Restaurant franchises today are relying more and more on technology as new realities stare them in the face.
The Covid-19 pandemic that broke out in 2019-20 prompted the entire world to reset its priorities. As the coronavirus affected millions and shattered the global economy, it became evident that businesses needed to adapt and adopt fresh approaches to survive. Those who couldn't adjust were swept away, although many others fought back.
The National Restaurant Association (NRA) of the US pointed out that over 110,000 restaurants in the US had to shut shop in 2020. Many of these businesses were highly established. In 2020, restaurant sales fell $240 billion short of expectations.
One way in which restaurants have found they can wriggle out of the mess created by the pandemic is to take note of the changed preferences of the customers and tailor their strategies accordingly. It is not that tech-enabled dining was not in vogue before the pandemic. In the wake of the pandemic, the scope and uptake of technology in the food industry increased manifold as safety started to assume paramount importance.
Technology entices franchisees looking to boost their brand image. Technological solutions such as online ordering, self-ordering kiosks, mobile point of sale (POS), and digital menu boards, when implemented across the restaurant chain, can provide substantial benefits to both the franchisors and franchisees.
It is hard to believe now that the most well-known franchises began by using manual cash registers to ring up sales. They manually counted inventory as well. Franchise owners also depended on bare guesswork for predicting what the customers may demand, and how much supplies had to be ordered to satisfy that demand.
Today, technology is integrated into practically every aspect of franchise operations, allowing business owners to gather business intelligence data, observe trends, make demand and sales forecasts using artificial intelligence and machine learning, and make use of inventory management and POS software to count stocks, and manage supplies. Technology helps modern-day restaurants to process payments in a jiffy and allows customers to go totally cashless. Not just that, technology is used for workforce management, including scheduling, employee time and task management, and employee performance management.
Technology is also used to ensure that restaurants conform to food safety protocols.
As the franchising industry becomes more competitive, the use of technology will continue to increase. In fact, with technology rollouts getting increasingly complex, it is getting ever more challenging for franchisors to maintain consistency across restaurant chains.
Therefore, when you start to implement new technology at your restaurant, it's critical to ensure a smooth transition. Read on to know what you can do to ensure that your technology rollouts are a success.
Top Recent Technology Trends in Foodservice Industry
1. Online ordering and food delivery apps- Online food ordering and contactless doorstep delivery helped restaurants stay afloat as Covid restrictions kicked in and in-venue dining ceased. These facilities were not unknown before the pandemic, and the Technomic study done in 2019 for the NRA pointed out that the takeout option was offered by 93% of the restaurant operators, while third-party delivery was offered by 66%.
It also found that over the course of a year, 91% of the customers had ordered through the website or app of restaurants, while 60% had made use of the services of third-party delivery apps like Grubhub and DoorDash. And with diners getting accustomed to obtaining the cuisine they want, and whenever they want and being able to enjoy their food in the comfort and safety of their homes, online ordering and home delivery are not going to go away in a hurry.
According to McKinsey, the global food delivery sector more than trebled since 2017 and its worth crossed $150 billion. This was to a large extent a result of the Covid pandemic.
2. Payment using contactless technology- It's not simply about placing orders online anymore; it's also about paying using smartphones, or smartcards through apps or touchless devices. New payment systems had been gaining traction in the restaurant business worldwide, but with the pandemic, this trend accelerated. According to a study by Juniper Research, the value of contactless transactions worldwide is expected to treble in four years from $2 trillion in 2020 to $6 trillion in 2024. Cashless and contactless transactions are safer and more hygienic apart from being quick, and easy. Today, contactless payment through mobile wallets like Apple Pay and Google Pay are becoming more and more popular. People can also use mobile/internet banking and even cryptocurrencies to make payments.
3. Online table reservation- Calling a restaurant to reserve a table is becoming obsolete with online table reservations getting commonplace. Customers can check the slots available and make bookings on the fly with the help of restaurant reservation service providers like Eat App, OpenTable, and Tablein. Online table reservation is beneficial for restaurants too and they are able to manage waitlists, seating arrangements, customer loyalty, and dining choices, and also gather crucial customer data for market insights and contact tracing.
4. Digital kitchen boards- Today, Kitchen Display Systems (KDS) have dispensed with the need for pen and paper for taking orders. Waiters also don't have to fret about printed tickets getting smudged, nor do they have to run between the restaurant's kitchen and the front-of-house. A KDS acts as a digital menu board that helps restaurants in streamlining their back-of-house operations. It ensures that an order is visible to the kitchen staff as soon as it is fed into the POS system. Consequently, the kitchen staff can get down to preparing the meals quickly. A KDS also eliminates the chances of orders getting overlooked. Time and effort are saved as a result, and this is especially beneficial for quick-service restaurants, which handle bulk orders and focus on speedy service.
