Consumer expectations for convenience have increased globally and across a variety of markets—and quick-service restaurants (QSRs) are no exception. Over 30% of today’s dining experiences involve some type of smart device to make fast food faster with quick ordering options, in-house kiosks, and new services competing in the delivery space. This has led to a 40% surge in digital sales as consumer-centric convenience and technology combine to elevate the customer experience. Perhaps unsurprisingly, fast food experiences have become the go-to for many busy consumers, leading to an increase in availability and variety in fast food restaurants.
Yet the rise in these convenience-driven programs also introduces possible security gaps that put consumers at greater risk of fraud, which impacts customer satisfaction and long term loyalty. To dig deeper into the consumer perception of quick-service restaurant fraud, Sift surveyed consumers across the United States about their use of these services, their experiences with QSR mobile apps, and their concerns about fast food fraud.
What is Restaurant Fraud and Fast Food Scams?
Restaurant fraud and fast food scams refer to deceptive actions that target either a business in the food industry or their customers, almost always for financial gain.
Chargeback and First-Party Fraud
One of the more common types of restaurant fraud encountered by QSRs is chargeback fraud or first-party fraud. This is when a person places a delivery order, then files a fraudulent chargeback claim with their card provider, claiming that they never received their order. Chargebacks not only impact a QSR’s bottom line, but can affect how a business’s payment provider categorizes their business. Visa, for example, places increased scrutiny and additional fees on businesses with what they consider high chargeback rates.
Stolen Credit Card Information
Another type of restaurant-related fraud is the fraudulent use of a legitimate user’s card information to place orders. The goal for these bad actors is to get as much as they can out of a credit card before the card is blocked. Once the card is blocked, a QSR or restaurant business is faced with both loss of reputation from the affected card holder and loss of revenue from the refunded order.
Fake Account Creation
Fraudsters frequently create fake accounts to exploit promotional offers such as sign-up bonuses, referral rewards, and first-time order discounts. This form of promo abuse results in wasted marketing spend, distorted user data, and diminished effectiveness of genuine customer incentives. Beyond lost revenue, fake accounts are often tied to broader fraud schemes like stolen payment information or account takeovers. For QSRs, the challenge is stopping this abuse without adding friction for real customers.
Balancing Restaurant Fraud Protection with Convenience for Consumers
It should come as no surprise that QSR customers expect experiences that are fast and seamless, with almost 40% of consumers reporting their number one frustration when ordering online and through mobile is experiencing a complicated login process or too many steps associated with accessing their account.
Yet despite this demand for convenience, speed doesn’t trump security; only 13% of survey respondents cited delayed order delivery as a factor when deciding to place future orders from the same QSR or third party delivery app while over half of survey respondents expressed concern over security. Here’s what we learned:
- 62% of respondents were concerned that their interactions with QSRs will lead to some type of fraud, whether it’s stolen payment information, account takeover, hijacked loyalty rewards points, or fake reviews
- 49% were most concerned about their credit card data being stolen
- 41% were worried about account takeover (ATO) attacks
This makes the margin of error for QSRs particularly narrow. Over 1/3 of consumers reported that they would abandon a QSR, never to return, if they experienced any type of fraud or account tampering, meaning that brands that don’t make their customers feel safe stand to lose big when it comes to customer loyalty and associated revenue.
Restaurant Fraud Can Cause Irreparable Damage
When considering operational expenses and optimization, serving a fraudster wastes time, resources, and eventually has a significant impact on their bottom line and reputation.
49% of respondents said they’d hold the restaurant or delivery service directly responsible for any fraudulent activity resulting from an interaction. 67% of respondents would consider switching businesses if their accounts were compromised in any way, and given the explosive growth of the QSR market, this would not be a difficult switch.
It’s clear that customers are unwilling to give businesses any grace when fraud occurs, and will simply seek out vendors that have made digital trust and safety a clear priority. With so much on the line, from profits, customer loyalty, brand reputation, and proprietary data, what was once merely a consideration for QSRs has become a requirement. QSRs must prioritize fast food scam detection, restaurant fraud prevention, and consumer protection.
