Quick Service Restaurants (QSRs) found themselves on the frontlines of the COVID-19 pandemic last year as widespread shutdowns forced them to pivot their businesses practically overnight. The QSR industry as a whole traditionally relied on customer visits, either in-store or via the drive-thru, with most purchases being made in cash, but the new contactless, socially-distanced environment changed that quickly. Consumers didn’t abandon QSRs as meal choices, but demanded new options for online ordering and contactless payments where they don’t have to handle cash, hand over their card, or even use a shared customer-facing terminal.
While the industry slowly adopted electronic payment acceptance over the last decade, it has been slow to invest in more sophisticated payment technology without a clear ROI for the business. COVID forced those decisions for many QSR operators, who quickly pivoted into mobile ordering and payments, QR codes, and electronic wallets like Apple Pay and Google Pay. While investing in new technology during a huge sales slump is neve an easy decision, the fast pivot made by many QSR operators is showing itself to have a silver lining. Tokenization technology that encrypts payment card numbers for safe digital storage also makes it easier to track customer behavior, and yields better insights without asking customers to enroll in an offline card-based loyalty or rewards program.
Savvy operators are capitalizing on this opportunity to restructure not only their technology roadmap, but also their marketing initiatives, using data to deliver targeted promotions vs. trying to keep up with their competitors promotions and outspend them on general brand awareness. This is another great example of the “paradox of payments”: As we become more aware of the power of a comprehensive payments and data strategy for our businesses, the payments themselves fade from the foreground as separate workflows, and become part of the workflows that created them.
Overview by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group