The Digital Restaurant

What can we learn from the struggles at Starbucks?

May 06, 2024 Carl Orsbourn & Meredith Sandland
What can we learn from the struggles at Starbucks?
The Digital Restaurant
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The Digital Restaurant
What can we learn from the struggles at Starbucks?
May 06, 2024
Carl Orsbourn & Meredith Sandland

Discover the future of dining with us as we unravel the latest technological marvels transforming the restaurant industry. You'll get an insider's look at how digital advancements like kiosk ordering and mobile pickups are reshaping the customer journey, yet sometimes leave us tapping our feet with longer wait times. Hold onto your forks for our special sit-down with Irvi Patel from GoToFoods and Maria Rivera from Small Sliders at the Food on Demand conference, where we'll slice into the rise of delivery-only models and ghost kitchens.

Grab your headphones and prepare to be served a hearty discussion on the self-service revolution. We analyze the impact of apps from culinary giants such as Panera and Chipotle on customer satisfaction and scrutinize how they're performing against the charm of traditional eateries. Get ready for a taste of AI in drive-thrus and the innovative spin on pickup lockers, as we pepper in the challenges and successes that accompany these technological treats. Plus, we'll stir the pot with Grubhub's latest partnership with Hilton, dishing out what it means for your next in-room dining experience.

Finally, we simmer down to the hot-button issue of tipping in America. Hear about Domino's crafty coupon strategy designed to sweeten the deal for both patrons and drivers. We'll pour over the historical context of gratuities, the modern twists POS systems have added to this long-standing practice, and how industry heavyweights like Texas Roadhouse and Starbucks are adapting. It's a full menu of insights that'll leave you with food for thought, so tuck in and join the conversation!

Support the Show.

πŸ”” Subscribe to The Digital Restaurant Podcast and follow us on YouTube for more episodes that combine the love of food with the latest in technology. Your next restaurant tech adventure starts here!

πŸ“– Get your copy of the Delivering the Digital Restaurant books at www.theDigital.Restaurant

🎀 Have Carl or Meredith come and speak at your company conference! Learn more at www.theDigital.Restaurant

πŸŽ™οΈπŸ“°Please subscribe to our newsletter and connect with Carl & Meredith's Delivering the Digital Restaurant page on LinkedIn for their twice-a-month newsletter.

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Show Notes Transcript Chapter Markers

Discover the future of dining with us as we unravel the latest technological marvels transforming the restaurant industry. You'll get an insider's look at how digital advancements like kiosk ordering and mobile pickups are reshaping the customer journey, yet sometimes leave us tapping our feet with longer wait times. Hold onto your forks for our special sit-down with Irvi Patel from GoToFoods and Maria Rivera from Small Sliders at the Food on Demand conference, where we'll slice into the rise of delivery-only models and ghost kitchens.

Grab your headphones and prepare to be served a hearty discussion on the self-service revolution. We analyze the impact of apps from culinary giants such as Panera and Chipotle on customer satisfaction and scrutinize how they're performing against the charm of traditional eateries. Get ready for a taste of AI in drive-thrus and the innovative spin on pickup lockers, as we pepper in the challenges and successes that accompany these technological treats. Plus, we'll stir the pot with Grubhub's latest partnership with Hilton, dishing out what it means for your next in-room dining experience.

Finally, we simmer down to the hot-button issue of tipping in America. Hear about Domino's crafty coupon strategy designed to sweeten the deal for both patrons and drivers. We'll pour over the historical context of gratuities, the modern twists POS systems have added to this long-standing practice, and how industry heavyweights like Texas Roadhouse and Starbucks are adapting. It's a full menu of insights that'll leave you with food for thought, so tuck in and join the conversation!

Support the Show.

πŸ”” Subscribe to The Digital Restaurant Podcast and follow us on YouTube for more episodes that combine the love of food with the latest in technology. Your next restaurant tech adventure starts here!

