SEPTEMBER 2020 FEATURE STORY (p . 7) How Blaze Pizza Fires Up News and Trends Deep Dive Scorecard Friendly Fraud Papa John’s reports How the surge of The latest mobile 11strong Q2 mobile order- 17mobile app use for 21order-ahead provider ahead growth, 70 percent food deliveries has rankings Defenses of orders received via heightened the risk of digital channels friendly fraud TABLE OF CONTENTS What's Inside 3 A look at how consumers’ dependence on mobile apps for takeout or delivery has increased the risk of chargeback fraud and how the industry can fight back Feature Story An interview with Mandy Shaw, CEO of Blaze Pizza, on how the fast casual 7 pizza chain proactively works to curb friendly fraud and how it has pivoted to provide a consistent customer experience across digital channels during the COVID-19 pandemic News and Trends The latest worldwide mobile order-ahead headlines, including how Papa John’s 11 received 70 percent of its orders via digital channels and Starbucks’ recent 5 percent decline in active rewards members Deep Dive An in-depth look at the tools QSRs can use to help identify and mitigate mobile 17 app-enabled friendly fraud Scoring Methodology 20 Who’s on top and how they got there Top 10 Providers and Scorecard The results are in. See the top scorers and a provider directory that features 77 21 players in the space About 52 Information on PYMNTS.com and Kount ACKNOWLEDGMENT The Mobile Order-Ahead Tracker® is done in collaboration with Kount, and PYMNTS is grateful for the company’s support and insight. PYMNTS.com retains full editorial control over the following findings, methodology and data analysis. © 2020 PYMNTS.com All Rights Reserved 2 WHAT'S INSIDE Ordering meals via mobile app for pickup or de- The ranks of restaurants and quick-service restau- livery has become increasingly commonplace for rants (QSRs) investing in mobile order-ahead millions of consumers in the United States, and technology are expanding significantly year over they are preferring to dine in the comfort and safe- year, according to fraud protection provider Kount, ty of their homes during the COVID-19 pandemic. A especially as consumer demand for food deliv- recent study predicts that the number of food de- ery apps has surged due to the pandemic. Along livery app users could climb 25.2 percent to 45.6 with the rise in mobile order-ahead use, however, million in 2020 as consumers continue to heavily has come an unfortunate increase in chargebacks rely on these services. This total could dip to 44.1 — which can be abused in acts of friendly fraud, million in 2021 as indoor restaurant dining spac- caused by customers, not cyberthieves. es reopen and consumers venture out to eat again. QSRs can employ existing credit card compa- The upward trend is not going away, however, and ny tools such as Card Verification Value 2 (CVV2) the number of U.S. app users is predicted to bounce codes to prevent problems, as this information is back by 2023 to as many as 53.9 million. © 2020 PYMNTS.com All Rights Reserved 3 WHAT'S INSIDE safely kept off restaurant premises, out of the reach lanes, one a dedicated pickup lane for guests who of any fraudster. Artificial intelligence (AI) and ma- use an app to order. chine learning (ML) are two additional powerful Some restaurant chains, meanwhile, are actual- tools that eateries have been utilizing to safeguard ly getting a boost from consumers’ preference mobile channels against digital threats. to dine at home during the COVID-19 pandemic. Papa John’s has experienced recent sales growth Mobile order-ahead developments around the world through its digital channels, with mobile order- ing being its fastest-growing platform, according Consumers are seeking quick, easy and touchless to CEO Rob Lynch. The pizza chain reported a re- ways to order meals online. Through an integra- cord 28 percent increase in same-store sales tion with Google, fast casual chain Panera Bread is in Q2, with 70 percent of orders placed digitally. broadening its off-site capabilities to improve the Pandemic-related concerns and restrictions are customer ordering experience using such tools as fueling the upward consumer demand for deliv- Google Search, Google Maps and Google Assistant, ery and pickup through branded mobile and online according to a recent announcement. Panera chief channels as well as third-party delivery services. digital officer George Hanson said that the compa- The company expects these sales to continue to ny is dedicated to expanding its digital landscape grow in the coming months, as the global crisis and off-site ordering channels. shows little sign of slowing. Drive-thru operations are serving as life support For more on these stories and other headlines from systems for QSRs during the pandemic, and many around the mobile order-ahead space, read the QSRs are investing in technology that streamlines