Technology Enables Restaurants to Elevate Customer Experience, Reduce Waste and Personalize Interactions
Quick-service restaurants increasingly deploy geofencing to reach nearby digitally connected consumers and convert them into customers. Starting around 2018, fast-food brands found geofencing to be a particularly effective marketing and advertising tactic.
According to marketing specialist Digital Division Group, nearly nine out of 10 marketers in a survey saw sales and customer engagement increase when they used geofencing, and the method delivered double the click-through rates over other online initiatives. Geofencing outreach is 10 times as effective as email marketing, Digital Division Group says, and geofencing is compatible with 92% of smartphones.
What is Geofencing?
So, what exactly is geofencing? TechTarget explains that it’s marketing and advertising based on a consumer’s geographic location at a particular point in time. That makes it a powerful marketing weapon for any brick-and-mortar business.
Here’s how it works: A mobile app or software harnesses the Global Positioning System (GPS), radio frequency identification (RFID), and Wi-Fi or cellular data to define a virtual geographic boundary, or geofence. Then when someone has entered or left the boundary, geofencing initiates a marketing text message to the person’s internet-enabled smartphone, smartwatch or tablet. The geographic area can be as big as a ZIP Code or as small as a boutique, TechTarget says, and Google Maps or Google Earth may help in setting the boundary.
Geofences can be passive or active, according to TechTarget. Passive geofences are constantly at work in the background and depend on Wi-Fi and cellular data. With active geofences, end users must opt in to location services and a mobile app to receive the marketing message. In fact, TechTarget points out that users may choose to customize the geofencing in their mobile apps by specifying that when they’re near a selected location, they wish to be notified.
So, the takeaway is that geofencing ultimately presents another way that marketers can engage with customers. It supplements ads in traditional media (television, radio, print) as well as those rolled out on social media platforms and presented in other online advertising such as search engine results.
Geofencing’s Primary Uses
There are many ways that fast-food restaurants use geofencing. First and most obvious, when people are near a QSR, they can receive an enticing offer. A second benefit occurs when customers who have ordered off the brand’s app enter the restaurant’s defined boundary, maybe a few minutes away. Inside the restaurant, an employee receives an alert that the customer is about to arrive to pick up her order. The kitchen can time the order to her arrival. This capability is vital with online ordering, which more than doubled during the pandemic.
In a write-up for QSR magazine, Coby Berman, co-founder of the app-building company Radar Labs Inc., said convenience is king in online ordering. “It’s no longer good enough to just have the best burger and fries in town. If the digital experience that’s paired with that [food] is bad – for example, if every time I show up, my food is not ready when I arrive or if my food is cold— then a brand is missing out on a critically important component of establishing brand loyalty.”
Less Food Waste
Berman goes on to say that another advantage of geofencing is a reduction in food waste, which is a tremendous plus because of the restaurant industry’s tight margins. This occurs because of the timing capability: The food measures up to the brands’ expectations as well as to their guests’. They won’t return food as subpar because, for instance, the hot food has cooled, the lettuce has wilted, or melting ice has diluted a beverage.
He adds that restaurants’ own internal standards may mandate that food be disposed of after 10 minutes because it no longer meets their standard of freshness. “That is a double whammy,” Berman says. “Now you have to cook food you already cooked again while you also are wasting food.”
Other Geofencing Uses
In addition, fast-food restaurants (and other businesses) may employ geofencing to draw customers away from their competition. For instance, XYZ Roasted Chicken may set up a geofence around ABC Fried Chicken so that when a consumer enters ABC’s zone, she receives a text message prompting her to divert from ABC in favor of XYZ.
And there are other benefits… TechTarget notes that geofencing can generate ads to users of social media (Instagram, Facebook, etc.) when those users enter a geofenced area; they also may send targeted ads to internet search engines when a user enters a geofenced area. And Radar’s app software can determine, for instance, that a woman regularly leaves her office at 6 p.m. on Thursday and picks up a meal. Armed with that data, the restaurant can market to her in a personal, timely way.
Big-Name Franchise Brands Use Geofencing
CitrusBits says McDonald’s, Dunkin’, Burger King, Taco Bell and Panera are among the big-name users of geofencing. In fact, in many cases they’ve tested it, reaped the benefits and broadened its applications. For example, Restaurant Dive reported last December that McDonald’s would expand its Ready on Arrival geofencing pilot program to its top six markets by 2025.
The burger giant, which had experimented with geofencing starting in 2017, notched a 62-second decrease in wait time when the Ready on Arrival app feature was used with mobile orders. McDonald’s CEO Chris Kempczinski said there are “significantly higher customer satisfaction scores” from ROA transactions, spurring more frequent visits.
But McDonald’s has been victimized by geo technology as well, Geospatial World points out. In 2019 in Germany, Burger King launched the Escape the Clown campaign which located customers at McDonald’s and lured them away with a Burger King coupon. And in 2018, Burger King set up a mobile geofencing ad to entice clientele away from McDonald’s in the United States, Geospatial World said. A notification allowed people to download the BK app and order a Whopper for 1 cent; then customers were directed to the nearest Burger King to pick up their food.
Geofencing vs. Geotargeting
Burger King has used both geofencing and geotargeting in butting heads with McDonald’s. The difference between the geo techniques, Indeed.com explains, is that geotargeting uses a person’s current location, plus other data, to personalize the ads he or she will receive. Geotargeting requires more detailed information about the recipient and therefore is more specific with its marketing and advertising, and it reaches a smaller audience.
Geotargeting can be an effective tool for scaling, the Indeed article states, because the business owner can use data collected about customers’ behaviors, interests and demographics, and then simultaneously run ads in various geographic locations to heighten brand recognition and awareness.
