This is the second part in Flying Donkey's series on how technology is changing industries in 2020. In the first segment we looked at the financial industry, but today we are going to look at the restaurant industry. The restaurant industry is consistently challenged with low margins, but is seeing some technology changes that will eventually increase margins if implemented correctly. Some of the major changes occurring are:
- 3rd party delivery services becoming larger portions of company revenues.
- Kiosks at fast food and dining restaurants.
- Apps for customer loyalty and carryout orders.
- Automation for repetitive tasks like drink making.
- Integrating all these together to give quality service regardless of which way the customer orders.
3rd party delivery services becoming larger portions of company revenues
The food delivery industry is expected to grow to $200 Billion by 2025 and can raise restaurant revenues by 10-20%. Most restaurants are using third party apps to do their deliveries, but these apps have some issues that can complicating running a business smoothly.
They often take the orders and send them to the restaurant and charge both the restaurant and the customer fees. Some services, such as UberEats, may charge the restaurant up to 30% of the order price for being an intermediary. Are you making 30% profit on your sales? If not, you may be losing money despite gaining revenue. Technology can help to make sure you still make money on sales by basing your prices for delivery based on the highest cost provider you utilise. Software can be developed to figure out which items to offer through these services and how much to charge.
In addition, they offer a variety of ways to receive the order including direct through POS system, acceptance through a tablet where your employees ring in order, fax, and phone orders. Some will even deliver the orders placed through your website or app if you have delivery dispatched to them. Each of these offers their benefits and challenges, but the most preferable option is direct through POS as it removes the room for human error, speeds up the process by putting it in immediately, and keeps all orders being made in the order received.
Another issue with 3rd party delivery services is who gets the data. Many do not share their data with restaurants. Those delivery services that can be sent orders from your own app are an exception as you are collecting the data. If you have an app, this is the preferred method.
Kiosks at fast food and dining restaurants
Many fast food and dine in restaurants are implementing kiosks to make ordering easier. I'll cover how this works for both types of restaurants.
Fast food kiosks let the customer place the full order and pay with card right at the kiosk. The kiosk is tied into the POS systems that send orders to the line. This makes it where the restaurant can take orders with the only variable cost associated with taking the order being the card transaction fees. This theoretically makes it where people don't have to wait in lines as long and can mitigate the issues caused by employees calling out.
In restaurants where you are served by a server, many of them are implanting at table kiosks. These can increase service speed, save server's time, save costs, and increase revenue. Most restaurants are using them for four specific parts of the dining experience:
- Ordering Drinks
- Ordering Appetisers
- Kids Playing Games
- Paying the bill
Ordering drinks and appetisers from a kiosk speeds up the process and gets food and drink out to hungry customers faster. This is mostly focused on increasing service. It could also reduce costs if less servers are needed, but that should be a gradual change made based on whether you find that there are people frequently standing around.
We've all been in a restaurant where kids are making a mess, being loud, and it disrupts everyone around them. With the implementation of kiosks, restaurants are able to help parents distract their kids by giving them games to play with. They normally charge a small fee of $2-5 which increases revenues. Meanwhile, the kids are having fun without distracting the surrounding tables and hopefully the parents get to have a pleasurable dinner as well.
Once the meal is over, it's time to pay. Where's the server? It takes another 10 minutes to pay the bill. Not anymore. As long they are paying with card, the kiosk lets them swipe their card, sign and be on their way.
As you can see this technology can really help restaurants in a variety of ways but has to be integrated with other systems to maximise results. We'll discuss all that later after all the technologies have been discussed.
Apps for customer loyalty, carryout, and delivery orders
If you don't already have your own app, you need one. Having an app lets you reward customers for loyalty, speed up service for carryout or delivery, and helps you collect data. Each of these is crucial in increasing your revenue.
Rewarding customers for loyalty pays off because 45% of customers are likely to order more often if they are rewarded for it[1]. In addition, using promotions that encourage people to try a new high margin product can increase revenue and profit. This means you'll have to have a database of customers, what they tend to order, and data analytics software to develop special promotions based on the individual. This personalised approach to marketing will help customers feel like you understand them better.
Because the customer can place their order before they leave their home or work, it saves the customer time and can reduce the number of staff needed to take orders which should let you focus more on fulfilling the order. Apps can be used for both carryout orders and delivery. These will need to route the orders to the proper store to make them and the proper delivery service if delivery is requested. This could require two integrations or more.
As we've touched on above data is a huge benefit of having
your own app. It lets you store the name and previous orders of customers, how
often they order, their average spend, and means of delivery. This lets you
more accurately market and increase customer value. It also lets you know if
you have problem customers that extra precautions or refusal of service need to
be implemented.
Automation for repetitive tasks like drink making
Many restaurants now have machines that automate or at least remove drink making from the employee responsibility. Casinos in Las Vegas have started implementing drink mixing machines where a customer can order a drink from their machine and a machine makes it before a cocktail server brings it to the customer. McDonalds has a drink machine that fills the drinks for drive through orders. Obviously, both these machines require integration into the existing order systems to be successfully implemented. These will save time and reduce the costs of human error.
Another form of automation that is really exciting for restaurants is silverware rolling machines, like the ones created by Autowraptec (Flying Donkey is in no way endorsing this company, but you can find information at http://www.autowraptec.com/auto_sol_main.html). If your staff is anything like people I know who work in the restaurant industry, they would love this invention. Machines like this will save the company money and increase employee morale by eliminating tasks no one wants to do.
Integrating It all together
Like I told you at the beginning there are lots of exciting technology being used in the restaurant industry. Reaping the rewards of them requires proper implementation to maximise your company performance. Let's take a minute what Flying Donkey can do for you.
You're currently considering ways to increase revenue and profit, but not sure which to implement. We've created a brochure of technology considerations for the restaurant industry you can download below .
Lets say you decide you need the following:
- a customer loyalty app that lets customers order carryout and delivery
- kiosks to order and pay
- an automated drink machine
- integration with POS
- integration (and development) of CRM
- integration into inventory systems
- integration with a third-party delivery service
Hardware would need to be installed by the proper vendors, but Flying Donkey has expertise in software integration and custom software development to help all your systems communicate with each other and give you the data you need to calculate pricing, to maintain margins when using a third party delivery service, reduce inventory and out of stock items by notifying you when an item is below the tolerance threshold, and provide data analytics software to give you actionable data to personalise your marketing to help you increase revenue, services, and margins.
I'm Mat with Flying Donkey and I'm excited to help you integrate your restaurant(s) with updated solutions to better serve your customers and advance into the future of the restaurant industry. If you’d like to schedule a call, click here.
[1] https://upserve.com/restaurant-insider/online-ordering-statistics/
