Wahlburgers Departs From Traditional Mobile Order-Ahead Apps FEATURE STORY (p . 7) NOVEMBER 2019 News and Trends Food delivery robots make their way to 11 college campuses Deep Dive Gift card fraud 16 threatens QSR profits Scorecard The latest mobile order-ahead provider 23 rankings MOBILEORDER-AHEAD Tracker Table Of Contents What's Inside 3 Many restaurants are reluctant to get on board with mobile order-ahead despite its growing popularity and advantages Feature Story 7 An interview with Dan Wheeler, senior vice president of marketing and innovation for Wahlburgers, on how its new mobile ordering app taps into the chain’s celebrity pedigree News and Trends 11 The latest headlines from around the mobile order-ahead space, including a new dine-in mobile ordering option from Chick-fil-A Deep Dive 16 An in-depth look at how fraudsters exploit QSR gift cards and how restaurants can stop them Scoring Methodology 20 Who’s on top and how they got there Top 10 Providers and Scorecard 22 The results are in. See the top scorers and a provider directory featuring 77 players in the space. About 53 Information on PYMNTS and Kount ACKNOWLEDGMENT The Mobile Order-Ahead Tracker® is powered by 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. © 2019 PYMNTS.com All Rights Reserved 2 WHAT'S INSIDE estaurant operations have been evolving National Restaurant Association found that only since the first modern eatery with menus, 18 percent of restaurants offer mobile ordering Rdining rooms and reservations opened in via their own apps, despite 43 percent of consum- Paris almost 300 years ago. Mobile order-ahead is ers wanting to use such methods. Restaurants the latest in a long tradition of innovations, though cite high costs and lack of demand for not offering it seems to have had an outsized impact on the en- first-party ordering, and many make up for this by tire industry. employing third-party services. A recent study found that only 15 percent of restau- Fraud continues to haunt the industry as it be- rant meals are eaten on premises, down from 40 comes more digital, targeting everything from percent several years ago. This is largely due to the user accounts to credit card information to gift prevalence of delivery, which has increased 15 per- cards. The latter is a particular plague on the in- cent since 2018 likely thanks to the rise of mobile dustry, having the highest rates of fraud attempts order-ahead apps. Third-party apps like Grubhub, of all quick-service restaurant (QSR) and retail prod- DoorDash and Uber Eats make entire cuisines avail- ucts. Fraudsters leverage a variety of techniques to able for delivery that were absent from the space conduct their plots, including brute force account just a decade ago. hacking with botnets, low-tech card number and security code forgery and even collusion with QSR Many restaurants are not taking advantage of these employees. growing trends, however. A new study from the © 2019 PYMNTS.com All Rights Reserved 3 What's Inside Consumers are not growing tired of eating out, but a total revenue increase of 14.6 percent to $1.6 bil- the risk of fraud could make many wary of digi- lion. This boom is due to the prevalence of mobile tal ordering. QSRs need to quickly counter these ordering across its store locations, according to threats before fraudsters pop the growing mobile CEO Brian Niccol. More than 97 percent of Chipotle order-ahead bubble. locations now offer delivery. Chick-fil-A is also expanding its mobile ordering ca- Mobile order-ahead developments around pabilities by enabling dine-in preorders. The app the world now allows diners to order food in advance and Mexican QSR Chipotle is one chain that is see- have it served to them upon arrival. App users ing dividends from mobile order-ahead. It recently need only select the “dine-in” option and tap their announced on an earnings call that its digital sales smartphones to indicate the tables at which they for Q3 2019 increased 87.9 percent year over year are sitting. Chick-fil-A’s director of service and hos- (YoY), accounting for 18.3 percent of total sales for pitality, Khalilah Cooper, stated that the feature is this period. This digital sales growth contributed to particularly popular with parents attempting to re- member multiple orders. Fraud is a constant concern for QSRs and their customers. A new study from safety solution pro- vider Sift found that 62 percent of QSR customers are concerned that their online interactions with restaurants could be at risk, with 49 percent par- ticularly worried about stolen credit card data and 41 percent about account takeovers (ATOs). The study also discovered that 37 percent of consum- ers would abandon a QSR entirely if they were defrauded. For more on these stories and other mobile order-ahead