Hungry for Mo

Quick Service Restaurant
Dishes Up Opportunity

re business?

Industry
 

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   CONSUMERS ARE DEMANDING THE CONVENIENCE OF PLASTIC everywhere they go - supermarkets, gas stations, drug stores, video stores and restaurants. And now, debit and credit card acceptance is emerging into a space that historically accepted only cash: the quick service restaurant (QSR) market, where the average ticket may be less than $12 and speed is king.
   Take a look at the market. According to Chain Store Guide, there are nearly 1,800 QSR chains operating more than 185,000 stores. The top 45 chains alone are responsible for about 150,000 locations. Franchisees operate the majority of the QSR units, so while they all share a single brand, they make many individual decisions regarding store operations, equipment purchases and even card acceptance. This means that historically it was difficult to reach critical mass among the QSR chains when it came to card acceptance. It wasn't dictated by "corporate" and franchisees were viewed as individual businesses that didn't have the combined buying power of one large corporation.

The Opportunity is Now

   However, times are changing and a wave of card acceptance is occurring in the QSR space. The market is opening up due to several factors:

Competition: Today's pace finds families on the run. Dual incomes, school, soccer practice - it all adds up to a busy lifestyle. Families are turning to supermarkets, restaurants and take-out as sources of home meal replacement (HMR), a growing percentage of disposable income. And savvy QSR operators understand that a family of five can easily spend upwards of $20 on a meal. In order to earn their share of HMR dollars, they need to offer the same convenience found at businesses competing for a family's wallet. That means extending the convenience of plastic to their customers. And once the chain "across the street" accepts debit and credit, the domino effect will take hold and competition between the QSR chains will drive widespread adoption.

Aggressive Pricing Models: As the card associations and acquirers vie for this space, they are brokering deals with QSR chain headquarters to extend "best in class" pricing to all participating franchisees. In many cases, this allows an owner of one or two stores to receive the same terminal and transaction rates as those operating two hundred stores. The industry typically carries low fraud rates - it's difficult to return that burger and fries once they've been digested!

Faster Transactions: They don't call it "fast food" for nothing. Historically, one of the barriers to entry in this market was the fact that transactions needed to be fast. Today, a combination of quick pay programs from the card associations, combined with advances in telecommunications, means transaction times don't slow down the checkout process.

Keep it Simple

   As this market opens, it's important that everyone in the payment industry - from terminal manufacturers, to acquirers and processors, to ISOs - understands the unique challenges facing QSR operators and the solutions that will result in success. So, put yourself in the shoes of the franchise operator and design a total solution to win their business. Here are some tips that may prove to be successful:

Simple Enrollment: Imagine spending your days constantly hiring, firing, worrying about cleanliness, counting inventory and trying to make money on a business where every dropped chicken tender is counted. Now imagine receiving a card acceptance package that is three inches thick and contains eight brochures and six different forms to fill out in order to begin accepting debit and credit cards - a service which costs you money. Something tells me the enrollment package will remain in the inbox for "tomorrow." So, keep it simple.

Easy to Use: High clerk turnover means QSR operators are constantly hiring and training new employees. Therefore, systems must be easy to use. Today's intuitive ATM-style payment terminals speed training time and greatly reduce clerk errors. The software application must be simple to customize by activating parameters. Even though it's considered a restaurant application, there's usually no need to print a tip line. In fact, many customers may not require a receipt, so make this an option. Further, if port- able terminals are needed for queue busting or delivery, they should run the same applications as the countertop terminals.


Michelle Graff is the Delivery Marketing Manager at VeriFone, a division of Hewlett-Packard. Visit the VeriFone website at www.verifone.hp.com.