the United States.

Taco Bell expects that 2015 will be a fruitful year for the brand, as more consumers become familiar with the mobile ordering app, and as breakfast options expand.

Taco Bell also has been driving app downloads with nationwide promotions. In January, it tempted consumers with a free Doritos Locos Taco for every mobile purchase made during the month, effectively ramping up awareness and usage of the app (see story).

Meanwhile, other brands under the Yum! umbrella, such as KFC and Pizza Hut, saw systemwide sales increase by seven percent and two percent in the fourth quarter, respectively.

Yum! Brands is projecting 2015 earnings to grow by 10 percent.

“The app needs to enhance and reinforce the customer experience so the brand is logically extended from the store into the device,” Mr. Peterson said. “Then the app needs to work really well and make the ordering and purchasing process seamless.

“I would expect nearly all QSRs to have a mobile ordering app in place in the next year or so.”

Final Take
Alex Samuely is an editorial assistant on Mobile Commerce Daily, New York