πŸ“– Get your copy of the Delivering the Digital Restaurant books at www.theDigital.Restaurant

🎀 Have Carl or Meredith come and speak at your company conference! Learn more at www.theDigital.Restaurant

πŸŽ™οΈπŸ“°Please subscribe to our newsletter and connect with Carl & Meredith's Delivering the Digital Restaurant page on LinkedIn for their twice-a-month newsletter.

Speaker 1:

Why Domino's are tipping their guests, are Starbucks suffering digital inertia? And what's going on with Grubhub deepening their ties with Hilton? That's all ahead on this week's Digital Restaurant. The Digital Restaurant works like this we're going to ask each other five questions about headlines that affect the worlds of restaurants, off-premise and technology, but in some way tie back to our book series Delivering the Digital Restaurant. Are you ready? Let's go? Happy Monday, meredith. How are you?

Speaker 2:

I'm good, carl, how are you?

Speaker 1:

Very good, thank you. I am looking forward to food on demand this week. How are you? I'm good, carl. How are you? Very good, thank you. I am looking forward to Food on Demand this week. How about you?

Speaker 2:

I think it's going to be excellent. Food on Demand is one of my favorite conferences chock full of learning, but also just a lot of people attacking the same challenges and opportunities, which is always fun to have a group of like-minded people together.

Speaker 1:

It's a great one for content. I'm glad that we have been kindly invited back. We're going to be on stage with Irvi Patel from GoToFoods and Maria Rivera from Small Sliders, so if you're coming to Vegas, we look forward to seeing you there. Don't be shy, come and say hello. And if you're not coming to Vegas, do not fear, because we're going to record a special bonus episode of our favorite highlights, so keep tuned for that.

Speaker 2:

That's right. I'll also be doing a panel on the new reality of delivery only models, where we will talk about virtual brands and ghost kitchens and what's happening with them now.

Speaker 1:

But we best get on because we have one heck of an episode this week. I think it's fair to say lots going on and you have the first question for me.

Speaker 2:

I sure do. Very interesting report out this week looking at some of the newest innovation that came out over the course of the pandemic, often spurred on by growth in digital channels, and comparing the performance of those new asset types to the legacy solution.

Speaker 1:

You know what? I think we could probably spend the entire episode on this one, meredith, but we can't, so I'm going to bring up these here just to show those that are watching us on YouTube what we have seen from the report, because there's so much good stuff in here. And ultimately, the emerging experience study was looking at the comparison from a consumer perspective mystery shoppers what it's like to experience an innovative solution that various different brands have put in place that are trialing, versus a legacy solution that has been tried by the customers as well. They did 90 visits per brand, went to one innovation location and two legacy locations, and so, in that sense, 30 visits were conducted for each location and they focused in on kiosk ordering, mobile ordering for drive-through pickup and mobile order for pickup at a window or locker, and drive-through experience at a new prototype location. I'm not going to go through everything, but I do want to go through some specific areas here. The main highlights, just to give you the exact summary, is that most of these consumers, these mystery customers, highlights, just to give you the exact summaries that most of these consumers, these mystery customers, were saying that they did have a better experience when they went to an innovative location Technology innovations were driving speed, primarily for digital orders place of pickup and for that, seven out of the 10 brands that they looked at, the overall scores for the innovation experiences were better than legacy. So that's good, right. There's good indication that innovation is creating a better consumer experience.

Speaker 1:

Let's dig into understanding exactly what that was. We're going to start by talking about in-store kiosk ordering. It seems to be a topic we touch on every single episode right now about kiosks, and Shake Shack and Burger King were the two concepts that were looked at here, and the innovation experience was where the order was placed via an installed kiosk, where the legacy experience was where someone just goes up to the counter. Now, what you'll see here is that the order experience from the innovation concepts was 93%, relative to 89% at the legacy. The pickup experience was even higher, at 98% versus 93% at the legacy, and therefore the overall satisfaction was higher as well. The thing that I thought was interesting, meredith, is look at this the innovation concept actually took more time than the legacy concept, so the innovation side actually was a little slower and from order accuracy standpoint, that was higher.