Restaurant Fraud Prevention with Sift
QSRs that adopt a holistic approach to digital trust and safety can inspire brand loyalty, protect revenue, and maintain healthy, steady growth while providing their customers with the secure, seamless experiences they’re hungry for, and that’s where Sift has solutions.
Sift’s Global Data Network of over 1 trillion annual events is worldwide and cross-industry, giving our customers unparalleled insights into user identities. Through AI-powered fraud detection, Sift’s payment protection solution is able to indicate suspicious user activity, flagging for further investigation or stopping them before they can complete the transaction. Sift is deeply embedded with some of the food industry’s leading delivery services and restaurant chains, meaning that any user flagged through transactions on one QSR will be for any Sift user on a global scale.
With Clearbox Decisioning, Sift shows you why a user is flagged. Every industry is different, and has varying tolerances and thresholds for fraud. Through Sift’s customizable workflows, you can flag suspicious users for manual review and decide whether to allow their transaction based on your individual company needs.
Because of these unique tools and approaches, Sift food and delivery customers can expect low chargeback rates and minimal manual review of users, leading to an increase in customer loyalty, boosted growth, and frictionless experiences for legitimate customers.
Make Restaurant Fraud Prevention Work for You
Running a QSR is challenging. Competition is numerous and aggressive, customers have high expectations, and fraudsters are everywhere. Trying to manually process and review every user on your platform slows delivery rates, frustrates users, and grinds transaction ease down to a halt. Sift’s solution is self-learning, with every new transaction and event feeding an unprecedented data pool that our AI-powered protection can use to keep your business and customers safe and satisfied. Hungry customers worldwide expect speed, convenience, and most of all safety, and Sift is positioned to provide all three with industry-leading efficiency and transparency.
Sift commissioned a series of Dynata surveys in September and October 2019 polling 1,000 consumers each in the US ages 18 and above.
Frequently Asked Questions
Restaurant fraud involves deceptive practices that exploit a business or their customers for financial gain, hurting both financially in the process. Chargeback fraud and first-party fraud are both examples of commonly used restaurant fraud trends. It involves disputing a legitimate order with the credit card company after the order was received in order to get their money back. Chargeback fraud is a subset of first-party fraud, which can also include requesting a refund for illegitimate reasons.
Sift’s Global Data Network includes numerous restaurants, including some of the biggest, most well-known QSRs in the world. By harnessing the data collected from 1 trillion events annually, brands benefit from the shared intel of flagged fraudulent transactions or suspicious behavior across the network.
Every time a new transaction is identified as fraud or a user is found acting suspiciously, other businesses across the Sift network gain that shared intelligence through Sift’s AI-powered fraud detection. This allows QSRs using Sift to quickly get ahead of emerging fraud trends. Combined with Clearbox Decisioning (which gives businesses transparency and control over fraud decisions), businesses can identify fraud with industry-leading accuracy while providing near-frictionless experiences for legitimate customers.
As of 2024, the largest QSR is McDonalds, with over 41,000 locations in more than 100 countries. As of 2023 McDonalds reported a revenue of nearly $26 billion.
The largest QSRs in the world are:
1. McDonalds: over 41,000 locations
2. Starbucks: over 40,000 locations
3. Subway: about 37,000 locations
4. KFC: more than 30,000 locations
5. Domino’s: more than 20,000 locations
In terms of overall locations, Mixue Ice Cream & Tea surpassed McDonald’s in 2024, but yields lower revenue and operates primarily in the dessert and beverage sector.
Essentially, yes, QSR (Quick Service Restaurants) is the same as fast food. Both terms refer to restaurants that offer casual experiences, low cost, high volume, and quick food. The main difference is that QSR is a more formal term used in the industry whereas fast food is a consumer term. QSR also includes establishments that focus on products besides food, such as Starbucks where fast food generally refers to brands like McDonalds, KFC, and Burger King.
