Can Chick-fil-A's new app remain popular?

BI Intelligence

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Chick-fil-A's new mobile app, called Chick-fil-A One, has been wildly successful since its launch on June 1.

The app was downloaded more than one million times in its first three days on the market, likely because of Chick-fil-A's offer of a free chicken sandwich for anyone who downloads the app between June 1 and June 11. The company had redeemed 131,100 free sandwich offers within the first three days.

But what happens when this offer expires? Can the app maintain its popularity without this incentive?

The answer should be yes because it addresses a significant pain point for customers: long lines. Users are increasingly turning to mobile order-ahead apps because they save a great deal of time. Customers order and pay for their items ahead of time, skip the line, and pick up their items at a designated location in the store. This should be extremely beneficial for Chick-fil-A, which often has long lines and particularly busy locations.

Second, Chick-fil-A One includes a personalized loyalty program that will surprise users with their favorite orders and let customers track how close they are to their next reward. This should spur customers to use the app more frequently.

Quick-service restaurants (QSRs) — also known as fast-casual restaurants — such as Starbucks have been turning to mobile order-ahead apps to extract higher sales, intensify customer loyalty, and heighten foot traffic.

Leading QSRs in the U.S. are beginning to adopt these platforms at an accelerated pace and are benefiting from them. Taco Bell sees 30% higher average order values on mobile compared to in-store, and Starbucks' Mobile Order & Pay already represents 10% of total transactions at high-volume stores, directly contributing to increased company sales.

Mobile order-ahead is still in its early days, but will be a $38 billion industry by 2020, accounting for 10.7% of total QSR industry sales. This will be driven by full adoption among the top QSRs in the US, the growth of mobile commerce, QSR adoption through aggregators like Grubhub, loyalty programs, higher average order values, and new buy buttons.

Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed Mobile Order-Ahead Report that profiles the companies that have proved the mobile order-ahead concept and analyzes the trends contributing to this new industry's growth.

Here are some key takeaways from the report:

• Mobile order-ahead apps — platforms that enable consumers to remotely purchase menu items for in-store restaurant pickup — are on the rise among quick-service restaurants (QSRs). We expect sales on these platforms to reach $38 billion by 2020, representing a five-year compound annual growth rate (CAGR) of 57%.
• Mobile order-ahead will ultimately have an additive effect on the QSR industry. Mobile ordering platforms have been proven to intensify customer loyalty, increase purchase frequency, and lift average ticket sizes through order customization and easier checkout options. This means that mobile ordering is not a simple substitution for in-store purchasing, but a channel that can enhance the lifetime value of QSR customers. This makes mobile order-ahead a critical channel contributing to the growth of the QSR industry.
• Alternative commerce solutions will help propel mobile ordering. Aggregators like Grubhub will onboard smaller fast-casual restaurants into the mobile ecosystem by offering them an existing app to integrate into, lowering the upfront costs of creating a mobile channel of their own. And in-store self-service kiosks will help popularize remote ordering and accustom users to less traditional forms of payment that don't require a cash register.

In full, the report:

• Forecasts the growth of the mobile order-ahead industry in the US from 2015 to 2020, including its share of total QSR sales.
• Profiles brands that are leading the migration to mobile ordering.
• Examines the alternative commerce solutions that could help popularize mobile order-ahead.
• Explains the risks and drawbacks to launching a mobile commerce platform.
• Assesses the ways both large and small brands can create a mobile order-ahead platform.
• Determines which types of fast-casual chains are in the best position to benefit from mobile order-ahead.

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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of mobile order-ahead.