Speaker 2:

Yeah, oh for sure. If a consumer is placing their own order, they are checking it as they go and even if they get something wrong, they're much less likely to report it wrong because they know they are the ones that made a mistake, whereas in a traditional order you're talking to someone at the counter. First of all, the chances for something to get lost in translation between what I, as a customer, say out loud and what you, as an employee, actually type into the POS. There's an opportunity for loss there. But secondly, when something is wrong as a consumer I am never going to think to myself oh, maybe I didn't say it. I'm always going to think they heard it wrong, they entered it wrong.

Speaker 1:

Good point.

Speaker 1:

I want to go to slide 12 here, which then talks about the mobile order for drive-through pickup.

Speaker 1:

This is where they looked at Panera, Taco Bell and Chipotle the innovation experiences, where the orders were placed via a mobile app for drive-through pickup and then the shopper was asked to drive to the restaurant, place their order while in the parking lot, whereas the legacy experience for Taco Bell and Panera Bread, at least, were traditional drive-through, where Chipotle's legacy experience involved parking, ordering via the app and then picking up at the store.

Speaker 1:

And again, the innovation experiences, from an overall satisfaction standpoint, ended up being 5% higher and actually across the board here you'll see some different numbers. So order experience, they suggested, was actually lower than the legacy, at 91% for the innovation concept versus 95% for legacy. Similarly, for the pickup experience was actually lower than the legacy, at 88 and 92. But the overall satisfaction was higher at the innovation side of things and they said here it wasn't always faster but they were mostly ready after the projected pickup time. So maybe that was part of the expectation setting that was happening here. But order accuracy was definitely higher, again at 11%. So that probably leans into what you were just explaining a moment or two ago.

Speaker 2:

I'm a little bit mystified by these numbers, though I'll be honest when I ask specifically about elements of the experience, it's lower at innovation, but when I ask about overall, it's higher at innovation. I wonder what we're missing here.

Speaker 1:

Yeah, I suspect further detail would be needed to really explore that one, but maybe there is something there just about the expectation setting as a result of that between the two different concepts. Let's go to the next area. Here I wanted to stop in on one of your favorite areas, the Chipotle, the digital kitchen, where they've got a particular spotlight focus here. And look at this Meredith, the innovation concept scores lower from a satisfaction with order experience in line with the legacy for the pickup experience, but overall, again actually better and also considered more friendly. So the Chipotle has given some interesting results here. The other side of it is that, again from a time perspective, the innovation concept's taking somewhat longer than the legacy experience. Any thoughts on that one?

Speaker 2:

I think people are just taking their sweet time going through the app. Is this really what I want? Do I want to add something onto it, although I must say, as an Android user, I would say that the Chipotle app is not as good on Android as it is on iPhone.

Speaker 1:

Okay, so I don't think we've got the data here to be able to explain how many of the customers used either iOS or Android. Let's go to checkers and rallies. They have been obviously in the news over the last year, particularly because they were given the title of drive-through of the future. This is, of course, where they have double drive-throughs, modular buildings, closed kitchens and AI voice technology, and again, when you look at the positive performance on this, you're seeing that the speaker, which, of course, is the way in which the customer is engaging through the drive-through was clear and understandable, which is certainly a big benefit when you talk about voice AI through the drive-thru. The shopper not having to repeat the order, therefore, is important, because most of the voice AI tech that I've seen does repeat the order to the customer, so that's already in place and so, therefore, satisfaction is higher as well. Rally is actually getting some pretty good scores across the board here.

Speaker 1:

Last one I'll touch on is in the mobile order for pickup at locker or window, and I wanted to highlight Whataburger because you'll see these rather swish lockers here. This is their digital kitchen that they launched in the fall of 2023, where customers place their orders through the app for pickup and then they pick it up through these lockers and again you'll see the general satisfaction for the pickup experience being 13% higher than the legacy solution and overall not one customer had a bad experience with it. Faster seems to be good from an accuracy standpoint, and also the fact they were able to identify clear parking spots for it were important too. So this report, I think, is a really good one for anyone that's in certainly the QSR space or folks that are looking to take on this type of technology to improve drive-thru, to improve pickup Really good ways to be able to learn on other innovators out there and what they're doing and what the customers have judged them at.

