Technology
Contactless ordering forcing restaurants to adopt 9 tech strategies in 2021
Contactless ordering is not only here to stay but is forcing restaurants to embrace nine specific technologies and strategies.
January 4, 2021 by Cherryh Cansler — Editor, FastCasual.com
"A new year; a new you."
We've heard the slogan every January for as long as we can remember, but for the restaurant industry it's never been truer. The 2020 pandemic is forcing restaurants to change operations more quickly than ever, and those changes are still evolving as we enter 2021.
Although we are still in the middle of the chaos, we've already seen several trends emerge. Some will fade out as we leave COVID-19 behind, but one major player — contactless ordering — is not only here to stay but is driving restaurants to embrace nine specific technologies and strategies inorder to adopt the service model.
1. QR Codes
Contactless ordering has triggered a resurgence of a platform most of us thought was past its heyday: QR codes.
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| Givex COO Graham Campbell |
"Once thought of as antiquated, QR technology is making a comeback and is contributing to the recovery of the restaurant industry in a big way," Givex COO Graham Campbell said in an interview with FastCasual. "In a world of social distancing, the contactless capabilities that QR codes provide limits the amount of interaction between patrons and restaurant staff — keeping everyone safe."
QR codes, unlike bar codes, encrypt data vertically and horizontally, which stores more information. Givex, for example, uses QR to create contactless menus for its clients.
"The codes are prominently displayed on restaurant tables, guests can scan the code with a mobile device to access the current menu online," Campbell said. "This improves the guest experience because there is no wait time and reduces order errors."
The system also helps back-of-house operations because mobile orders are linked to the table number and sent to the POS and the kitchen display systems/prep areas.
The experience is seamless, and allows for faster table turns, Campbell said. "Unlike paper menus which are removed from the table once a patron orders a meal; the online menu is readily in hand, so diners can continue to scroll the menu and select other dishes to try or order more drinks or dessert."
Dirk Izzo, NCR Hospitality president and GM, agrees, stating that although QR technology has been around for quite a while, especially in Asia, restaurants are newly embracing it amidst the pandemic. Once customers understand their convenience, they may not want to go back to paper menus, he said.
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| Dirk Izzo, NCR Hospitality president and GM |
"They can provide a digital path for guests to order and pay for their meal, all from the comfort of their personal mobile device," he said. "This limits the amount of physical interactions in the ordering and payment experience, while increasing table turns and allowing staff to focus on delivering a safe and enjoyable dining."
2. Contactless payments
That leads us to another trend that is here to stay: contactless payments which allow customers to pay without using cards or cash. Instead, they may wave their phones or NFC-equipped cards over the payment device.
"The coming year will bring its own set of unique challenges and difficulties — cold weather and the coming flu season will likely have an outsized impact on not only restaurants, but banks, stores and other businesses as well," Izzo said. "Even with the possibility of a vaccine on the horizon, operators can take steps now to secure future success by transitioning to digital, contactless technologies that create seamless, engaging guest experiences, pandemic or no pandemic."
DiBella's Subs, which is based in Rochester, New York and has 44 locations, launched an app with a payments component earlier this month, and it's already paying off, according to Jennifer Jackson, the company's vice president of brand and people.
"The way consumers order from and experience restaurants has likely changed forever, regardless of things going back to 'normal,'" she said during in an interview with FastCsual. "In our opinion, there is likely to be a 'new normal' and engaging with restaurants digitally will be a part of that. Depending on our promotions and/or restrictions in the different areas we operate in, anywhere from 25% to 50% of our sales in a given week can come from online ordering."
3. Digital ordering
Contactless payments goes hand-in-hand with digital ordering of course, so it's no surprise it has received major traction during the pandemic.
Tech experts like Appetize Co-Founder Kevin Anderson, said it's another platform that will survive COVID-19's extinction.
"Businesses have adapted quickly due to the current climate, and there's no indication mobile ordering will fade, especially with quick serve restaurants," he told FastCasual. "Across America, major brands have been unveiling forward-thinking and innovative restaurant concepts for 2021 — and what's interesting about these designs is that they're built around on-premise mobile ordering."
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| Appetize Co-Founder Kevin Anderson |
Tillster CMO Hope Neiman said the pandemic has taught customers to rely on mobile. Tillster consumer data revealed it's not only millennials and Generation Z consumers using digital tools for ordering, pickup up and delivery.
"Instead, even the baby boomers have learned to embrace restaurant apps and websites," she said. "No matter when our communities can return safely to in restaurant dining, it's a safe bet that the digital tools we sharpened during the pandemic will remain viable far beyond its end."
Take Chipotle, for example. It opened its first digital-only restaurant in November 2020and is building all new locations with mobile order pick-up lanes.
As part of its "Next Generation Prototype," KFC is working on revamping the customer experience with a cubby system akin to pick-up shelves that eliminate the hand-off process for mobile and delivery orders, as well as dedicated drive-thru lanes specific to mobile orders. El Pollo Loco also unveileda design that include cubbies for mobile orders.
