Restaurant And Hospitality News – July 25, 2016
By Christine Kern, contributing writer
In news this week, Omni Hotels suffered a Point-of-Sale data breach affecting 50,000 customers; Starbucks’ Mobile Order & Pay usage is heating up; and Chipotle launches its new “Chiptopia” loyalty program to draw back its loyal customers after the E Coli scare.
Omni Hotels Reveals POS Data Breach at 19 Locations
Dallas-based Omni Hotels & Resorts has warned consumers that it has discovered a Point-of-Sale Breach affecting approximately 50,000 customers at 19 locations, according to the Wall Street Journal. The breach was the result of a sophisticated malware attack and affected customer credit and debit cards via the POS system at hotel facilities.
According to the Dallas News, compromised information included credit and debit card numbers, cardholder names, security codes, and expiration dates. Debit card PIN numbers and customer contact information were not affected by the breach, the company said.
Omni said that most of the systems were only affected for a brief time, though the malware could have been in operation for approximately six months between December 23, 2015 and June 14, 2016. The company statement read, in part: “Upon learning of the intrusion, we promptly engaged leading IT investigation and security firms approved by the major credit card companies to determine the facts and contain the intrusion. The issue has been resolved and we have taken steps to further strengthen our systems. We have contacted law enforcement and are cooperating with its investigation.”
Omni has not released a list of the specific 19 locations impacted by this breach, though they did assure that there was no indication that reservation of Select Guest membership systems were affected.
Starbucks Reports Rise in Mobile Order &Pay Usage
Starbucks Corp. reported that five percent of all U.S. transactions at its stores were made via the mobile order & pay app in Q3 2016, according to the Nation’s Restaurant News. This marked a full percentage point increase over Q2 figures. The mobile order & pay app was rolled out across its U.S. stores less than a year ago, with the expansion from iPhone to Android smartphone devices completed in September 2015.
Membership in the Starbucks Rewards loyalty program has also increased 81 percent over last year, according to the company. The program was revised in April, creating some backlash from customers, but the program seems to have rebounded. The company earnings release said that it has 12.3 million loyalty club members at the end of the quarter.
According to Starbucks chairman and CEO Howard Schultz, the third quarter result “demonstrates the strength and resilience of the Starbucks brand and business around the world.”
“As we enter Q4 and approach fiscal 2017,” Schultz said, “we have clear line of sight to returning our U.S. business to historic levels of comp sales growth which had been at or above 5 percent for the 25 consecutive quarters prior to Q3.”
According to Scott Maw, Starbucks chief financial officer, the third quarter was the first non-holiday quarter for Starbucks in which operating income exceeded $1 billion. He said, “We are confident in the correctness of the strategic, operational and digital moves we outlined today and remain steadfast in our commitment to deliver significant, profitable growth over the long term.”
Chipotle Launches New Loyalty Program to Bring Back Customers
in an earnings call with analysts, Chipotle founder, chairman and co-CEO Steve Ells said the launch of the new Chiptopia loyalty program on July 1 is designed to bring back customers, as the beleaguered chain continues its battle to right itself after a series of foodborne illness outbreaks last year, according to The Nation’s Restaurant News. The new loyalty program has approximately 3.6 million customers so far, Ells said, accounting for 30 percent of its restaurant transactions.
And while the loyalty program has shaved nearly 3 percent of the average check as a result of free food rewards, Jack Hartung, Chipotle chief financial officer said that the chain has also experienced a 90 percent increase in customers who visit 2.5 times per week or more; and the chain has seen a 140 percent increase in diners who choose Chipotle 1-2 times a week. “So we’re off to a great start with Chiptopia so far,” Hartung asserted. “We’d certainly like (the recovery) to be further along, but there are signs that the recovery is well on its way and continues to march along.”
While the first half of 2016 was focused on initiatives designed to get customers back into the restaurant, the second half of the year will highlight Chipotle’s great food and rewarding loyalty among its repeat guests. “Based on data, we believe a majority of our most loyal customers have returned, but many of them are not coming as frequently as they used to,” explained Mark Shambura, director of brand marketing.
Since January, when same-store sales were down 36.4 percent following the crisis, Chipotle has recovered about 53 percent of transactions, Hartung said, with restaurants in Ohio showing the most recovery, with declines of only 12 percent in July. Meanwhile, in the West, where the E. coli outbreak was largely focused, and in the Northeast where a norovirus outbreak sickened hundreds, the recovery has been slower.