Speaker 2:

I couldn't recommend reading this report enough, and it reminds me, carl, of our first book. Do you remember the part where we talk about how, when drive-thru was first introduced to the industry, they just slapped a window on the side of the building and said come, pick up your order via your car? And it took a long time for actual science around how a drive-thru should work, what the stack should look like, how the parking lot should flow, how the drive-through windows should relate to what's going on inside of the kitchen, specific technologies being developed to optimize that process. It took a long time for all of that to happen and I think what we're seeing in this digital on-demand pickup and delivery space is that we're still in the front end of that, with everyone trying different things to figure out what exactly is the unique combination of things that create a great experience, and in this report I think we're starting to see what some of those things might be.

Speaker 1:

Okay, question two. We've also been listening to a little webinar which Andrew Costage over at Medallia was hosting earlier this week, where Medallia have done some deeper studies into the ideas of personalization. But one of the aspects that caught my attention from this Meredith was the fact that perhaps it's being held back by budgetary constraints and therefore there's a question mark as to are restaurants and other providers of personalization truly seeing the value of what it can mean to restaurants for having personalized services? What was your take on this one?

Speaker 2:

There's a little chicken or egg there right In this report, the very first thing I noticed was that restaurants were rated worst by consumers in terms of personalization Percent of customers rating nine or 10 on a zero to 10 scale. In terms of how much personalization is occurring In healthcare, it was as high as 38%, and then restaurant was down at the bottom only 21% of customers rating a nine or 10. Then what I thought was really interesting is when you peel back the ending, what exactly does that mean? Like, what are they looking for in personalization? The report goes into some specific aspects of personalization and one of them is customizable products. Restaurants really excel at this right. All of the ordering interfaces have different modifiers. You can put on things, you can take off onions, you can add extra ketchup.

Speaker 2:

I think restaurants are very good at that one, and that can't possibly be what customers are thinking of when they're imagining personalization with restaurants and then rating them so low. There are many other steps in the journey and you can be personalized all the way along. So, whether it's upfront in the marketing and pulling people in in terms of what messages you're giving them, what offers you're giving them, whether it's once they get to that menu? Do they see an actual personalized menu? We've talked many times about Amazon being what we imagine restaurants will become over time, where my Amazon page is not the same as your Amazon page, but I would bet if you and I both went to Starbucks our page would be the same and they're considered a leader here, right? So restaurants have a little ways to go on that dimension.

Speaker 1:

I wonder whether folks get sometimes confused by the term customization and personalization right, and where do those expectations come up most prominently? Are they at the point of purchase? Are they before the point of purchase, a day or two before? That's the challenge with personalization it's not just personalizing it to you as an individual, it's actually personalizing it to the time and situation, as to when you're thinking about food.

Speaker 2:

So then, specifically as it relates to your question about budget, I think we could ask ourselves are restaurants maybe not seeing the full benefit here because they're not spending as much money on this? I think we see that customers want personalization. The brands across industry, according to this report, that are investing in personalization are seeing higher growth rates. It's probably worth doing, and I think a lot of the reason that we see higher check on digital channels like kiosks and apps is that the offers are a little more customizable and personalized. But if restaurants aren't spending the money to get there, are they ever really going to see that benefit? All right, here's one for you. Carl Grubhub is deepening their ties with Hilton. These are two brand names that we do not often talk about here on the Digital Restaurant. So what is happening?

Speaker 1:

Before I tell you what's happening, meredith, let's go back to a stage that we shared last year with Cornell, to a stage that we shared last year with Cornell and I think a certain Meredith Sandham was sharing some views that she had about what it means to be someone that goes to a lot of hotels and experiences the opportunity of room service.

Speaker 2:

I am a million mile flyer on two different airlines. I've spent a disproportionate amount of my life living out of a hotel room and I will tell you that I have not ordered in-room dining in probably seven years. Right Like I think the consumer is changing. Because you have the availability now to get anything you want via DoorDash or Uber Eats, why would you be restricted to the menu that's on the in-room dining? I imagine that many hotels are seeing my personal consumer behavior writ large on in-room dining trends, and yet I think hotels have a fantastic opportunity to create that experiential dining and to use that same kitchen capacity and that same space to bring people out of their rooms.