5. Automated inventory management- Tracking food supplies, forecasting quantities, and scheduling reorders are no longer tedious and time-consuming with inventory management being automated. Tech-enabled inventory management lets a restaurant cut the wastage of food as well.
This is an important merit of using technology to track stock levels, considering the fact that a humongous 40 million tonnes of food are discarded in the US each year. This is more than any other country in the world and constitutes 30-40% of the total food supply in the US. Software solutions like Zip Inventory (available on the Hubworks platform) use cutting-edge technology to assist restaurant owners in reducing food wastage and costs, as well as running their operations more efficiently and sustainably.
Restaurants can also avoid wasting surplus food with the help of platforms like Too Good to Go, and instead offer it to people searching for a meal deal.
6. QR codes- These are becoming increasingly popular in restaurants all around the world. QR codes have assumed importance in this era of 'no-touch' as both diners and restaurant employees have become wary about cross-contamination by the deadly coronavirus. This technology does not require the installation of an app and has played a crucial role in contact tracing.
7. Air purification- Restaurants are increasingly focusing on air purification technology solutions for promoting 'clean air'. Using bipolar ionization, restaurants have been able to purify the air as well as the surfaces of indoor areas by eliminating contaminants. This technology is harmless to humans and is already showing good results. Technology solutions using ultraviolet light have also proved to be effective in purifying both air and surfaces.
8. Drones, and robots- Pushing the envelope further in terms of adoption of technology by restaurants, drone-delivery of food and the use of robots are also getting fashionable. In the US, Flytrex launched a drone delivery service to Holly Springs -- a small town of 25,000 residents in the state of North Carolina. Elsewhere, sports bar chain Buffalo Wild Wings started testing a robot that can cook wings, making kitchen operations more efficient, while freeing up restaurant staff for "higher value contributions", Restaurant Business Online reported.
Another article on the website talked about Middle Eastern chain Halal Guys planning to offer premium blended beverages with the help of Botrista's DrinkBot, which can mix drinks in just around 20 seconds. The use of robots is expected to help businesses in getting over possible labor crises.
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Covid effect- Restaurants of the Future Have Arrived Early
The migration of restaurants across the world from the physical to the digital has been necessitated by the pandemic, as people stayed cocooned in their homes out of the fear of contracting the coronavirus and restaurants downed their shutters. Indeed technology became THE most important ingredient for restaurants, and technological progress that would have taken many years to accomplish was incorporated by the food service industry in a matter of months. More aptly put, the industry was bruised, battered, shaken, and forced to transform itself.
Before Covid struck, these concepts were seen as 'add-ons' and ways to supplement restaurants' on-premises sales, expand their reach, and tap into a burgeoning online customer base. Post-pandemic, these have become the pre-eminent part of restaurants' strategies.
Desperate times called for desperate measures and restaurants had to pivot to ensure that money kept flowing. The change was slightly more difficult to adopt for full-service and fine-dining restaurants, whose USP was the ambiance and hands-on hospitality they offered. However, they had to fall in line too even at the cost of a dilution of brand value with the threat of extinction looming large.
Restaurants like the Florida-based breakfast-and-lunch chain First Watch, which had tasted considerable success over many decades in spite of being old-fashioned, had no incentive before the pandemic to go high-tech and change their business models, Restaurant Business Online reported. However, they had no option but to change.
So out went the notepad on which orders were scribbled. In came chit printers. The restaurant chain focused on online ordering and struck a deeper partnership with the New York City-based B2B SaaS company Olo, which devises online ordering and delivery programs for restaurants.
First Watch also developed a mobile app and mobilized the services of Google ordering to expand its reach. Third-party delivery, waitlist software, and credit card processing were also brought in and First Watch "literally turned the entire business on its head".
In view of the Covid-induced changes in dining, Deloitte polled 1,000 people who had eaten at a restaurant over three months preceding the survey to find out what they thought. This led to its report titled 'The Restaurant of the Future- A Vision Evolves' in December 2021.
According to the report, 64% of the respondents didn't expect to return to their pre-Covid habit of visiting restaurants for sit-down meals, and 61% said they ordered takeout/delivery of food once every week at the minimum.
Three out of every four respondents said that they didn't like to be kept waiting for more than 30 minutes to receive their food.
Moreover, four out of every five respondents stated they were likely to place orders with ghost kitchens. This tendency was seen to have increased by 20% from a year ago. Over one-third of the respondents preferred drive-thru as their ordering option. Therefore, the 'smallest' restaurant today is no longer a cozy bistro, but instead a restaurant that you would not be able to 'visit' at all.
The study also found that out of five respondents, three expected the food delivered to their doorstep to be in no way lesser in freshness and quality than sit-down meals.
