November 10th, 2008

Ordering Pizza Hut From Your Facebook Page? It's on the Way

By Emily Bryson York
Advertising Age

Fast-Food Chains Experiment With Takeout/Delivery Services Via Social Networks and IPhone Applications

A number of fast-food chains are reaching across the digital divide to get young consumers to order via Facebook or their iPhones. And they’re building valuable databases of their customers in the process.

Pizza Hut, which recently crossed the $1 billion benchmark in online sales, is launching a Facebook application that allows fans to place orders without leaving their profiles. Although online ordering isn’t new—the chain has offered it in some form since 2001—Bob Kraut, VP-marketing communications at Pizza Hut, said the bulk of that $1 billion in sales has come in the past 18 months. The chain is also launching text-ordering capabilities and e-gift cards, which can be purchased, exchanged and redeemed online.

Pizza Hut’s not alone: A number of the nation’s biggest fast-food chains are beginning to embrace text and iPhone ordering capabilities, at least as tests. Already for the three months ending in August, food marketers sent almost 1.4 million text-message ads, up 37% from the same period last year, according to ComScore’s M:Metrics data. Consumers seem to want the offers: of all the ad categories using SMS marketing, restaurants had the highest response rates, with 15.5% of consumers responding to the ads.

Subway spokesman Les Winograd said some of the chain’s franchisees have begun to offer ordering via text and iPhone apps. The chain has an unusually open policy that lets individual franchisees experiment with their businesses.

“Some of that is stuff that they’re doing on their own, but they share information,” Mr. Winograd said. “We’re constantly encouraging franchisees to think out of the box and try something new. You never know, it might take off.” (He said adding turkey to the menu was a franchisee experiment in the chain’s early days.)

Lessons learned
McDonald’s experimented with text-message ordering in Chicago last summer, with signs encouraging consumers to text in their late-night orders. Spokeswoman Danya Proud said there were “some very good learnings from this campaign about how to execute future viral campaigns.”

Chipotle is developing an iPhone-ordering application to complement its existing web- and fax-ordering platforms. The chain also lets consumers pay online, place group orders and save ordering information for return visits.

While shifting consumer behavior may be behind the move toward mobile ordering, it’s also lucrative. According to Mr. Kraut, online buyers spend more. “It’s a little more upscale demographic, and a lot of people use credit,” he said.

To attract those customers, Pizza Hut is launching a promotion with eMusic.com that gives customers 75 free downloads in exchange for buying a pizza online. The chain is hoping to boost awareness of its online ordering, up its cool factor and build its customer database.

Younger consumers
Mr. Kraut said the chain uses its database for targeted, sometimes monthly promotions, as well as market research. He declined to disclose the size of the database or how much it’s grown this year.

“We’re seeing that our customers are getting younger and younger,” said Mr. Kraut, adding that the eMusic promotion is a way to bring “people in from other source and offering them something extra.” Pizza Hut has done a variety of online promotions this year, including a partnership with Rockstar Games and its Midnight Club Los Angeles driving game.

Package-food companies aren’t sitting on the sidelines either. Kraft chief marketer Mary Beth West said the company has created an iPhone application for consumers to download recipes and shopping lists in the grocery store.

“Even in the current economy, people don’t have any more time than they had before,” Ms. West said. “They’re trying to get dinner on the table, and this is going to help them do that.”

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