Speaker 1:

There you were last September saying that. And, of course, grubhub and Hilton now have come together and started working with Home to Suites, which is part of the Hilton family, and they've enabled a seamless interface for guests staying at their extended stay hotels. And Rob Delacruz, who's the VP of on-site hospitality at Grubhub, said digital platforms can simplify the search for dining options when guests are on the road. Makes sense, right? You were just explaining that from your perspective, and what they've done here in building this relationship with Hilton is that they've been able to dot these QR codes around the hotel and those codes basically tie back to the location of the hotel, so that part of the process is simplified. Think about the last time you were away from home and you ordered through a marketplace. You have to find the address, you have to type it in. It's a bit of friction, right, when you have to change the address. So therefore, if you've got these QR codes that create that link all the way through to Grubhub, that know the address straight away, it's simplifying that process. Also, what's interesting is that they're giving the guests that choose to go through that particular profile then a month free on Grubhub+, which is their delivery subscription platform.

Speaker 1:

Why does Hilton do this? First of all, note it's home to suites, right? They offer kitchens in their suites, and so they're expecting their guests to basically cook, not necessarily eat, at their restaurants. I doubt many of them actually have restaurants in them, so they're either cooking or they're eating out when they're staying at this particular hotel brand, and I think even those restaurants that do still have a level of a food and beverage operation within them. They're probably seeing declining volumes for the same reasons that you mentioned on the video. But for the forward-thinking F&B executives in Hilton or in Marriott, I guess they must also be asking themselves how are they going to use their kitchen capacity to not just service the guests in their hotels but those that live within two or three miles of the hotel? Because if you can increase the volumes and the revenues by widening your access to different eaters, then perhaps you can reinvest into better food, which then may get you to have better opportunities for people to actually order room service in the future.

Speaker 1:

Of course, this does suggest about virtual brands. Are they really what I should be thinking about? And part of that is probably because of the marketing aspects that are involved in making virtual brands successful, but the wow-bows of this world, the Franklin Junctions, where they source known brands and are able to service them out of kitchens. That could be a potential option for how Hilton can utilize excess kitchen capacity. Or if they perhaps wanted to go alone and they wanted to develop concepts of their own, they could perhaps then think about how do they tap into that wider database of loyalty customers, because you're not necessarily having to stay at a Hilton, but you might be living two to three miles away from a Hilton property and so therefore, that gives you a leg up relative to many other restaurant brands out there to be able to target them through the app, through the customer information that they have about them. So Hilton, heck Marriott, you can have that one for free from me.

Speaker 2:

I think that's a great idea, carl. Wow, you're just going to give that away.

Speaker 1:

You heard it here first, guys. If you see it out there, let me know. Okay, so we're often asking you, meredith, to provide a view on the marketplace results or technology company results. This time we're going to ask you to reflect on both Starbucks and Texas Roadhouse. They've had different reports I think it's fair to say this week different outcomes. What are your reflections on both of them?

Speaker 2:

These are absolutely a tale of two cities. When we look at what's happening with Starbucks and Texas Roadhouse, let me just go through their numbers. Starbucks saw a same-store sales decline of negative 3%, while Texas Roadhouse saw an increase of 8.7%. At Starbucks that was made up of a 4% check increase and a 7% transaction decline. Now check increase could be them taking price. That could be consumers buying larger things or more items per order. We don't know. They didn't specify. And whereas at Texas Roadhouse it was pretty balanced between 4.9% check increase and a 4.3% transaction increase, percent check increase and a 4.3 percent transaction increase.

