Can Dunkin Donuts Out-Mobile Starbucks?

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1 Can Dunkin Donuts Out-Mobile Starbucks? By pymnts Posted on November 30, 2015 faster, Dunkin Webster and inside Brands Donuts now, Dunkin s that VP boasts Scott its that new latest Hudler, its On-The-Go coffee mobile and tastes CARDFREE play mobile and better how order than CEO consumers ahead Starbucks, Jon platform Squire are its responding. take mobile is the MPD best wallet CEO in the has Karen market. grown It s time to make the donuts or more precisely order (and pay for) them in advance via mobile and pick them up at the store.

2 Earlier this month (Nov. 18), Dunkin Donuts, launched its new On-The-Go ordering platform at select locations in Portland, Maine. Leveraging CARDFREE s mobile payments platform, Dunkin s On-The-Go platform was rolled out to 124 stores and allows Dunkin s Perks loyalty members to order and pay ahead and simply pick up in-store. MPD CEO Karen Webster had a chance to speak with Jon Squire, CEO of CARDFREE, and Scott Hudler, Vice President of Global Consumer Engagement of Dunkin Brands, about the launch, early consumer response and the technological integration that made it all possible. ON-THE-GO TAKES OFF! We re super excited about On-The-Go, said Hudler. We are a brand that is built on speed it s one of our key differentiators and, as technology is becoming part of every organization, this is something we felt was extremely important for us. Although Hudler said that Dunkin has every intention to roll out the app nationwide, there is no definitive timeline set yet for when or how that will happen. For now, Hudler tells Webster, Dunkin is focused on learning from users experiences at the Portland locations. And, after just about a week in, Hudler says that the stores were already seeing promising signs from customers and crewmembers (aka staff) alike. We re really encouraged by what we re hearing from how consumers are using it, what we re hearing from our teams and what we re hearing from our guests, he remarks. The bottom line is: Once customers use this one time, they don t want to stand in our line or any line for anything ever again. Hudler goes on to explain that in a dense market like New England where Dunkin has a longestablished presence, a robust footprint, and very busy locations it s extremely valuable to be able to increase the speed of service for their customers.

3 There are so many people coming into our stores, says Hudler, that to be able to improve our throughput with a tool like our On-The-Go ordering platform is a great win from both a guest experience standpoint. We can literally get more people through the doors especially during our peak morning hours. When asked how competitors like Starbucks and its immensely popular mobile payment app has changed the paradigm of service in QSR retail locations, Hudler tells Webster that Dunkin s customers know how ordering and pick up works in their stores now. It s about making sure that the guest knows that once they ve ordered they can come into the store and skip the register and go right to the pickup area, he adds. Hudler says Dunkin s customers are already used to seeing express beverage lines at many locations lines that expedite the ordering process, and help customers get out the door faster by allowing them to avoid getting stuck behind a breakfast sandwich order, for example, by picking up their beverage-only order from a special pick-up line. That helped get people in and out but limited Dunkin s ability to monetize that customer fully. Historically, says Hudler, when we ve had beverage-only express lines, that does provide a consumer benefit, but that limited the ticket to just a beverage. Our model is built around the coffee plus one. By having the On-The-Go ordering platform, we ve taken that issue of having to wait off the table, so a customer can order the coffee AND the breakfast sandwich, avoid the long line in the store and head right to the pick-up window. MAKING ON-THE-GO WORK ON THE INSIDE From a crew standpoint, Hudler notes that a close working relationship with technology partner CARDFREE has allowed Dunkin to implement several new operational features as part of the On-The-Go platform launch.

