The current buzz in the restaurant industry—technology. Restaurant chains Buffalo Wild Wings (NASDAQ:BWLD), Darden Restaurants (NYSE:DRI), Dunkin Brands (NASDAQ:DNKN), McDonald's (NYSE:MCD), and Wendy's (NASDAQ:WEN) are all adopting technologies such as mobile payment apps, online ordering, table top ordering and payment, and customer feedback platforms in an effort to improve the customer experience. Happy customers translate into increased top and bottom line growth improving your chances for stock price appreciation and dividend increases. These stories provide insight that may help you make investment decisions regarding these companies.
Tablets at your table
Restaurants under competitive pressure need to find ways to improve traffic flow, reduce costs, and improve the customer experience. Tablets represent a possible way to do this by providing games, company exclusive online content, and a way to conveniently order freeing up time for restaurant staff. Buffalo Wild Wings and Darden Restaurants plan to roll out table top tablets in their chains first in a test phase and then chain wide if successful, according to Nation's Restaurant News. Interestingly, Buffalo Wild Wings wants to expand on its "B-Dubs TV proprietary network for sports programming" by bringing in local sports content such as high school sports in an effort to stay in touch with its community.
Buffalo Wild Wings grew its revenue an impressive 12% in the most recent quarter. Its same restaurant sales grew 5.2% at company owned locations and 3.1% at its franchised locations during that time frame. Buffalo Wild Wings definitely wants to avoid complacency. Darden Restaurants can use all the help it can get. In its most recent quarter Darden saw its overall sales decline 1.1% while same restaurant sales declined 5.6% for Olive Garden, Red Lobster, and LongHorn Steakhouse and 0.7% for its specialty segment.
The digital experience
Many restaurants want to improve digital experiences for customers. Mobile payment apps have dominated restaurant industry news recently. However, for some people the mobile app experience may not live up to expectations. The editor of Nation's Restaurant News, Ron Ruggless, gives a bittersweet account that discusses the difficulty of finding the Wendy's mobile app in his app store, setting up an account, and selecting a prepaid amount. Also, he described the inconvenience of setting up a six digit number to give the Wendy's cashier. He goes on to talk about how the number expires in five minutes which happened while the cashier and his manager tried to figure out how to ring up the app payment.
Conversations ring loud in the media with restaurants such as Buffalo Wild Wings and Darden Restaurants wanting to introduce online ordering to their chains. However, the most notable online ordering introduction in the media conversation comes from Dunkin Brands' Baskin-Robbins . As of April 1, its customers can order ice cream cakes, according to the Wall Street Journal, just like ordering pizza. Baskin-Robbins hopes this will help differentiate the company and aid in its turn around. Testing proved that it can boost traffic the Wall Street Journal reports.
Staying in touch with customers
Darden Restaurants and Buffalo Wild Wings recently stepped up data gathering. As a result, Buffalo Wild Wings wants to introduce a digital loyalty program reports Nation's Restaurant News. Darden intends on using its data to better predict consumer consumption patterns. Also, McDonald's partnered up with Service Management Group or (SMG) to arrange for a customer feedback platform in McDonald's U.S. restaurant group according to SMG's press release. Customers can provide real-time feedback via a website. McDonald's can hopefully use the data to improve the customer experience .
These new digital initiatives should help continue the growth momentum of fast growing chains such as Buffalo Wild Wings and Baskin-Robbins. Hopefully, data gathering will help Darden understand what it's doing wrong specifically in its struggling Olive Garden segment. The same goes for McDonald's partnership with Service Management Group. I agree with Ron Ruggless's conclusion that Wendy's mobile app will enjoy higher adoption from the younger demographic. Only time will tell if it will boost traffic for Wendy's overall.