Speaker 2:

Now Starbucks let's start with that. They blame order to delivery times, which I think is fascinating, and it is certainly true that we see in Chipotle they've talked over and over again about how their transaction growth can really be attributed to their service speeds. It's incredibly important in the industry, so I don't want to deny that. But I think it's very interesting that they focus in on the order to delivery times and specifically they said they're seeing more cart abandonment due to slow service time. So I want to just look a little here at I'm going through the ordering process getting myself a cappuccino. Don't see an order time on there. I need something else. What should I get? How about a sandwich? Pick one of those out. Egg wrap that looks good. No delivery time still. Add that to my order. Go into my cart. Review my order. There's my delivery time Six to nine minutes. But did you notice anything else while we were going through that, carl? Anything else that was missing on that item detail page that, honestly, you would expect to see in any other e-commerce experience?

Speaker 1:

No, I have a feeling you're going to tell me.

Speaker 2:

The price. The price of the item is not on the item detail page, which is amazing. You don't see it until you get to the cart. So I think it's interesting to blame an increase in cart abandonment solely on that time, which certainly that's the first place a consumer sees it. So it's possible that's contributing to cart abandonment. But you don't see the price, as a consumer, until you get all the way to the end. And I will tell you, as a Starbucks consumer, I have often gotten to the end and thought maybe I don't also need a cake pop, maybe I'll just get one for Lincoln, I'll be fine. The number just gets surprisingly high, surprisingly quickly, because you have no idea what you're adding to your cart as you go along.

Speaker 2:

Starbucks did not release what their price increases were for the quarter, so we don't know how much to blame of that. Of course, price is a we'll call it a cumulative thing. As you take price upon price and those things start to add up, then you can see a massive transaction decline. And I wonder if that's actually not what we're seeing here, when they start to peel back the layers on the numbers and what's happening. One of the things that they blame is the afternoon day part, afternoon day part. I think a lot of that is people who are having treats. These are not our addicts who need caffeine in the morning. These are people who are going to have an afternoon treat of some kind. Oftentimes it's your high school students getting out of school going over to Starbucks, or it's you and I are having a meeting. Let's do it at Starbucks, something that maybe we don't deem as critical to our daily lifestyle as that morning jolt of caffeine. So you could see how you could definitely blame price there that people would start to pull back in that date park.

Speaker 2:

Meanwhile, texas Roadhouse, they actually told us how much they took 2.2% here in the quarter. So that could be one of the things that's contributing to doing well. But the other thing they talked about was rolling out their digital kitchen. They've now done conversions in 30% of their kitchens. This digital kitchen is a KDS that manages timing between all the different items. They said it makes their kitchen calmer, but I'm guessing it also makes the consumer experience much better, helps them with table times, all of those types of things. So here we see the inverse of what Starbucks is saying. Where Starbucks is saying their service times are slowing down. We've got a brand that's really investing in technology and back of house. That's most likely helping their service times get.

Speaker 2:

I want to take a moment here, though, to point out Texas Roadhouse really is an outlier to see that a 4.3% transaction increase. And we'll pull up one more chart. It's been over a year that transactions in the restaurant industry have been negative. This is thanks to guest FM this data coming out. Same store traffic has been below that zero line for over a year. Actually, if you take this data back even further into 2022, same thing. And this is, of course, is all happening against a backdrop of ongoing price increases. So when the experience is not as great, it's not as convenient. Certainly those times do matter, but also when the experience is not as great, it's not as convenient. Certainly those times do matter, but also when the value is not there. I think those two things, hand in hand, are what caused the transactions to go down.

Speaker 1:

And Starbucks. If I could give you any advice, it would be yes, absolutely improve those service times, but maybe also take a look at your price. I'm curious do you think there was a lag effect? Curious, do you think there was a lag effect? You mentioned the lag effect already on price, but do you think the fact that there's a digital wallet within the Starbucks experience that some way protected them a little bit through the price inflationary period of last year?

Speaker 2:

That's an interesting question. So I use the Starbucks app all the time to order and of course I have the digital wallet loaded in there, but I don't think of it as any different than the credit card. Personally, I don't know how most consumers do, but since it's tied to my credit card, I just think of it as my credit card. The way that the machinations of the credit card loading beforehand and then getting spent yes, it depends whether you're a $20 reloader or a $100 reloader.