"Mobile ordering is their priority, influencing the new design concept," Anderson said. "Diners will be able to collect mobile orders from coded lockers, and a new drive-in channel will allow customers to park under a solar-powered canopy, scan a QR code in their spot (via mobile phone) to order with meals delivered to their car. Virtual drive-thru is a trend within a trend, and we'll likely see more of it since ordering directly from your car is convenient for both staff and customers."
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| Tillster CMO Hope Neiman |
These restaurant designs for 2021 unarguably indicate a demand for mobile ordering, but they also support confidence in mobile ordering as a standard into the future, Anderson added.
"Customers want a frictionless experience, and restaurants are spending millions of dollars to provide it," he said.
Campbell agreed that having an efficient online ordering system has never been more essential for restaurants, but developing a site on their own can be costly, time consuming and confusing.
"Restaurants should consider partnering with industry experts that can develop the customer interface, as well as manage the back-end processing," he said. "Look for partners that have can offer integrated (kitchen display systems) to ensure that orders are intelligently timed for production so customers aren't kept waiting or get cold food."
KDS systems help to reduce food waste and prevent negative customer experiences.
"The developer should also have a number of integrated online payment solutions and delivery partners," Campbell said. "It's also important to work with partners that can help you scale your business and offer a range of features such as loyalty programs and branded gift cards."
4. Digital loyalty programs
In a recent Appetize survey, nearly half of those polled would dine at a restaurant more frequently if it offered a brand loyalty program, so Anderson expects to see more restaurants meeting that expectation this year.
As part of its Accelerating the Arches strategy, McDonald's is incorporating its first-ever point-based loyalty program for customers (currently piloting in Phoenix). Similarly, Taco Bell unveiled a beta loyalty program in August.
"Perhaps both chains learned from Moe's, which revamped its app and online platform during the pandemic and generated 3.7 million loyalty members in just six weeks," Anderson said.
Loyalty programs have enormous benefits for customers, but restaurants have the most advantage here.
"They're integrating technology that personalizes guest experiences and pulls vital analytics and data, meaning they'll have a better understanding of their customers, Anderson said. "With loyalty programs via mobile built on Mobile API, we'll see more adoption of this technology from restaurants."
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| Rob Kenny, director of Restaurant Partnerships at Dosh |
Rob Kenny, director of restaurant partnerships at Dosh, a cashback rewards app, said restaurants will take control of their digital experiences, including loyalty platforms.
"Heading into the new year, I expect to see more restaurants to add to their digital experiences, roll out expanded capabilities in their mobile apps, create unique experiences that do not depend on dine-in customers and incentivize customers with rewards programs that encourage loyalty," he told FastCasual.
5. Changes at the drive-thru
Digital channels are also important at the drive-thru, according to Izzo, who said many of those same operators driving brand loyalty via digital channels also recognize the data-driven benefits.
"Leveraging digital channels gives restaurants the power to recognize customers instantly, track their behavior, analyze preferences and reach them directly," he said. "This way, operators can create highly personalized, almost predictive, guest experiences."
The drive-thru, especially for QSRs, is ripe for innovation thanks to these tools. Burger King, for example, recently revealed several new design concepts — one with a unique suspended kitchen and triple drive-thru lanes — based on more efficient, safer and improved service.
"When a customer enters a drive-thru, their vehicle can be automatically linked with their persona and ordering preferences," Izzo said. "Those orders can then be tracked over time to deliver relevant, tailored advertisements and promotions. And with the rapid increase in mobile ordering this year, much of this data is already available and ready for use.
Although drive-thrus have been a staple to QSR operations, the pandemic is forcing fast casuals to adopt them as well.
"Drive-thrus will become even more prevalent in 2021 as consumer demand for the feature is only going to grow," said Andrew Smith, managing director of Savory, a food and beverage investment fund. "To meet this need, cities that haven't been drive-thru friendly will lift those restrictions in order to support the inevitable future of restaurants from quick service to fast casual."
6. Third-party delivery
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| Andrew Smith, managing director of Savory, a food and beverage investment fund |
Just as the drive-thru is changing, so is third-party delivery. Once viewed by brands as a necessary evil, many are innovating their way out of relying on them to increase margins, Smith said.
"The pandemic made companies like Doordash, Uber Eats, and Grubhub essential to restaurants' survival," he said. " However, the model isn't sustainable for a restaurateur who needs every cent to stay solvent. In 2021, restaurants will need to create their own technology or partner with new technology entrants that are more friendly to their bottom line."
ShiftPixy CEO Scott Absher agreed, predicting more restaurants will embrace native delivery in 2021.
"Despite the rapid growth of third-party delivery services throughout 2020 as many went public, merged and reached massive valuations, the companies are doing so on the backs of restaurant operators, negatively impacting their profits, brand and access to part-time labor," He said. "With many restaurants relying primarily on their off-premise sales for the foreseeable future, operators will increasingly take notice of the problems associated with third-party apps, and be inclined to take back control of their off-premise operations via native delivery."
