The customer strolls past the long line of caffeine-deprived commuters and saddles up to the bar, just as the barista presents a drink already prepared to her exact specifications: a grande, no-whip, extra-hot mocha with nonfat milk and an extra shot. Is the barista a psychic? Nope. A few minutes before arriving at the store, the customer used her smartphone to order and pay for her drink via Starbucks’ mobile app.

A growing number of restaurants are following Starbucks’ lead and offering customers the option of ordering and paying ahead by way of their smartphones. But as with all commerce taking place on the Internet, mobile ordering also increases for customers’ privacy getting compromised.

Growing option

Starbucks is a leader in digital and mobile innovation, having rolled out its mobile order and pay system in all of its 7,400 U.S. locations in 2015. Expect more restaurants to follow suit soon, according to Noah Glass, CEO of Olo, a New York based provider of customized digital ordering systems for restaurants. By 2022, he predicts that 50% of restaurant orders – not including pizza – will be digital.

Consumers want “the convenience of being able to have food at your fingertips, to skip the line at the restaurant, or to get food that you crave delivered to you,” Glass wrote, in a recent blog post on Olo.com’s blog.

Taco Bell was the first quick-service chain to launch mobile ordering and payment in 2014; to date, about 3.5 million customers have downloaded the app. Others are quickly following suit. In the fall of 2015, Jamba Juice, Firehouse Subs and Papa Murphy’s announced launches of mobile apps with ordering and pay ahead capabilities. Panera remodeled its mobile ordering app in about 20% of its stores as of late 2015, with more underway.

Mobile ordering isn’t just for takeout. BJ’s Restaurants recently launched mobile order and pay for guests who dine in. National Restaurant Association research shows that a third of all adults and more than half of 18- to 34-year-olds say that they would use mobile or wireless devices to pay restaurant tabs at full-service restaurants if given the option.

Restaurants that adopt mobile ordering early, and well, stand to enjoy a strategic advantage, industry observers say. In those Panera cafes converted to the new 2.0 mobile ordering system, digital utilization accounts for 20-30% of sales, and labor and order input costs go down, according to Panera’s CEO Ron Shaich.

Similarly, analyst David Tarantino of Baird Equity Research expects Starbucks’ new mobile order and pay app will create a structural advantage that will boost sales and keep customers coming to Starbucks, and coming more often, for years to come.

Reducing risk

While digital ordering can boost business and customer loyalty, restaurant operators need to also address privacy issues inherent in mobile payment, according to eCommerce attorney Darin M. Klemchuk.

“To reduce risk, every restaurant that adds mobile apps should have comprehensive privacy policies and terms of use agreements with customers,” said Klemchuk, of Dallas-based Klemchuk LLP. “These agreements are relatively inexpensively created and maintained. Because eCommerce law changes frequently as technology develops, these agreements should be reviewed periodically.”

For more information on this topic, please visit our Privacy Policies service page, which is part of our Internet and eCommerce practice.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX. The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights. The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution. Additional information about the internet law firm and its internet attorneys may be found at www.klemchuk.com.

Klemchuk LLP hosts Culture Counts, a blog devoted to the discussion of law firm culture and corporate core values with frequent topics about positive work environment, conscious capitalism, entrepreneurial management, positive workplace culture, workplace productivity, and corporate core values.