Enabling Technologies

Three Ways Online Payments Are Shifting the Restaurant Business By Leslie Lopez, Brand Manager at Togo’s

MEDICI

It’s no secret that the digital revolution has impacted every industry, including the restaurant business. Online payments in particular significantly affect the restaurants. As companies like Taco Bell and Starbucks added ordering and paying to their mobile apps, customers are choosing to pre-order and pre-pay for their meals – only entering the storefront to quickly grab their purchases. The restaurateurs certainly had to adapt to newly shaped habits and incorporate online payments as another money stream channel, which was happening actively for a long time. Leslie Lopez, Brand Manager at Togo's, a restaurant chain operating across 255 locations, shared her insights on the ways online payments are shifting the restaurant business. Here is the transcript of the interview with Leslie:

LTP: For our audience that may not be familiar with your business and experience, could you please briefly describe how long you have been in the restaurant business, the format of your restaurants and how many stores you have?

Leslie Lopez: Togo’s is a sandwich franchise that operates 255 locations West of the Mississippi. We will be celebrating our 45 year anniversary in the summer of 2016. One of the challenges we are working to overcome with mobile payments is that our model does not have a guest facing payment system. Currently, a sandwich maker takes the guest’s order and prepares it, and a separate cashier takes the guest’s payment over the counter and returns their credit card or change. This process is clearly not ideal for EMV or mobile payments. We are working with both credit card processors and our POS partner to test equipment that will be placed on the counter so that a guest can fulfill both EMV (chip-and-pin) and NFC mobile payments. In order to do this, it does require an investment and configuration setup on the part of the franchisees and restaurant owners.

LTP: As we know, digital revolution is impacting every industry. However, each industry is affected and responding in a different way. Could you please tell us how digital transformation affected the restaurant industry? Have the operations and the business models changed dramatically over last few years?

LL: The digital revolution has definitely impacted our business. The restaurant industry in general has been slow to adopt new technologies, which has put many restaurants in a race to adopt currently. We have gone from punch card programs to fully engaged electronic loyalty programs with full CRM (customer relationship management) abilities. With the latest EMV payments, PCI compliance guidelines, rapid adoption of smart devices, mobile payments and the social/mobile consumer, we have been forced to look at our business through an entirely different lens.

Fortunately, we started testing a loyalty & gift Card program in the fall of 2013, which was a pretty basic card-based program with little CRM capability and no ability to integrate with an app. This test forced us to take a step back and think about everything we wanted in a gift card & loyalty program. We knew we wanted an app and CRM capability, but how could we bring all of this together? Once we did the research on what was available, we selected to partner with Paytronix, an industry leader in gift and loyalty programs, to develop a scalable and integrated program that would allow us to do:

-Loyalty

-Gift cards, stored value and mobile gifting

-Social sharing and ability to integrate with our online ordering system

-Mobile payment and stored-value abilities

-Extensive CRM tool allowing us to connect with our guests in a real-time and relevant way

-Connecting with guests via email messaging, geo-targeting and push/pull notifications

-Integrate with our POS and other vendor/partners (online ordering, mobile payment processors, etc.)

LTP: Some restaurant businesses have been accepting mobile payments for a while now. Do you think its driving new customers to your stores by accepting mobile payments or losing some by not offering them? Do you see people actively demanding to pay via mobile?

LL: We haven’t seen a demand for mobile payments yet, so I don’t believe we have gained or lost guests by having/not having one. However, we do see the demand coming right around the corner and with the expectation that it is rapidly moving in that direction, we are currently outfitting our restaurants with equipment that enables NFC payments with both Apple and Google wallets by Q2 2016. We are also in the process of rolling out a mobile rewards & gift program that will be system-wide in early 2016..

From a guest engagement perspective, our new system will be one of the most impactful and forward-moving systems Togo’s has seen in years. The work we have been doing over the past year and continue to do has positioned us to have a scalable mobile program that works seamlessly with all of our technological moving parts.

LTP: Maybe, you could share some statistics on the most popular mobile payments solutions in the industry?

LL: Twelve months ago I would have said Starbuck’s stored value and payments through their app was the most popular. But with the launch of iPhone 6 – making Apple Pay as easy as a tap and thumbprint – and now Google Wallet, I expect these two market leaders to be the payment of choice by the end of 2016. It will be interesting to see how PayPal fares and I understand Samsung has a unique take on NFC and mobile payments. Many of these companies are also building integrations to allow guests to tie their payments to their various rewards memberships. The clear winners will be those who provide the simplest and most seamless solutions.

LTP: Could you tell us about the changes that have taken place at Togo’s with regards to digital transformation? How did your payment acceptance change over the last few years and what are the next steps for the company in that regard?

LL: Our digital transformation is happening right now. We are moving to an integrated POS system that will allow seamless functionality with our online ordering, loyalty/rewards and gift card programs. We are also outfitting all of our locations with guest-facing terminals that will accept EMV and NFC mobile payments. We expect it all to be fully integrated and functioning in our “integrated” locations by Q2 2016.

With the new terminals, the guests will have more control over their payments. They can ensure their loyalty membership is linked to their purchase and visually see the breakdown of their order.

LTP: As an expert in the restaurant business, what do you see as the future of payments in restaurants? Would you say that at some point, all the restaurants will be accepting only mobile payments?

LL: With the length of time it takes for the new EMV chip-and-pin cards to complete a transaction (30 seconds vs three seconds) and the advanced security the payment industry says mobile pay offers, I definitely believe that we will see the QSR, Fast Casual and Fast Fresh diners move to mobile payments quickly. I forecast 2016 to be the tipping point for mobile payments to go mainstream; not only in retail locations, but in the restaurant industry as well.

MEDICI Team

MEDICI

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