6 Ways COVID Is Accelerating the Tech Transformation of the Restaurant Industry
Restaurant-goers from just five years ago wouldn’t recognize the restaurant industry of 2021. The coronavirus pandemic fundamentally changed how restaurants operate.
Online ordering, ghost kitchens, QR codes. The digital transformation of the restaurant industry is in full swing, and it doesn’t seem to be slowing down.
Let’s look at six key ways the COVID pandemic changed the way multi-unit restaurants use technology—and how the tech transformation will continue to unfold.
In this article, we’ll explore…
- Why food delivery isn’t close to finished evolving yet
- How chains and franchises are using customer data in new, power ways
- Changing customer behaviors, and why omnichannel ordering is the future
At HungerRush we’re proud to work alongside innovators who accepted the challenges of the last year and turned them into creative solutions..
Off-Premises Dining is King and Relies on More Complex Tech Integrations to Work
We’ve been predicting the rise of food delivery and takeout as the dominant forms of restaurant orders for years, but the pandemic sped things up. 2020 was a banner year for delivery and takeout, and there is no shortage of stats to prove it.
- DoorDash sales were up 110% in May from January of 2020
- Grubhub reported a 35% active user growth from Q3 2019 to Q2 2020
- Roughly 66% of adults have ordered takeout or delivery during the previous week
- 68% of adults say they’ll continue ordering more food for takeout and delivery than they did before the pandemic began
The trends are clear: off-premises dining is more common than in-store dining, and even as the world recovers from the COVID pandemic, it doesn’t look like that will change.
What’s not clear is whether restaurants will stand for sky-high fees from third-parties once the pandemic urgency has been dispelled. With commissions as high as 30% in some states, delivery platforms leave many restaurants making less money than before—and at the end of the day, restaurants have no idea who their app-using customers are.
We foresee significant future shake-ups in the food delivery market. Restaurants fare better and profit more when they own the online ordering process or even manage a delivery program in-house.
Customers also know this and want better for their favorite restaurants. That’s why 63% of people have a strong preference toward ordering directly from restaurants, rather than going through a third-party marketplace.
Read More: Goodbye, POS: HungerRush 360 is the Future
Ghost Kitchens are Powering Explosive Growth and Require Upgrades to Ordering and Logistics Technologies
The rise in ghost kitchens has also been on the HungerRush radar, and their explosion over the last year—along with billions in funding for ghost kitchen startups—is no surprise.
UberEats only had ~3,000 delivery-only restaurants on its platform in 2019. By the end of 2020, the number of virtual restaurants had risen to over 10,000. Both startups (DoorDash, Mr Beats, Mealco) and established chains (Applebees, Chick-fil-A, Cracker Barrel) are getting in on the action.
We believe this is still just the tip of the iceberg for the ghost kitchen explosion. Restaurants looking to expand, with foot traffic never expected to reach anywhere close to pre-pandemic levels, will choose more and more to open delivery-only locations driven by innovative ordering and management technologies.
Customer Data Ownership Protects Margins when Powered by a Robust CRM/Loyalty Platform
With so many orders now going through third-party platforms that keep customer data in a black box, restaurant operators are realizing they’re missing out on learning about who their customers are.
You pay DoorDash to connect you with a customer, you make a slim to none margin on that delivery order, and then the next time that customer orders from you, you pay Grubhub again.
High-growth brands realized in 2020 that they need to own their customer relationships, rather than paying third-party platforms to find them over and over again—especially since third-party platforms like UberEats and Grubhub are profiting off your customer data while they keep you from it.
Taking ownership of your customer data is one of the most powerful levers you can pull to enable the long-term growth of your business, whether you have one location or hundreds.
- Remarket to existing customers to create repeat visitors. Whether by email, text, or physical mailer, when you can reach your customers, you can nurture relationships with them. When it’s time for a big promo, you can cash in your chips—Hungry Howie’s launched a promo with a record-breaking 74% redemption rate. If you don’t own your customer, you’ll never get even close to that.
- Identify customer types and acquire new customers more efficiently. Another benefit to a fully integrated customer database is the ability to discover trends about who orders from you, what foods they prefer, and where they’re located. Voila!, now you can find lookalike audiences that are more likely to become frequent visitors, rather than shooting in the dark with marketing spend.
- Build a resilient business with an earned audience. Restaurants without an established customer base they can communicate with are more vulnerable to shifts in the market. When you own your customers, you can test new ideas, pivot strategies, and create new offerings with an audience who is behind you and easy to access.
The pandemic was a huge wake-up call in this area. If you don’t own your customers, you’re not in control of your business’s direction.
Read More: Take Command of Your Multi-Unit Restaurant: The 5 Pillars of Data Mastery
QR Codes are Back From the Dead and an Easy Access Point for Customers
Nope, you’re not stuck in a time loop from 2009. QR codes have made a stunning comeback since the COVID pandemic began, with one study reporting 52% of restaurants in the United States were using QR codes as physical links to digital menus. Another study showed that physical menus were an automatic deal-breaker for 41% of restaurant guests in the US.
The big surprise isn’t that QR codes have started popping up everywhere, from salons to retail stores to restaurants—the big surprise is that it took this long.
QR codes are a handy technology:
- Restaurants can link them to contactless digital menus for dine-in guests
- Digital menus and online ordering platforms can be updated in minutes, compared to physical menus, which take days or longer to update
- Customers can stick their favorite restaurant QR codes on the fridge for super-fast website ordering
It’s our belief that QR codes are a handy tool that’s here to stay.
Text Ordering is the New Frontier of Convenient Ordering, Enhanced by AI-Driven Tools
New advances in Natural Language Processing (NLP) are making it possible for customers to order from your restaurant with the send of an SMS. This new ordering channel has some unique benefits:
- Ordering by text is the fastest, most convenient method for guests
- SMS marketing has a 98% open rate—unrivaled by any other channel
- Text orders can be linked in loyalty programs for higher customer return rates
HungerRush TextAI is one of the first tools out there for multi-unit restaurants that want to take advantage of this up-and-coming sales channel. See how it works here.
It’s Omnichannel Ordering From Here Onward, and Restaurant Enterprises Must Invest in Integrated Systems to Compete
All of these digital transformations lead to one natural conclusion: if restaurants want to stand out in an increasingly competitive market, they must create seamless and convenient customer experiences that span a variety of ordering channels.
Modern diners want to enjoy your restaurant experience with the same level of thoughtfulness and personalization no matter where they order, whether it’s in-store, online, or via SMS.
Disjointed POS terminals, online ordering platforms, loyalty programs, and mobile apps are going to quickly fade in relevance as more cohesive, interconnected systems replace them.
We’ve come a long way, yet there’s more digital transformation that’s yet to take place. Most restaurants are still operating on old-school POS systems. But the trends are clear: the next digital transformation—HungerRush 360—is already disrupting how multi-unit operations grow their businesses.
Here’s how execs at the fastest growing restaurant chains are leading the way forward with next-generation restaurant technology. Watch the webinar.
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