Don’t blame COVID: Your restaurant still needs a digital transformation plan
There has never been a harder time to operate a restaurant. The global pandemic forced the permanent closure of 10 percent of all U.S. restaurants, and those that remain must navigate a tricky new world filled with fewer workers, rising prices, and quickly changing consumer behavior.
Thankfully, necessity remains the mother of invention, and a number of technologies are coming to market that can help restaurants of any size adapt and thrive through the “new” normal. Here’s a look at three of the most pressing issues restaurants face today — and some of the technology rising up to ease those burdens.
A rapidly changing labor market demands resiliency
Talk to any restaurant operator and they’ll tell you finding and retaining labor is the most critical challenge for their business. A recent National Restaurant Association survey found that
“72% of restaurant operators said recruiting and retaining employees was their top operational challenge.” That figure was the highest in the roughly 20 years of the Association’s monthly tracking survey.
Complex forces are driving this labor shortage, but none of them change the fact that restaurant operators always need to maximize their efficiency by doing more with fewer people. What has changed, though, is the urgency being placed on decision makers to make good on that in a serious and sustainable way.
We all know a lack of labor means big challenges. On an operational level, restaurants just can’t operate without enough people. Even big chains like McDonald’s and Chick-Fil-A were recently forced to shut down dining rooms because they were short-staffed. Incidents like these ripple out to consumers —who may not even be aware of this industry-wide staffing crisis — concerned solely with how long it takes to get their meal. Consumer frustration often manifests itself as resentment and sometimes outright anger directed towards hapless staff, creating a toxic work environment that stresses the physical and emotional well being for everyone working at that restaurant.
Rising operational costs are here to stay
Many restaurants are responding to the labor crisis by paying employees more. But cost inflation isn’t limited to the labor market; the price of food is up, too. Ruby Bugarin, who owns and runs the Margaritas and Pepe’s chain in Los Angeles recently told CNBC that the price of avocados more than doubled to $85 a case — from $40 a case — over the past month, and lamented that she can’t raise the prices for her customers in the same way her suppliers can for her.
Wingstop said this summer that the cost of chicken wings had risen 125 percent year-over-year. The chain was able to bring that price down through supplier relationships, but small restaurants don’t have that type of leverage. The result is that smaller restaurants must either use lower quality ingredients or pass the higher costs on to the consumer. Neither of these options are attractive to the consumer, and both are short-term fixes. And the result of all this inflation is that higher prices are passed on to the customer.
Your customers live in an on-demand world
As dining room closures and higher prices are impacting customers, changing consumer behavior is altering the restaurant experience. The Delta variant of COVID-19 has restaurant goers spooked once again. According to a recent National Restaurant Association survey, nearly one in five Americans are no longer going out to restaurants (The Wall Street Journal, subscription required).
That doesn’t mean consumers are making all their own meals now. While the pandemic wreaked (and wreaks) havoc on dine-in options at restaurants, delivery and takeout are still growth businesses. Data from Statista, McKinsey, and Morgan Stanley show that US food delivery revenue grew to $26.5 billion in 2020, up from $20 billion in 2019. The push to off-premises eating forced many dine-in restaurants to start offering to-go and delivery, and those services will need to become permanent. A survey from OpenTable and the James Beard Foundation in April found that 91 percent of consumers surveyed wanted restaurants to offer takeout and delivery after the pandemic recedes.
While what consumers expect and want from restaurants is changing, the good news is that consumers still want restaurants. And the even better news is that there are a number of technology solutions coming to market empowering restaurants to adapt
The tech is ready. Are you?
When it comes to labor, there are a number of options for restaurants to better manage the resources they already have. There are services like Landed and ShiftPixy that connect restaurants with a network of skilled hourly workers looking for gigs. Mobile apps and digital kiosks can take over the ordering process, freeing up staff to engage in higher level tasks and customer service. Services like 86 Repairs catalog a restaurant’s equipment and outsource maintenance and repairs. There are even cloud-connected devices to ensure that employees are washing their hands.
Unfortunately, there are no apps that can magically lower the price of food, but restaurants that implement digital ordering systems have access to a treasure trove of data. Operators can see exactly what is being ordered and when to properly staff restaurants at the right times. They can also cull menu offerings and eliminate items that aren’t selling. If operators are feeling particularly adventurous, they can even implement dynamic menu pricing — automatically adjusting menu prices as the restaurant gets busier or slower.
To better simplify delivery, services like Ordermark unify orders from multiple delivery apps such as DoorDash and Uber Eats into one ticketing system. Or restaurants can engage in much more sophisticated queue management like Panera, which started using Geofencing last year with its mobile app. Now, staff are automatically alerted when a takeout customer pulls up into the parking lot.
It can certainly feel like the darkest times for restaurant owners and operators right now. Though technology may not be able to solve all of the woes of the restaurant industry, at least restaurants have more options than ever to survive and even perhaps thrive.
One of the keys to modernizing any restaurant is to get many touchpoints online. Connecting hardware that staff and consumers interact with to the cloud achieves greater insight into how a restaurant is operating and optimizes existing workforces. Part of getting a restaurant online, however, is ensuring that all the systems are running on a robust platform that can not only perform, but do so at scale — and that’s a challenge many restaurants are now facing.
If you want technology to help your restaurants keep up with existing and future challenges, then check out Esper.