Supercharge loyalty and elevate customer experience with on-premise technology
Restaurant owners and operators of all sizes are weighing up the benefits of on-premise technology - and whether they will receive the required return on investment at a time of labor crisis and inflation.
HEAD OF MARKETING AND CUSTOMER SUCCESS
February 7, 2023
The lasting impact of the pandemic on both restaurants and customers is still very much evident. Take-out and third-party-delivery dining experiences have, for most brands, continued to outstrip the equivalent pre-pandemic numbers.
A report from the U.S. Census Bureau states that between 2019 and 2021, the number of people primarily working from home tripled from roughly 9 million to 27.6 million people - approximately 17.9% (U.S. Census Bureau, 2022).
Consequently, routines and meal times continue to be fluid, with many families and diners visiting local, suburban restaurants for mid-week visits, rather than city centers. 44% of consumers in a recent survey reported they are consciously opting for local restaurants as a way to save gas money (HungerRush, 2022).
For restaurant operators, the primary driver for the adoption of new technologies throughout 2021 and 2022 has been operational efficiency, as the labor crisis means teams have to meet increased orders with fewer team members.
A priority for many full-service, casual and grab-and-go brands is a robust, reliable digital ordering platform that integrates with the point of sale, drives revenue, and fits the on-premise operation.
But is efficiency important to the customer - or would longer service times be preferable if it came with the ‘human touch’ of traditional service models?
Customers are demanding better service
Research from Mintel suggests that customers have now moved away from viewing restaurant technology as a safety or sanitation tool. Interestingly, their research suggests that restaurant tech should be focused on “delivering benefits that increase efficiency for the diner.” (Mintel, 2022)
Value-for-money, attractive loyalty programs, and delicious food remain priorities for customers, but they have not overlooked the opportunity for tech to reduce friction in mobile ordering, contactless payments, and loyalty journeys. Recent reports support these findings - 68% of customers now expect to be able to order digitally at casual restaurants (HungerRush, 2022).
Pepper example: community-minded chain Sweetwaters Tea & Coffee offer their guests multiple routes to order, including via their mobile app or using a web view, either desktop or mobile. All of their online ordering journeys are integrated into both their Square loyalty system and the POS in-store. This omnichannel approach led to significant growth in digital ordering and loyalty in 2022.
Leaders in the restaurant industry tech space, such as McDonald’s and Starbucks, continue to remodel restaurants and coffee stores to meet the changing needs of a digital-first operation. In December 2022, McDonald’s opened a test restaurant in Texas with a separate drive-thru lane for mobile orders, saving time by having food delivered to customers on a conveyor belt.
Even smaller groups and independents in the restaurant business have been opened up to a world of digital innovation, thanks to online ordering and integrated services that link to POS companies like Square and Revel.
Pepper example: Vela Juice bars have supercharged sales in their two locations with digital click-and-collect, via a mobile app. They have over 10,000 users in the Plymouth, Massachusetts region with no need for customers to queue and relay their orders to staff. Many have their regular order saved in the app - making re-ordering a number of taps.
The market position is well summarized by Varchasvi, a Foodservice Analyst at Mintel Menu Insights:
“On-premise technology offers operators and consumers the path to a common goal – a seamless dining experience featuring high-quality food. By implementing the right technologies, restaurants can make operations efficient and deliver on consumers’ expanded needs for value, convenience, and speed while also offering highly personalized experiences that build consumer loyalty.” (Mintel, 2022)
Building loyalty with mobile payments
Efficiency is also integral to the successful implementation of online orders and digital loyalty programs. An ordering process that requires manual intervention, entering codes, or taking down phone numbers, for example, can slow down service and frustrate time-pressured in-house staff.
For persistent loyalty programs, like stamp cards or points-as-currency, it’s important that consumers have transparency over how they’re earning rewards, where they can stay up to date with them, what the benefits will be and how they can spend them.
Pepper example: Craftwork Group, which operates coffee stores for residents inside apartment buildings, has seen over 30% of customers move to digital ordering. As well as speeding up service for their sites, they have also seen a 20% higher spend from digital consumers.
Pooja Lal, a US-hospitality Mintel Analyst, summarized that: “Operators should continue to grow their brands in the digital space as it evolves. Diners want to hear more about establishments regarding topics of food quality, new menu items, and loyalty rewards and programs.”
Driving data capture through online ordering
New tech trends in digital ordering and payment unlock crucial data on restaurant diners, which allows brands to be more targeted and personalized in their approach. Research supports the view that even data-wary consumers are willing to trade transactions and visit data for compelling loyalty programs and personalized offers when ordering food.
Mintel’s research supports this - highlighting that diner participation is key for successful tech investment. Loyalty programs and marketing campaigns become more nuanced, targeted, and better informed when built on the analysis of a large data set. However, poorly implemented technology that does not suit the operational needs of a business, or systems that do not integrate with other key tech partners, can form a barrier to guest usage.
As well as providing multiple paths to ordering and purchase, restaurant groups should incentivize reluctant guests into tech acceptance via rewards for early adopters and transparency about the use of their data.
How do restaurateurs prioritize tech needs and evaluate potential suppliers?
It is evident that a wealth of consumer research supports the need for brands to digitize their online ordering and loyalty. For many, however, with rising cost pressures, shortages of employees, and competing priorities, investing in important restaurant technology can feel overwhelming.
It’s key to find a tech partner that appreciates these needs and has the resources to support your brand throughout not only the implementation but the long-term strategy of your app, online-ordering solution, and/or loyalty program.
Some brands choose to use quick-set-up off-the-shelf solutions that are not integrated or standardized digital bolt-on offerings from their POS provider.
Often, however, these tools are either incredibly manual to update and maintain - meaning more work down the line for the management team in-restaurant, or they are very limited in their scope because they are designed to work for the widest cross-section of the industry. This can mean features are limited and customers are frustrated.
Pepper seeks to design and create a solution for each business that meets their specific needs, then offers the support and expertise throughout, to ensure ongoing success.
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- Mintel - US on-premise restaurant technology market report
- Business Wire - Nearly 80% percent of consumers prefer restaurants with technology experiences
- Mintel - US fast casual restaurants market report
- Census - People working from home