McDonalds to launch app in Q3

McDonald's to launch app in Q3

As busy global consumers feel they face ever tightening schedules, they are increasingly looking for out-of-home options for various eating occasions. The foodservice sector is an area of growing importance for food manufacturers. In order to appropriately address the needs of the channel, it is important to keep up-to-date with the latest developments in the trade.

And last month's key developments demonstrate how operators are attempting to use innovation to strengthen their appeal. Front-and-centre of this push is the growing use of customer facing technology to enhance guest experience.

In the US last month, for example, sandwich chain Subway revealed it is rolling out a mobile app and remote ordering capabilities. McDonald's also revealed plans to launch its own mobile app in the US in the third quarter as part of the group's turnaround drive.

For many commentators, the integration of consumer-facing tech is key to innovation in foodservice – from making ordering easier and more convenient to communicating menu attributes and providing the additional detail on what goes into meals.

As research from international food and restaurant consultants Baum + Whiteman notes: "Short of putting food into our mouths, technology is upending the way dining out works. Electronic wizardry once hummed quietly in the background ... but now we're immersed in "front-facing technology" or "guest-facing technology": all sorts of devices and programmes that interface directly with the consumer." The research firm highlights increasing experimentation with tablets, mobile ordering and express kiosks.

All of this is designed to streamline the consumer experience, making the progress between placing and receiving an order seamless. Large swathes of the industry see this as the future of out-of-home dining. However, there is some evidence to support the suggestion consumers still value the face-to-face service experience of eating out and the desire for the integration of digital technology could – perhaps – be overestimated.

A foodservice report sponsored by Italian food group Sacla and produced by Trajectory found 37% of UK consumers would actually favour a tech-free environment. And, surprisingly perhaps, of the number of people who actually do no't want tech, the figure only drops to 32% for millennials.

The report also throws out some interesting conclusions on the kind of tech in which consumers are most interested. More respondents wanted to see visitor reviews (41%) and GPS navigation (34%) than mobile payment options (22%).

Other innovation has focused firmly on the more traditional – but ever important – area of menu innovation. Profound adjustments in how consumers view health have been at the heart of a significant shift in consumption patterns throughout many global markets. Packaged and highly processed foods have fallen out of favour. Clean labelling has become a watchword and consumers are seeking out options free from artificial additives and GMOs. This mega trend is undoubtedly a motivating factor behind Wendy's move to trial antibiotic-free chicken at its US outlets.

Here is just-food's round-up of some of the most interesting headlines from the foodservice sector over the past month.

Subway launches mobile ordering and payment

Sandwich chain Subway announced plans to roll out a remote ordering and payment app for its US consumers. The company aims to increase its appeal to consumers on-the-go. Additionally, Subway said it is improving its ordering options on its website, which allows customers to choose a restaurant, customise and place their orders and then pick them up. Payment is being made easier through the introduction of PayPal's One Touch system as well as mobile payment options Android Pay and Apple Pay.

Subway is in the middle of an aggressive expansion push with plans to open 2,500 new stores globally during 2015.

McDonald's insists turnaround gaining traction as sales disappoint

Fast food giant McDonald's booked a 0.7% drop in second-quarter same stores sales. Europe was a bright spot – as were the group's turnaround efforts in Australia. The company's operations in Asia have, however, been hit by safety concerns. In China, sales dropped 4% in the period as the company lapped last year's meat supplier scandal. The group's performance in the US, where it generates 40% of sales, is of particular concern. Same stores sales fell 2% at the burger maker's domestic market.

Speaking during a conference call with analysts, CEO Steve Easterbrook said the result in the US was "disappointing" but insisted the company is committed to arresting nearly three years of decline. McDonald's is working to adapt more quickly to changing consumer trends, promote its value proposition through better marketing support and enhancing the customer service experience. The company is extending its trial of all-day breakfasts, adjusting its cooking methods and increasing staff training to improve order accuracy.

Easterbrook also revealed McDonald's will launch a mobile app in the third quarter. "This is part of our global digital strategy that over time is designed to streamline and improve the entire customer service experience," he said. "The initial version of the app will make it easy for consumers to receive value when they choose McDonald's, through features like tail adopters that are easy to redeem and rewards for regular purchases of their favourite McCafé beverages. And at the same time, the team is already hard at work, developing additional features to hasten the shift from mass communication to personal one-to-one engagement with customers in the future."

China hits Yum! Brands

Yum! Brands, which owns Pizza Hut, KFC and Taco Bell, failed to hit market expectations as continued softness in China dragged down the group's second-quarter result. Yum! recorded US$3.11bn in second quarter revenue - down 3% over last year and slightly below consensus expectations of $3.19bn. Net income for the quarter dropped 30% but, excluding one time items the decrease was less steep but still dropped 5%.

Yum! has been hit hard by a scandal in China when footage of a KFC meat supplier picking up chicken that had fallen on the factory floor hit the headlines. Same-store sales in China dropped 10% in the period. This compares to growth of 12% in the year-ago quarter.

Yum! management insisted it plans to push ahead with expansion in China and plans to open around 700 outlets this year. However, this has not quelled market speculation the company may choose to spin off its China division.

Wendy's trials antibiotic-free chicken

In the US, fast food group Wendy's revealed plans to trial antibiotic-free chicken. The move follows a pledge from rival McDonald's to cut antibiotic use in chicken in the next two years and comes as further evidence of a shift in the US away from the routine use of medical drugs in meat production.

According to The Wall Street Journal, Wendy's plans to test the chicken raised without antibiotics at Orlando and Gainesville in Florida; at Kansas City in Missouri., and at Austin in Texas. The company has – as yet – stopped short of a full-scale commitment to cut its reliance on chickens raised using antibiotics.

The US FDA delays menu regulations

The US Food and Drug Administration has agreed to delay requirements to list calorie counts on menus until December 2016. Originally, the agency had said it wanted out-of-home food vendors to include calorie counts on their menus by the end of this year.

The move, which was hailed as a setback to public health by some consumer advocacy groups, was welcomed by the industry. Foodservice providers have argued that they simply need more time to comply – and the FDA agreed.

Michael Taylor, the deputy commissioner for foods and veterinary medicine at the FDA, said: "The FDA agrees additional time is necessary for the agency to provide further clarifying guidance to help facilitate efficient compliance across all covered businesses."

The National Restaurant Association said it has "long supported" a nationwide menu labelling standard that "pre-empts a patchwork of state and local laws". "As the FDA prepares further guidance, we continue to work with the agency to address issues of concern for the restaurant industry and ensure a smooth transition for restaurants and consumers alike," the industry association said.

Expanding in new markets

A number of well-established foodservice brands announced plans to expand in markets where they see greatest potential for growth. Starbucks struck a deal to open stores in South Africa, Chipotle said it plans to grow by 30% in Europe with another restaurant confirmed in London, while burger chain Johnny Rockets said it will open restaurants in Tunisia and Dunkin' Donuts started a push into Poland.

Entering and expanding in growth markets is a key way of growing sales for foodservice brands. However, as the experience of titans Yum! and McDonald's in China proves it can be a capital intensive and challenging route to growth.