Tracker's News and Trends section (p. 11). these operations to improve the customer experi- ence. Taco Bell has released a new Taco Bell Go Blaze Pizza on preventing abuse of Mobile restaurant concept featuring an entirely chargebacks on mobile orders new experience focused on modernizing guest ac- Consumers are regularly using mobile apps to or- cess points, according to president and global chief der meals, and many are hesitant to return to operations officer Mike Grams. Restaurants that public dining. An increase in fraudulent activity is adopt the new concept will include two drive-thru © 2020 PYMNTS.com All Rights Reserved 4 WHAT'S INSIDE Executive unfortunately occurring alongside such behav- ioral shifts. Preventing incidents of friendly fraud INSIGHT surrounding online promotions requires continual- QSRs have made advances in supporting mobile ly evaluating existing controls and innovating new order-ahead, yet the pandemic has also created new security gaps for fraudsters to exploit. What types of solutions, according to Mandy Shaw, CEO of fast fraud have you observed recently, and how can QSRs casual pizza chain Blaze Pizza. For this month’s safeguard their platforms from them? Feature Story (p. 7), Shaw explained how preventing “Mobile order-ahead is just one example of how digital bad actors from taking advantage of higher digital innovation is accelerating in the quick-service restau- rant world. In order to effectively safeguard these activity volumes requires a proactive approach. platforms, start [by] considering the entire customer journey involved in placing an order. Deep Dive: Rise in chargeback risk mirrors The customer downloads the app, creates an account, surge in mobile app ordering logs in, navigates the menu, makes some customiza- The recent rise in digital food ordering is prompt- tions, selects the location and time they’re ready for their order, perhaps enters loyalty information or re- ing a corresponding increase in digital fraud, and deems points and makes a purchase — maybe with a friendly fraud is no exception. Mobile ordering is saved credit card. making reimbursement requests easier than ever, Each of those areas — accounts, payments, loyalty pro- but restaurants can use several tools to take aim grams, et cetera — are all opportunities for fraudsters to potentially exploit. Kount works with many of the at unwarranted chargebacks and deter would-be top QSRs, and we’ve seen and stopped these fraud at- friendly fraudsters from filing false claims. This tempts at every step. month’s Deep Dive (p. 17) explores how the surge With more consumers making more digital purchas- in mobile ordering has led to a rise in credit card es than ever before, fraudsters hope to slip through the cracks in the midst of other priorities. And in the chargebacks. Fraud detection tools, however, can restaurant business, there is little to no time to do any help QSRs identify and mitigate friendly fraud by manual review; consumers expect their food sooner rather than later. adding just the right amount of friction into the cus- tomer experience. eCommerce businesses, including QSRs, can partner with advanced, AI-driven fraud prevention platforms that protect the entire customer journey. Solutions BRAD WISKIRCHEN like Kount are sophisticated enough to understand the CEO of Kount types of frequent, small dollar amount purchases at QSRs while being able to stop both emerging and ex- isting attacks.” RICH STUPPY chief customer experience officer at Kount © 2020 PYMNTS.com All Rights Reserved 5 WHAT'S INSIDE Five Fast Facts $3.5B 5% Reported record high digital Decline in year-over-year 90-day sales for Taco Bell in Q2 active Starbucks Rewards members 45.6M 59% 47% Expected number of U.S. mobile Share of U.S. consumers who Portion of restaurants that food delivery app users in 2020 plan to eat out as soon as it is say moving operations deemed safe online was the greatest COVID-19 challenge © 2020 PYMNTS.com All Rights Reserved 6 How Blaze Pizza Fires Up Friendly Fraud Defenses © 2020 PYMNTS.com All Rights Reserved 7 FEATURE STORY Consumers are using mobile apps’ order-ahead between legitimate customers and fraudsters tak- features and loyalty perks more often during the ing advantage of the higher volumes of digital COVID-19 pandemic, yet chargeback fraud — also activity. known as friendly fraud — is unfortunately also ris- A proactive approach to friendly fraud ing. One report found that 1 percent of all restaurant purchases are targeted by fraudsters — a seeming- Friendly fraud often develops around online promo- ly small yet deeply damaging rate for eateries that tions at restaurants. Some consumers will attempt may already be struggling. to use digital offers in person when they are not val- id for in-store use or try to use a promotion more Much of the recent increase in chargebacks can times than permitted, for example.