Research: 2018-Q1 Hospitality Digital Leaderboard

Today our research brand (Grid Decision) launched its first quarterly Hospitality Digital Leaderboard. Below is an article extracted from the Grid Decision website introducing the report.

My first involvement in digital ordering was all the way back in 2002, when I managed a team at Starbucks who piloted what might have been the first mobile ordering solution, ever. We called it Starbucks Express and piloted it first in a few Seattle locations and then in the Denver market in 2002. The solution was way ahead of it's time, even before smart phones (as a point of reference, the first iPhone wasn't even announced until 6/29/2007), and was eventually put on hold due to lack of adoption. But it worked. Customers would setup an account online and tie a Starbucks Card to it for automatic payment on order submission. They would then create a specific order for a specific location and give it an order number. Later, during their commute, they could speed-dial a number on their flip-phone, be prompted to enter their order number, and then have that order waiting for them on the counter 4-5 minutes later with a sticker on the cup with their name on it.

My first involvement with digital loyalty was during the two years prior (2000-2001), when I led the initial Starbucks Card program. The funny thing is that one of the keys to the initial Starbucks Card program's success was the simplicity of the loyalty program. We decided that the game-changer at that time was to: 1) be the first global gift card, 2) be faster than cash, and 3) be a premium card in alignment with the Starbucks brand. Nowhere in that list is a loyalty and rewards program as it would have added complexity to the POS, slowing the expansion to domestic licensed partners and international joint-venture partners (all who have their own unique POS platforms and competing priorities). We had to keep it simple and that was the key to the rapid global expansion to become the first gift card that could be used globally in all Starbucks locations. All that said, we did end up adding a very simple loyalty/rewards program to the initial launch (card users who registered online were sent perks in the mail, keeping the complexity out of the stores). Fast-forward 17 years and the digital program has evolved with rewards now being a key tenant of the Starbucks Digital Flywheel strategy.

So it feels like a full-circle moment that over a decade later my consulting firm (Peak Portfolio) is helping multi-unit chains select and negotiate digital vendor relationships and my research firm (Grid Decision) is now evaluating the digital vendor marketplace via leaderboard reports.

Today we're launching the first of what will be quarterly leaderboard reports for hospitality digital (ordering, loyalty, CRM, Analytics, and UX).

You will notice there are some key vendors missing from this initial report. Several indicated that they wanted to see how the report turned out this first quarter before deciding to participate in future quarterly reports. If you like the format of this report and would like to see all the top vendors included in future quarters, the best way you can help is to do one or both of the following:

1. Send me an email ([email protected]) indicating the vendors you would like to see in future reports to help you evaluate your options. I can then consolidate these requests and share it with the vendors.
2. If you decide to leverage our Custom Grid option (applying your own weighting model to our RFI data) to short-list vendors in your selection process, an email from your CIO indicating you plan to use our RFI data to short-list vendors can be forwarded to the non-participating vendors as incentive to fill out the RFI asap and participate.

What's in it for you? Not only a complete leaderboard report for the digital marketplace but also a complete set of RFI data for the Custom Grid option mentioned above. As an example of how this can be beneficial, Jamba Juice recently leveraged the Custom Grid option with our recent Q4 POS leaderboard's RFI data, allowing them to shorten the typical RFP process from 4-6 weeks down to 1 day. We accomplished this by applying their weighting model (unique priorities) to our RFI data to produce the same level of detailed scoring matrix that you typically see in an RFP process. So the more vendors we have refreshing their RFI data quarterly, the more complete and effective of a tool this Custom Grid can be to fast-track your digital vendor selection process when the time is right.

To give you an idea of what to expect in the digital leaderboard report, here's an excerpt that provides an overview of the digital ecosystem to set the context of the rest of the leaderboard report:

Digital Ecosystem

As you can see in the diagram below, the digital ecosystem can be very complex and there are many different configurations possible. Many chains are struggling today with manually keying in menu data in multiple systems. To add additional complexity, most vendors check different boxes below so there are some that aim to resolve the complexity by becoming a one-stop shop and others who aim to be the best of breed for a specific box and integrate with everyone. There’s also the question of who provides the UX (app or web). In some cases the loyalty provider builds it, in others the order engine builds it, and in others an app/web dev shop builds it. The right approach will be different for each chain based on their priorities, funding, and internal capabilities.

Order Marketplaces

Many chains have the dreaded wall of tablets to receive orders from the Order Marketplaces and manually key them into their POS. Vendors are racing to partner and integrate with leading order marketplaces to solve this problem for their customers. This will eliminate the manual integration as well as enable syncing menu data to ensure the order can be fulfilled when the customer/delivery carrier arrives to pick it up.

Delivery Marketplaces

Chains are announcing partnerships with delivery marketplaces regularly to expand their customer base. Quality and coverage is the primary focus in selecting order marketplaces. There is also an opportunity for digital vendors to automatically select from multiple delivery carriers on a per-order basis based on predefined criteria. Integration with digital vendors will enable an improved guest experience by providing status updates back to the customer.

Digital Vendor Market Map

The following is a list of the key vendors in the digital marketplace:

Here is a summary of what's included in the digital leaderboard report:

If you would like to see how many of the vendors above ranked in the digital leaderboard, you can download it free:

2018 Q1 Hospitality Digital Leaderboard

Lastly, if you are an multi-unit chain executive, you might also find our quarterly POS leaderboard report helpful:

2018 Q1 Hospitality POS Leaderboard

I hope you find these reports beneficial and welcome feedback for improving future quarterly leaderboard reports!

Allen Eskelin
CEO of Peak Portfolio - consulting
CEO of Grid Decision - research