developments, read the Tracker’s News and Trends section (p. 11). © 2019 PYMNTS.com All Rights Reserved 4 What's Inside Wahlburgers joins the mobile order- ahead scene with WahlClub How can advanced learning tools such as AI and One of the more unique players in the QSR field is ML help increase QSR sales and revenue? Wahlburgers, which was founded by the celebri- "Effective digital fraud prevention is about much more ty Wahlberg family. The chain recently became than stopping fraud — it’s about driving business out- the latest entrant to the mobile order-ahead comes, including increased sales. From lowering operational costs to improving the customer experi- field with WahlClub, a digital ordering app and ence, AI-driven fraud prevention helps QSRs generate rewards program that brings a celebrity twist more revenue in a number of ways. to typical ordering features. For this month’s One of the quickest ways to increase revenue is to ac- Feature Story, (p. 7) PYMNTS spoke with Wahl- cept more good orders. Not only does this affect the burgers’ senior vice president of marketing and initial sale, but it also provides a positive customer ex- innovation, Dan Wheeler, about WahlClub’s ori- perience and encourages repeat business. [Buyers gins and how it meets the security challenges are] more likely to become repeat customers if they inherent in the mobile order-ahead space. have friction-free experiences at checkout. Further, QSRs don’t have the time to manually review most or- ders, and advanced AI-driven fraud prevention [tools Deep Dive: Exploring the rise of gift are] able to make assessments of a customer’s risk or card fraud safety in real time. Kount’s AI uses unsupervised ma- Gift cards have been growing increasingly chine learning to detect anomalies and emerging fraud and supervised machine learning to evaluate historic popular as a means of driving QSR revenue, trends. particularly eGift cards that customers can access and redeem via their mobile devices. AI-driven fraud prevention augments the work of a fraud management team by freeing their time to fo- These cards are prime targets for fraudsters, cus on more strategic initiatives. Kount’s AI emulates however, as they can be easily stolen and laun- the work of an experienced fraud analyst in a highly ac- dered for cash without catching authorities’ curate, fast and scalable manner. With fewer manual attentions. This month’s Deep Dive (p. 16) ex- reviews comes improved operational costs and more plores the methods that fraudsters use to steal time to look into advanced analytics that can help com- panies realize who their best customers are and what gift cards and the techniques QSRs are leverag- they like to purchase. With the ability to use that data to ing to stop them. market to certain profiles, companies have expanded opportunities to increase revenue." BRAD WISKIRCHEN CEO, Kount © 2019 PYMNTS.com All Rights Reserved 5 What's Inside Five Fast Facts $31.8B 18.3% Current value of the eGift Share of Chipotle’s Q3 sales card market generated by mobile ordering 18% 62% 58% Share of restaurants with Portion of QSR customers Portion of mobile in-house mobile ordering concerned that their order-ahead orders that capabilities online interactions could are ready for pickup in be at risk of fraud less than two minutes © 2019 PYMNTS.com All Rights Reserved 6 Wahlburgers Departs From Traditional Mobile Order-Ahead Apps © 2019 PYMNTS.com All Rights Reserved 7 FEATURE STORY ew QSR players have more recogniz- PYMNTS recently spoke to Wheeler about how the able names and media presences than chain leveraged that celebrity status when devel- FWahlburgers. The chain was the subject of oping its mobile app and how it took lessons from an A&E reality show of the same name that cov- other players in the field when meeting the indus- ered how actors and musicians Mark and Donnie try’s specific security challenges. Wahlberg and Chef Paul Wahlberg launched and operated the restaurant. The chain recently made WahlClub’s entourage of features headlines when it entered the mobile order-ahead Just as Wahlburgers distinguishes itself from the scene with WahlClub, its digital app and rewards crowded QSR burger scene with its celebrity pedi- program. The app enables customers to skip lines, gree, so too does its app. score free items and access exclusive content from “We’ve got the traditional rewards structure and the family that gave the chain its name. mobile ordering capabilities that you'd find in most “What we’ve learned from talking to our guests is apps,” Wheeler said. “But we also provide some ex- that people feel like they can relate to that type of clusive content, like conversations with the brothers celebrity,” said Dan Wheeler, Wahlburgers’ senior and recipes from Chef Paul.