Uncomfortable hard seats, bland decor, and bright lighting -- all of these were designed back in the day to get you out of the fast-food restaurants and make room for more guests. Now with guests hitting the drive-through more than ever and in some cases hitting the road all together and over to Chipotle Mexican Grill, companies such as Burger King Worldwide (NYSE:BKW), McDonald's (NYSE:MCD), and Starbucks (NASDAQ:SBUX) are instead now looking for ways to lure you in and keep you in. They are quickly learning that the easiest way is to do so with free and better Wi-Fi.
No longer premium
Do you remember a few years back when McDonald's would charge its customers to use the Internet, if it was even offered at all? Times certainly have changed. People not only expect Wi-Fi free, but they also expect it often. As mentioned recently in Nation's Restaurant News, "Sixty-five percent of customers expect easy Internet access while eating out, according to research from industry data and analysis firm Technomic."
Technomic EVP Darren Tristano was quoted in the same article as saying: "Over the years, Wi-Fi has really transitioned from nice to have to a point where operators should believe that it is an expectation of their customers. It is a no-brainer, and because it is such a huge expectation, I don't know how you avoid it."
And it makes sense, especially now. Once upon a time, the Wi-Fi demand was mostly limited to Starbucks, where people would lug their laptops in and relax for a while. Now with smartphones and tablets in everybody's pockets and purses, most of us have a mini-computer that we access all day long. "Do you want fries with that?" is being replaced with "I need Wi-Fi with that."
According to comScore and Pew Research Center, 58% of American adults now own a smartphone, including around 83% of millennials. These numbers are, of course, only growing, both domestically and internationally.
During last quarter's conference call, CEO Don Thompson of McDonald's stated: "In addition to free Wi-Fi in most of our global system, we integrated Apple Pay across 14,000 U.S. restaurants, including our drive-throughs. We are the only restaurant to offer this payment convenience in drive-through." Bravo on Apple Pay, by the way, Thompson. It's nice to see McDonald's ahead of the curve on that one.
Then there's Burger King's cleverly named free "Whopper Wi-Fi," announced back in April. One advantage cited in its press release is your device's ability to recognize the service and automatically connect (after the first time) no matter which Burger King you're in, just like your home Wi-Fi.
Wendy's, Taco Bell, and just about all of the major fast-food chains have a similar deal. But they can't all win – or can they?
Why this may be a win for them all
On a per-restaurant basis, offering Wi-Fi can't possibly be all that expensive, and if it gets a few extra people to come in the doors or stay awhile and order a few extras, then it quickly pays for itself. But there is another way they can all win -- and by "they," I mean all of the major chains.
Turn to Domino's Pizza (NYSE:DPZ) and Papa John's (NASDAQ:PZZA) for the answer. These two are the pizza delivery giants and they're disrupting the entire pizza industry and turning it on its head suddenly, thanks to technology. How so?
Domino's CEO Patrick Doyle explained in the most recent conference call, "I really think that the biggest thing that is going on in the category is the larger players, largely driven by digital have been taking share from the smaller players."
What's going on with pizza delivery is that people are turning to their mobile devices to order -- something the regional and mom-and-pop chains can't offer, at least not as well with a "use anywhere" service. The pizza-delivery industry may not be growing as a whole, but Domino's and Papa John's are growing like weeds by taking market share from their thousands of smaller competitors.
Could something similar be happening with the fast-food giants? It's an entirely different business model from delivery, but with so many customers demanding consistent Wi-Fi service at an increasing pace, you have to figure that the smaller fast-food chains, with perhaps either less reliable Wi-Fi service, are suffering. Few are partnered with a nationally accessible brand, such as McDonald's with AT&T, or with Starbucks automatically logging you into its Google Wi-Fi network.
In short, Wi-Fi is becoming part of the expected fast-food dining experience. It may be just the opportunity the bigger chains need to prosper and take market share from up and coming chains.
Nickey Friedman owns shares of Apple and Google (C shares). The Motley Fool recommends Apple, Chipotle Mexican Grill, Google (A shares), Google (C shares), McDonald's, and Starbucks. The Motley Fool owns shares of Apple, Chipotle Mexican Grill, Google (A shares), Google (C shares), Papa John's International, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.