4 We ve added a printer that prints out a ticket so the crew knows there is something different. There s also a buzzer that goes off so the crew knows that is an order that has come through our On-The-Go platform, explains Hudler. CARDFREE s Squire agrees that working extremely closely with Dunkin was a key factor in the success of their partnership. When asked what other elements factored into the success, he says, I think our big differentiator since launch has really been about not being a singular service platform, but rather a full platform for mobile commerce. Squire goes on to say that CARDFREE has experience working with other QSRs rolling out complete end-to-end solutions. We are able to focus on the order ahead component as well as the point of sale integration, taking that pain point off our partners, he tells Webster, as well as things like CRM, loyalty offers and utilizing our own payments mechanism. Squire says that offering this depth and breadth of services allows the companies that CARDFREE works with to avoid having to go to another vendor to get and then integrate these additional services. The other big key fact, observes Squire, is that we ve done this on an enterprise level several times, and that helps our partners avoid a lot of the hiccups that tend to go along with these pilots and rollouts and speed to market. That level of experience was definitely evident to Hudler and his team, who considered CARDFREE a true partner in the development and initial rollout process. YOU DON T HAVE TO BE FIRST JUST BETTER It seems that Dunkin s culture of innovation also positions them well for success in this launch. They embrace technology like nobody else, said Squire of Dunkin. They ve learned from the past that you don t need to be first to the game taking a page out of Apple s book you just

5 need to do it better. So when you see how this flows you ll see that, in our opinion, this is the best [order ahead] integration to date. That s certainly a glowing recommendation from an organizational leader who has been involved in countless partnerships across the QSR space and beyond. It s not an easy thing for a large entity to take on operationally or from an infrastructure standpoint, continues Squire. So it s really a wholehearted buy-in from our partners as they go into this space order-ahead specifically which is more operationally challenging than payment swap out at the point of sale. It was really working as tightly as you possible can with a team and becoming a real partner entity, really the mobile arm of the Dunkin brand. Hudler can t help but chime in here, practically bubbling over with enthusiasm for the culture of innovation that Dunkin s CEO has fostered at the company. I m fortunate that organizationally this is something that we absolutely embrace the importance of technology and how it changes everything, especially for a brick-and-mortar retailer like Dunkin Donuts, Hudler tells Webster. I am fortunate enough to work for our CEO, Nigel Travis, who is very focused on technology. He recounts the day the pair spent up in Portland just a few days prior, visiting stores unannounced just to see it, he said. We didn t tell anybody we were coming; just decided to go do it and we were testing it, trying to see what we could find and how things work. Travis, as Hudler explains, has had the benefit of working in two industries that saw significant technology evolution and innovation. From the Blockbuster days and the rise of Netflix and also coming from Papa John s on the pizza side, where ordering from your desktop and now your mobile device makes up the majority of orders, Hudler says of his CEO, he is really incredibly wired and it just flows on down. Additionally, as Squire points out, the Dunkin rollout was far more complicated than what Starbucks did because of the franchise model that defines Dunkin.

6 With the mix of technology and also the franchisee mix that Starbucks did not have to face, says Squire, the level of complexity of what these guys had to take on was so much more complex. Nigel wholeheartedly committed to this and I think you ll see that same level of enthusiasm as we continue to expand into new things. When asked about the response from franchisees, Hudler says, They ve been very supportive. They see other concepts in and outside our industry and how they are specifically using the ability to order ahead on mobile to grow, they are absolutely excited about this and want us to be prudent about it. ON-THE-GO IN THE FUTURE For all their enthusiasm and eagerness to get the On-The-Go platform live and in the hands of franchisees, Hudler makes sure to note that Dunkin employs a measured approach. I think we have probably been methodical about this because this is the first time we ve changed our service model since we launched drive-thrus a long time ago, explains Hudler. We take it very seriously, because speed of service is a big thing and there are a lot of things that go into getting the guest in and out quickly. So while we want to get it rolled out as quickly as possible, we also want to make sure we re doing it the right way. And the right way is something that cannot be overlooked in this conversation. After all, it s not only about getting customers in and out quickly. Major QSR brands like McDonald s have been ultra-focused on getting orders right the first time, sometimes sacrificing speed in the process. You ve got to be fast, but you ve also got to be right, emphasizes Hudler. And this actually helps with both, which is why we think it s so powerful. We see accuracy as a benefit of onthe-go ordering. The guest enters their order and can customize it as they see fit. There are no speaker box issues; there are no language barriers. We think there are a lot of benefits that go with that.

7 The timing of the launch, coming as it has during the start of the busy holiday season, may be odd to some. But, when asked if the company was nervous to do the first market rollout during the holidays, Hudler expresses no such sentiment. We wanted to do it [at this time], he tells Webster. This is a good time. Being in one market, we can handle that, we would not launch it nationally with everything else going on. We always say the sooner we get into stores the sooner we start to learn, and that s what we do.