Burger King Vs McDonald’s: Can Quicker Launch Of Mobile Payments Be the Differentiator?
As the restaurant industry struggles to grow revenues amidst a challenging environment, brand differentiation is likely to be the key factor to drive revenues in the future. Menu innovation and better customer service via digital platforms are the two key areas where quick service restaurants are looking to distinguish themselves from other players. While Starbucks and Dunkin’ Brands already have successful mobile order and pay systems, fast food companies such as McDonald’s (NYSE:MCD) and Burger King – owned by Restaurant Brands International (NYSE: QSR) — are in the process of launching their digital ordering platforms this year. Burger King is likely to roll out this system in the next few months, ahead of McDonald’s expected year-end launch, giving it a first mover’s advantage. An efficient model can give Burger King an edge for the few months when McDonald’s does not have its digital platform rolled out. Shorter queues and wait times could help attract customers, though food quality and menu are likely to be the key driving factors in the long term.
Focus On Food Quality, Innovation And Technology
McDonald’s has been aggressively working on improving its product quality and introducing gourmet menu items to attract customers, especially millennials. Focusing on technology is another part of its growth strategy, however a singular focus on quick service cannot drive revenues. McDonald’s efforts have shown results and despite a challenging industry environment, the company grew its comparable sales in the U.S. by 1.7% in Q1 2017. On the other hand, Restaurant Brands International reported flat comparable sales for Burger King in the same period, as it faced tough competition from McDonald’s. These numbers indicate that McDonald’s is ahead of Burger King and the company is working on a strategy of technology and product innovations to drive revenues in the future. McDonald’s is testing fresh patties for its popular Quarter Pounder, and while this could slow down its service to some extent, it is likely to attract customers who are looking for fresh and healthier food options. Focusing just on quicker service through technology innovations is less likely to retain consumers for quick service restaurants in the long term.
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According to Business Insider Intelligence, mobile ordering of fast food is expected to be a $38 billion market by 2020. Consumers spend more on fast food online rather than when they order via the phone. Research suggests that the average pizza order is 18% greater online than on the phone. Further, this technology can enable companies to link their reward programs with the mobile ordering system, driving customer loyalty. Tracking customer orders via a mobile app can improve personalization and suggestions around products which can be combined. A mobile ordering system not only improves the efficiency of service but also provides a huge opportunity to the restaurant to improve service quality via personalization. However, a first mover’s advantage (by a few months) over McDonald’s in adopting this technology is not likely to make any significant difference for Burger King. We believe a combination of food innovation, service, and technology will be key in creating brand differentiation for restaurant companies in the future.
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