Speaker 2:

Maybe that's what it's about, maybe that's what it's about, but I do notice that I certainly in recent months, I am much more likely to look at that basket when I get all the way to the end and say how did I get to $16.95? What did I buy? All right, our last question Domino's have an interesting promotion this last two weeks. What they said was that they would help our consumers tip a bit more. So there's a bunch of consumer frustration happening over tipping. Domino's had a potential solution. Why don't you tell us what it was?

Speaker 1:

Yeah, the ongoing debate of tipping right. What restaurant business owners have relied upon to shoulder the burden of cost, I think, in running their business, when it comes to labor, of course. And do you remember why tips are such a big thing here in the US? Meredith, I've told you this story before because Danny Meyer once told me a number of years ago that tipping is such a prominent thing in the US because of how it came about. And it came about at the abolishment of slavery in the US, and there were two industries the train track lane industry and the restaurant industry decided to handle paying their now new employees differently, and restaurants use tips as a way of being able to handle it.

Speaker 1:

So, fast forward to where we are today. And because of the increased amount of customer engaged POS equipment no matter whether this is in restaurants, in retail, everyone is engaging these days with a bit of equipment to be able to process their credit card. There's then this prompt about tipping as well. So everyone under the sun, it seems, is asking for a tip. In fact, I saw an article the other day about whether you're tipping your landlord. Have you received any tips recently, Meredith, as a landlord?

Speaker 2:

That's amazing.

Speaker 1:

No, I don't think I haven't myself, but there we go. So, anyway, americans are saying that tipping has become a bigger issue, and one of the things that a coupon birds survey recently revealed is that 66% of us tip purely to avoid awkwardness, 63% do it to avoid confrontation and 84% of Americans believe the minimum wage should be increased for servers. And so there's this theme bubbling in the background, and Homebase released findings from a survey that said about 48% of its customers said tips went down in the past year. So a lot of noise online about tipping, and while things might suggest that they should change, it seems that many business owners haven't received any complaints. In fact, 67% of those same home-based customers said they have never received any customer complaints about their tipping practices. So, with all that said, let's now think about how Domino's enter this debate by saying it would cover the cost of tips on behalf of its customers. Saying it would cover the cost of tips on behalf of its customers. Anyone who places an order online and leaves a tip of $3 or more will receive a coupon worth $3 that can be used in the following week for another online delivery order of $5 or more.

Speaker 1:

Now I think this is brilliant because clearly it's a trip frequency driver, a topic that gets the attention of everyone, and something that can be seen to be playing a positive role in addressing consumer sentiment. So the company has had a lot of success with this type of mechanic in the past. Do you remember, meredith? I think it was a year or two back. They said that they would reward customers for opting for carryout right, so they would give a coupon if you chose to pick it up yourself as opposed to having it delivered. So I think they're playing into that same kind of sentiment, the fact that customers are clearly watching what they spend. Clearly there's some frustration around tipping, but they're using it as a marketing mechanic to be able to drive order frequency at the same time. I think it's another great marketing move by Domino's.

Speaker 2:

It also helps them solve their continual problem with drivers right. They've really struggled on the driver front and I think this is yet another way. The first way was you don't need a driver if a customer picks up. But the second way is well, can we get the drivers paid a little bit more?

Speaker 1:

thank you for those of you that share your thoughts about what we should cover for those people that send us reports, information that they've been receiving about what's happening in the industry. We thank you. We appreciate you. For those of you listening, please give your views below. What do you think about the, the tipping controversy? Where do you think texas roadhouse goes from here? What would you do if you were the starbucks ceo? Lots of things. Similarly, are you going to order room service? Where do we end with this one, meredith? Lots of people to think about. Thank you for listening. We look forward to seeing you again soon and we'll see you at Food on Demand if you're joining us. The Digital Restaurant Podcast is available for you to follow and subscribe. Wherever you listen to your podcasts, watch us, rate us and subscribe to the Digital Restaurant on YouTube and follow along on all our social media digital Restaurant channels. Thanks for listening.

Digital Restaurant Innovation Study Highlights
Drive-Thru and Pickup Innovations Analysis
Personalization and Innovation in Restaurants
Starbucks vs Texas Roadhouse Analysis
The Tipping Controversy in the US