Digital apps were used by 57% of the customers to order food while dining off-premises. Furthermore, out of five customers who preferred to remain in their cars during drive-thru experiences, four (or 81%) said they would go for automated voice systems.
The study also found that 40% of the diners who ordered off-premises tended to opt for a restaurant's own branded app or website.
With the advancement of kitchen automation technology, the chances of errors have been reduced and cost control and efficiency have been given a leg up. Over half of those polled said that they would be happy to place orders with a partially or totally automated kitchen.
Food payment is another area that is fast embracing digitalization. The Deloitte study found that contactless or digital payment method was preferred over a physical payment method by 25% of the customers. In 2020, as many as 57% of the respondents were found to have opted for contactless delivery half the time at least. The study found that customers were also open to getting food delivered by driverless cars or drones.
Benefits of Restaurant Technology
1. Quick and easy order-taking-To improve operations, restaurants should make use of the growing cloud technologies. A browser-based POS software that can function on any piece of hardware, including a tablet, laptop, and smartphone, allows for seamless order-taking, table reservations, mobile ordering, and automated loyalty benefits. It also allows orders to be collected from outdoor diners. Furthermore, table bookings have become much easier with apps designed for this purpose.
2. More efficient front-end operations- There are numerous daily chores that must be completed on the restaurant's front end to guarantee that operations run smoothly throughout the day. Therefore, with the help of technology, restaurant staff can provide quality customer service, for example, the staff can propose and upsell products on the basis of the customer's order history.
Self-ordering kiosks allow customers to place food orders without having to stand in queues and wait for their turn to be served.
Furthermore, menu items can be displayed in an attractive manner with the help of digital menu boards. Digital signage, as supported by Plum POS (available in the Hubworks app store), allows restaurants to beef up their branding and promotion exercises. Digital signages placed at major locations help to push sales up by building brand awareness.
3. Increased back-end efficiency- Food preparation, inventory and supply management, workforce management, data management, food safety management, and accounting are all part of a restaurant's back-of-the-house functions. The use of technology has totally changed the way a restaurant conducts its back office operations.
Kitchen display systems, inventory management, supply chain management software, accounting software, business intelligence solutions, and employee scheduling, and employee time clock solutions have made restaurant operations highly efficient and error-free and freed businesses from the problems associated with manual methods.
A host of cutting-edge software solutions are, in this regard, available on the Hubworks platform. These are Zip Schedules, Zip Clock, Zip Inventory, Zip Supply Chain, Zip POS Data, Zip Forecasting, Zip Checklist, and so on that promise to make restaurant operations perfectly streamlined.
4. Increased marketing and client engagement- You won't sell without being visible to your customers. Therefore, it's critical to consistently promote your business, as well as communicate with your customers. While offline promotions are beneficial, they can be costly when compared to online ones. Promotions done online have a greater reach and are more cost-effective.
Therefore, customer data collected at the POS can be used to devise loyalty programs, and target customers through text and email marketing. A tech-savvy restaurant can list its business on Google, and promote itself on social media. This makes it easy for customers to find the restaurant. The restaurant can also integrate with third-party ordering and delivery platforms.
What Makes Franchise Tech Rollout Difficult
It is difficult for businesses today to move even an inch without technology. However, technology is difficult to grasp because not every employee may be tech-savvy, and training them is quite a headache. While franchisees require assistance with technology, franchisors seek to keep the demands on the franchisees to a minimum. Franchisors also do not want to see their liabilities growing. Consequently, many have opted for a hands-off method while dealing with technology, and sort of thrown the franchisees to the wolves.
However, a hands-off approach is far from ideal as the brand takes a hit every time a data breach occurs. It is, therefore, not a good idea to leave franchisees to fend for themselves and take crucial decisions on their own on matters like whether to provide guest Wi-Fi, what type of guest Wi-Fi to give, and how to support guest Wi-Fi operationally. A comprehensive technology plan should be implemented, which would provide the customers with a consistent experience.
Often, franchisors are hesitant to ask their franchisees to implement technology requirements except those that are absolutely essential because they fear that the franchisees may veer towards rival businesses that impose fewer obligations.
The hands-off approach is not beneficial for franchisees as technology affects every part of business, starting from customer experience all the way to employee engagement. It is common for customers to get frustrated every time a screen turns black, a POS transaction is not quickly completed, or a mobile order does not go through.
Franchisees often don't examine their logs on a daily basis, impart network security training to their personnel, or fill out questionnaires for self-assessment properly. As a result, when there is a breach, the franchisee is not eligible for safe harbor and is held completely responsible for any damages.
To provide a uniform brand experience across all locations, managers and employees frequently rely on fully operational access to cloud services. When problems arise with cloud access, franchisees are left rushing to remedy something they don't know how to fix.
