Business and Operations
Restaurant technology post-COVID
Technology can help you operate, market and communicate with customers, but is the ROI there?
There are stirrings of hope that we might finally socialize and dine on-premise again. For those restaurants who have weathered the storm, operational innovation and flexibility has been the key to survival and that operational flexibility has often been supported by technology.
We were curious to hear from operators about what technology they implemented so they could continue to operate during the pandemic and we also wanted to know if these same operators planned to run with their new systems in the “aftertimes” when COVID -19 restrictions are lifted for good.
The April Labour Force Survey from Statistics Canada, reports that of the 503,000 jobs that are still absent from pre-COVID levels, 70.9 per cent of those missing jobs belong to the foodservice industry. According to Restaurants Canada, eight out of 10 restaurants report operating at a loss or break-even point and seven out of 10 operators feel they will need a year of recovery to become profitable again. Those businesses whose models were rooted in on-premise dining had the steepest learning curve because their business model and operating plan was not aligned with off-premise consumption. Survival came from government support, rent relief and new streams of revenue like curbside pickup, delivery, meal kits and pantry/non-food product line extensions. All of these shifts were primarily supported by technology.
What is restaurant technology?
Technological innovation does not have to be cutting edge, expensive or worthy of a feature highlight in the next Back to the Future movie. Your phone qualifies as a technological asset. Operators on the cutting edge like &pizza, a restaurant chain in the U.S., use robots back of house to roll dough, chatbots to take orders and converse with customers, and tricked-out delivery vehicles that have working kitchens in them to make the pizza en route to delivery. This is the operational exception, not the rule. Most restaurants are trying to figure out what this week’s lockdown status is while juggling staff, applying for grants and losing sleep. Researching, purchasing, learning and implementing a new software solution is often easier said than done. Most restaurants still operating post-pandemic have implemented curbside pickup supported by an online ordering platform.
Will take-away dining continue post-pandemic?
Prior to the pandemic, 30 per cent of Canadians ordered food online at least once a week according to research by Agri-Food Analytics Lab at Dalhousie University. The research found that Canadians spent $4.7 billion total on meals in 2019, and almost $1.5 billion of these sales came via a food ordering app. The pandemic accelerated this trend. The lab canvassed 7,300 Canadians in early November 2020 and learned that nearly 29 per cent of survey respondents had ordered directly from a restaurant since the start of the pandemic and 26 per cent reported using a delivery app. Upserve.com reports that the top three items that have spiked in sales in 2020 compared to 2019 are sandwiches and wraps (up 21 per cent), burgers (up 10 per cent) and pizza (up nine per cent). Surveys are indicating that take-away dining will continue to be strong in the “after times” as well. The researchers were surprised to learn that half of respondents intended to continue to order online at least once a week post-pandemic.
High cost of tech
Many operators are frustrated by and concerned about the transaction fees that come with technology use. With restaurant margins already thin, giving some of that away to take orders and process payment can really cause an operator to wonder if these platforms are worth it. Brian Gasbarini owner of Rise Above Restaurant in St. Catharines and Hamilton, implemented an online ordering system so customers could order and prepay prior to curbside pickup. Gasbarini points out that the system used to facilitate that online ordering system also charges a commission of 7.5 per cent for the platform solution and about 2.5 per cent for the credit card processing.
“A customer could order the same food by phone, and pay by cash, and we get 10 per cent more money from them compared to online ordering, or 7.5 per cent more if they order by phone and pay by credit card. So, it’s an interesting consideration for restaurant owners as to whether the food costs should reflect these extra order processing costs,” he says. The more that service providers “dip into” restaurant revenue streams like this, the harder it will be for restaurants to extract any profit from already narrow profit margins. Or the higher restaurant prices will need to be, without the customer really understanding the big picture of why. Gasbarini doesn’t necessarily see it as a long-term positive development, even if it is helping Rise Above reclaim missing on-premise revenue during the pandemic and offer more convenience and ease for the customer.
Enza Lorefice at Trecce in Toronto expresses similar concerns around the transaction fees and surcharges associated with take-away dining. Trecce has continued to operate with a take-out and delivery menu as well as by selling fresh-made pastas and sauces. Trecce uses Square and etransfers to process online and phone orders but Lorefice is hesitant to go too far with new order processing systems where the surcharges and transactions fees can claw back too much of the profit. “These companies know that many restaurants will say yes to keep operating, but the attractive pricing at the start can turn into something much more expensive after the trial period is over,” she says. Trecce will explore ways to continue to market their pastas and sauces post-COVID and will likely continue to take etransfers for payment as that seems to be convenient for both customers and their business. The advantage of an etransfer payment process is that the restaurant is only charged a transaction fee if it requests the transfer through the system. If the transaction is completed verbally and the payment is sent after that conversation, the sender (customer) is charged a small fee. This process involves more labour (a conversation with the customer) and isn’t without risk. If no password code is used, then the bank is not liable for any exchange that gets hacked and compromised.
Technology and restaurant promotion
Technology can support your operation, but it also has huge value in terms of marketing and customer relations. Online tools are primarily free or very cost-effective and, increasingly, these platforms offer robust bells and whistles to help you attract more business. Night Picker and Pantry are brand new food-focused platforms best described as “The Food Network meets QVC Home Shopping Channel.” They are the brainchild of Julie Guyard, who brings her background in retailing and culinary arts to the industry. The app is free for the restaurant industry to use. It allows restaurants to loop in their social media feeds and their online ordering systems to reach a wider but more focused audience of food lovers. The app is primarily a media platform dedicated to the food industry. A pizzeria can set up a profile to focus on their local market or a chef can promote their brand to a wider audience (and Night Picker is receiving more and more requests from individual chefs). “We see many chefs launching non-perishable products such as spice blends or sauces or even cookbooks that they’d like to promote to a wider audience so the app is being changed to allow for this,” Guyard says. Night Picker is the content portion of the platform where restaurants can post their promotional content and Pantry is the transactional piece where food lovers can discover new things to buy. It’s perfect for promoting pizza kits. The app had its big reveal on Canada’s Top Chef in May 2021.
Restaurant tech post-COVID
Technology is there to do your bidding. The return on investment during COVID is hard to gauge due to the skewed nature of the orders being all takeaway. That’s not reality and in the “aftertimes” things will recalibrate. Do the real math around the cost of the technology: a $15 order that costs you $1.50 in transaction fees must be compared to a verbal order by factoring in the labour to take that order. If your employee is making $11.40 per hour, then you are paying them about $1.90 for every 10 minutes of work. If the average phone order takes five minutes, then you are paying $0.80 for each order in labour which an online ordering system does automatically, labour-free. Those numbers only include the direct labour for that order. You are still paying that person $1.90 per 10 minutes for work, paid breaks, time where there isn’t any business . . . the online ordering system only costs you money when it’s generating a sale.
See where your business shifts post-COVID and then do a fully loaded profit-and-loss analysis for each menu item for three different order/delivery scenarios: on-premise, takeaway or delivery. When we get the business model right, restaurant tech can be a strategic profit booster. |
Michelle Brisebois is a marketing consultant specializing in e-commerce and digital content strategy and retail/in-store activation. Michelle has worked in the food, pharmaceutical, financial services and wine industries. She is currently an adjunct professor at the Canadian Food and Wine Institute at Niagara College and can be reached at email@example.com.