Ross Franklin, founder of NYC-based Pure Green, said delivery has been crucial for his five-unit juice and bowl concept, but he's leveraging technology to help off-set the high commissions that most platforms command.
"Square recently introduced the Courier Powered Delivery Model that cuts out the middle man (delivery platforms) and allows the restaurant to save the standard 25% to 30% commission fee that would have went to the platform," he told FastCasual. "Instead, there is a small nominal fee, which can be a pass-through cost.
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| Ross Franklin, founder of NYC-based Pure Green |
Pure Green was hand-selected by Square to be one of the first 40 companies to test it.
"We're having great success with it," Franklin said. "The delivery system has helped Pure Green locations to be almost as profitable in revenue, as in-store sales."
DiBella's is rolling out nationwide delivery in 2021 but keeping costs down by exploring different packaging materials and preparation methods as well as tapping different delivery partners like Goldbelly.
"We have fans everywhere, but we aren't located everywhere. So, nationwide delivery is such an important thing for us to continue to explore," Jackson said.
Similar to his prediction about restaurants gaining better control over loyalty platforms, Kenny said it's also true for delivery.
"When COVID-19 started, restaurants leaned into third-party delivery platforms to keep their businesses afloat and expand their offerings as dining behaviors changed," he said. "But unfortunately, if a customer has a negative interaction through a third-party delivery service, they may be quick to blame that experience on the restaurant, not the tech. 2020 has shown us how important it is for brands to maintain authenticity and control over the diner experience across as many digital platforms as possible."
7. Ghost kitchens
When it comes to offering contactless service, ghost kitchens are a prime example of how restaurants are innovating operations in order to get on the bandwagon. Muscle Maker Grill, Dickey's Barbecue, Fatburger, Saladworks and BurgerFi are just a few fast casuals rolling out delivery-only locations.
"The chatter around ghost kitchens began before the pandemic, but is being rapidly accelerated as a solution for operators that want to detach from their physical real estate and focus solely on their to-go sales," said Absher. "In the New Year, ghost kitchens will continue to pop up around the country, as consumers become increasingly reliant on delivery and open to trying out these new-age establishments that allow them to enjoy their favorite foods from the comfort of their own homes."
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| ShiftPixy CEO Scott Absher |
Smith said increased real estate costs are another reason ghost kitchens are popular ways to enter markets.
"Despite many restaurants closing across the country, real estate prices for prime locations are increasing at a record pace," he said. "Along with this, banks will also only finance proven players in the market, which will slow the growth of smaller restaurants trying to make their way into the market."
Chris Adam, Oracle's VP of strategy, agrees, noting that although many restaurants did not survive the harsh restrictions imposed by the pandemic, the infrastructure remains.
"We'll quickly see the emergence of Restaurants 2.0 — a new generation of restauranteurs who snatch up available real estate for ghost kitchens, virtual brands or new dine-in experiences that have a heavy reliance on digital interactions and business models that enjoy lower overhead," he told FastCasual.
8. Using tech to predicting behavior
Internet of behaviors is another trend picking up as a result of contactless ordering, according to Kevin Emahiser, founder and president of Propel-U-4-Ward, a digital transformation company.
"IoB has to do with the capturing, analyzing, understanding and monetizing of the physical and digital representations of behavior. It's primary objective is to insent certain behaviors," he said.
That's useful in improving a brand's overall human experience.
"There is no question that we are living in a world none of us expected," Emahiser said. "In order for your business to survive, and more importantly thrive, it will be imperative to demonstrate to all involved in the success of your business that you are concerned about their overall well-being, and the better you understand their expectations the better positioned you will be to win. The sooner you embrace and implement these trends the sooner you position your organization to lead and to long term sustainability."
Adams said that as the food and beverage industry continues its digital transformation, restaurateurs need to prepare to take advantage of a tidal wave of data that these interactions create.
"For example, to level-up the fan experience you can combine first-party transaction data with player stats, weather conditions, and inventory to better predict game-day sales," he said.
Technology is also moving from a tool of convenience to a safety requirement, especially in stadiums and arenas.
"In the past, technologies that analyzed and reported the length of lines at restrooms and concessions stands were a convenience — a nice perk to keep fans from missing too much of the event," Adams said. "In the future, these technologies will become key to pinpointing areas where crowds may form, enabling the venue to proactively reduce crowded spaces, keep people safer at stadium and arena events, and still provide an enjoyable experience."
9. Increased cybersecurity practices
As more people come to rely on digital transactions, consumer privacy and data security remain imperative for operators, Izzo said.
"The increase in high-profile data breaches over the previous decade means restaurants must also refine their cybersecurity practices and controls. Loss of sensitive customer information can result in significant damage to a restaurant's brand and image."
About Cherryh Cansler
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Oracle
Oracle helps ambitious food and beverage providers transact in new ways, prioritize guests, and deliver great experiences. With Simphony Cloud, an open and extensible digital transaction platform, NetSuite for business management, and CrowdTwist for loyalty, thousands of operators worldwide automate operations and elevate personalized guest experiences with Oracle.
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