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Ways to Ensure Success of Tech Rollout
1. Determine your solution- Not all new technology is appropriate for every restaurant. While it may seem self-evident, any technological solution you choose should address the problems your restaurant is having, from excessive wait times to food wastage going out of control. Once you do that, you would need to select the software company that can give you the best results. The software solution provider should have a strong implementation strategy, and substantial experience offering the service you are looking for.
2. Establish the criteria for success- Your restaurant's success might be based on a number of factors. Boosting customer loyalty, increasing table turns, and eliminating staffing discrepancies can all contribute to your success. However, in the final analysis, what you need to consider is the return on investment.
Before the start of your project, establish a list of criteria, which would make your business successful, and then see if the technology on offer can help you hit your target. Establishing these criteria for success allows your team to track progress, concentrate on solutions, and make necessary improvements.
In the same way, identify project-related risks and weigh them against the advantages of successful deployment. If there are obstacles on the way, you would be better prepared, having identified potential risks beforehand.
3. Identify your main stakeholders- These are the people to whom you must deliver results. They could be hourly employees, managers, the executive suite, or your bank. They are the people who are impacted the most by technology rollout and are, therefore, vital to the process. After identifying the key stakeholders, you would need to clearly communicate to them the effects that your technology rollout may have. This would ensure that your stakeholders are better prepared for your technology deployment.
4. Create a timeline- Take your restaurant's busiest hours and time frames into account while creating a timeline for implementing technological solutions. If you're aiming for a specific date, your plan should include a substantial amount of time for dry runs. When coming up with deadlines, ensure that they don't clash with important days for your business.
5. Properly communicate your vision- Once you have thought about a project, identified the criteria to succeed, and established a project timeline, you must communicate your vision and objectives. You have to make four points obvious right away, namely what tools will be modified, what procedures will be modified, how adopting the new technology will improve employee performance and the timeline that can be expected.
Make sure to include the 'why' factor in your communication about the shift in technology. When information about the adoption of new technology is communicated clearly and with a good deal of positivity, the organization would face far fewer emotional roadblocks during the implementation of the technology changes.
6. Train and execute- During technology rollouts, the most difficult part is usually implementation. This problem can be addressed by delegating effectively and planning for feedback and training.
First and foremost, an implementation team has to be selected. This group will create plans, establish feedback loops, and lobby for implementing the plans. The team should comprise an executive/corporate sponsor, organizational administrator, and people who can provide implementation support.
If you operate across multiple locations, you also need to establish a training team. Ongoing training must be provided so that your employees can fully make use of the software you deploy.
Technology rollout also requires you to establish a feedback loop for identifying the features of the technology that could be improved. This is especially true for technology solutions that are more scalable and customizable.
7. Examine and make changes- You won't know if you're performing well or failing to meet your objectives in certain areas unless you evaluate your data. It is easy to gather data with the help of technology, but that data need to be interpreted to identify actionable insights. Based on these insights, the organization can make the necessary adjustments. Technology rollouts must also consider how they are going to be used and the people who would be using them.
In an increasingly digital age, consumers are more inclined to interact with brands through digital channels before visiting a physical site. And, when consumers do interact with a brand in person, it is critical that the experience mirrors that of the online brand.
The way technology provides a strong feeling of community between a brand and its customers is explained by Adam Zeitsiff, Chief Information Officer at Smoothie King, which is a franchise brand that operates across more than 1,000 locations.
Our guests should feel they can interact with Smoothie King through technologyspecifically via our app, and this interaction should enhance their relationship with us, Zeitsiff said, according to a Restaurant Business Online report.
Digital solutions provide value for franchisees while boosting the franchise brand, as proven by a company like Chipotle, which recently established its 3,000th unit.
The market for restaurant POS solutions in the US was estimated at $3.42 billion in 2020, and it is predicted to grow at a Compound Annual Growth Rate (CAGR) of 3.9% from 2021 to 2028, according to Grand View Research. Furthermore, a Statista study says that the global interactive kiosk market revenue is expected to enlarge from $26.63 in 2020 to $45.32 billion in 2028.
According to a Technavio study titled 'Restaurant Management Software Market by Deployment and Geography - Forecast and Analysis 2021-2025', the market share of restaurant management software is set to rise by $2.95 billion from the year 2020 to the year 2025.
The restaurant industry saw 'business as usual' being disrupted by the pandemic, but the drastic changes caused as a result of the pandemic prodded many food industry professionals to identify an opportunity to fast-track technology trends and re-imagine businesses.
Technology gives restaurants the opportunity to stand out. Business owners can use technology to run their operations in a more efficient manner. With the help of technology, restaurants can spend more effort and time delighting guests and making their dining experiences memorable. It is a win-win scenario for both business owners and customers, and, therefore, technology rollouts have to be carefully planned to succeed.
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