Restaurant & Hospitality Digitization Overview

For almost 20 years now, we’ve engaged with digital commerce solutions in our personal lives. Chances are, you’ve used Uber or Lyft to order a ride, used Amazon to make a purchase, and ordered food from a third-party delivery provider like Grubhub or Doordash. All are great examples of Digital Commerce solutions. The aforementioned companies have done a phenomenal job in training consumer behavior over the years.

“We are one of the few industries left where someone can start as a dishwasher and grow to CEO. And that is a beautiful thing!”

Historically, the restaurant industry (as a whole) has been late adopters of technology. It wasn’t more than 15 years ago we were reluctant to give up our cash registers for POS systems. Not too long after, we were reluctant to give up our spreadsheets for scheduling and ordering software. And we are still a bit reluctant to trust forecasting algorithms and the 100’s of other new solutions promising massive ROI. But like all “new” technology, there’s a learning curve and reluctance in adoption. Digital commerce is no exception, and for good reason.

Year over year, the restaurant industry has grown both in location count and revenue. However, it’s also been growing towards a world of unstable unit economics. Issues with an ever-worsening labor market, rising costs of product, inflation and increased competition have become significantly more prevalent with the onset of covid. Re-imagining service models, restaurant design, and infrastructure is crucial to the industry’s continued growth.

Any time demand is heightened, it’s inevitable that opportunistic minded people will work quickly to create supply. Solution providers of all disciplines continue to flood the restaurant technology market every day. And that is exactly why, we as restaurant operators, are so hesitant on trusting “new” solutions. We’ve been inundated with phone calls from strangers promising growth in revenue and ebidta if we buy what they are selling. A majority of us have been burned more than we like to admit. Outsiders to our industry have adopted talk tracks aimed at artificially creating needs for their solutions. Some are hard NOT to believe.

Without ever having; worked a clopen, been triple sat in a section, or been burnt by a salamander…can you really understand the restaurant industry? I don’t trust people that answer “yes” to that question. We are one of the few industries left where someone can start as a dishwasher and grow to CEO. And that is a beautiful thing! Now, that’s not to say you can’t lead a large multi-unit business without that experience, or even build some technology without it…but there is no doubt, “ground-up” experience sure does help. Ok, OK! Rant over, now back to Digital Commerce for restaurants and hospitality.

Digital Commerce is currently showing our industry “Hard to Believe” returns on investment and benefits from going Digital. Some of which…

· “the ability to keep stores open with less than half of their normal staff”

· “10-20% increases in throughput and revenue”

· “30% Decreases in Labor Costs and staffing requirements”

· “300x Loyalty Adoption Rates”

· “Sharp increases in Guest Satisfaction Scores”

· “2-5% COGS Savings from increased Order Accuracy”

And the list goes on and on and on.

However, the brands reporting these results are currently the minority. Countless "Digital Providers" have failed to hit the mark in a multitude of ways. From lack of core functionality necessities to poor implementation teams...some new comers to the space are just fancy looking vaporware. Time will tell if any of them can last in the market, and for those that do make it...will ultimately just be leapfrogged by the legacy POS providers? Afterall, who really wants additional points of failure present in collecting money?

If you are dead set on being an early adopter, aware of the risks, and can't get the functionality from your current POS. Let's dive in to the shopping process. Picking what is right for you and your brand is actually very, very simple. Buy something with a proven track record, which is infinitely scalable across your commerce channels. Let’s talk through your commerce channels for clarity…There’s 2 Categories

1. On Premise

2. Off Premise

On Premise commerce consists of…

· Dine-in Transactions

· Dine-in with to-go Transactions

· Gift Card Transactions

· Loyalty Transactions

· Retail/Merchandise Transactions

Off Premise commerce consists of…

· Online Ordering Transactions (both 3pd and through your brands portal)

· Curbside Transactions

· Drive Thru Transactions (if applicable to your concept)

· Catering Transactions

· Gift, Loyalty, and Retail Transactions (applicable when infrastructure exists)

You’ll want a solution that…

· Has the capability to hand handle every aspect of your commerce needs (including EMV)

· Integrates seamlessly with your legacy POS, or ideally is supplied by them.

· Integrates seamlessly Loyalty, Gift Card, and Third Party Delivery Providers

· Consolidates Menu Management and Distribution into one platform

· Is NOT a credit card processor

It’s easy to find a myriad of companies providing some of the above, but very few that offer it all. That doesn’t mean you have to roll out everything at once, but that does mean you won’t be in a tech stack nightmare when you’re ready to do so.

Hope you found this article valuable and happy to assist on any of your technology or operational initiatives that come up.

Until next time,

-Savi