A key innovation at Starbucks and Chipotle is turning into a major problem
In January, Starbucks reported that transactions, an important measure of customer traffic, dropped 2% in the most recent quarter, in large part due to problems caused by mobile ordering.
Mobile ordering allows customers to order and pay on their smartphones, and in theory, skip the line in stores. But the new technology has created bottlenecks as workers struggle to fulfill orders on time.
Starbucks recently admitted that some of its customers say they have walked out of stores after seeing the crowds waiting for mobile pick ups.
CEO Howard Schultz said he wasn't worried about the issue, and that the chain would quickly find a solution. However, Starbucks isn't alone in its struggles.
Customer complaints about wait times averaging 20 to 30 minutes forced Chipotle to invest in a new system to fulfill online orders, which the company rolled out in late February. During testing, the new system decreased wait times by 50% and resulted in a "record" increase in digital orders, according to the company.
Shake Shack, which launched its Shack App nationally in December, said Thursday that the influx of app orders can have a "slowdown impact" at its busiest locations at peak hours. On Tuesday, the fast-casual salad chain Sweetgreen was forced to email customers who had ordered from a New York City location to say that mobile orders had been delayed roughly 15 minutes.
"We are working to identify the root cause of this backup, as this is not the level of service we stand by," Sweetgreen said in an email to customers impacted by the delay. "We are committed to building systems that make eating healthy, fresh food as effortless as possible."
For the last couple years, mobile ordering has been seen as the savior of fast-food - a high-tech way to boost how much customers spend and serve more customers at a faster pace. On Wednesday, McDonald's announced it would launch mobile order-and-pay technology in all 14,000 of its US restaurants by the fourth quarter of this year, a major change that the chain is hoping will give its traffic a much needed boost.
Mobile ordering is expected to be a $38 billion industry by 2020, accounting for more than 10% of total fast-food sales, according to a BI Intelligence report.
However, if chains want mobile ordering to succeed, it isn't as simple as just adding an app. These chains will need to create an entirely new ordering experience, inside and outside of the store.
As Panera developed its 2.0 reboot, which has significantly driven digital orders at the chain, the company made changes across the board, including redesigning kitchens and reworking the assembly line in addition to implementing new tech.
"It's about a systemic solve," Blaine Hurst, Panera's president, who was heavily involved in the development of Panera 2.0, told Business Insider. "A lot of people say, let's just do this, let's just do that. I believe you have to look at the whole system - or it will break."
Mobile ordering has the potential to revolutionize the fast-food industry, but it's not a band aid fix that chains can simply slap on with an app update. Instead, as many chains are realizing now, it's something that can cause just as many problems as solutions.