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How restaurants can shine in a digital world

Restaurant operators excel with implementation of technology

Restaurants can stand out in a digital world by implementing technology solutions that appeal visually, speed convenience, organize and increase sales and promote safety–especially during a pandemic. Creating a frictionless ordering process is key to appeasing homebound or home-based consumers. Ghost kitchens, whether cloud-based or dark kitchens, while trendy at first, are now keys to survival and growth. And artificial intelligence is enhancing a variety of ordering and tracking functions for multi-unit operators.

Ordering and payment systems

Ordering and payment systems are likely the biggest digital differentiator in the short-term, notes David Henkes, senior principal at foodservice consultancy Technomic, Inc. Chipotle, Domino’s and Wingstop are prominent examples of restaurant chains that have excelled in this area and performed well amid the health crisis..

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In the Chicago and Washington, DC areas as well as other markets, fine-dining restaurant companies have gravitated toward Tock, a reservation system and ordering provider. In addition to these functions, Tock has created a marketplace to help customers find local restaurants, specials, pickup and delivery options within a particular territory. Many of Tock’s options require up-front payment; this ensures restaurants will receive their revenue on a timely basis. For third-party delivery, Tock will redirect to the appropriate service.

A restaurant website serves as a storefront for most multi-unit operators. If the digital storefront is optimized to attract business, it willbuild incremental revenue. Each website should have an appetizing layout and clear, user-friendly instructions, steps and clicks that guide customers through efficient, friction-free ordering.

The website should make it quick and easy for customers to identify service options that are available (curbside, pickup, delivery). Larger chains such as Applebee’s have invested heavily in making their website the first point of ordering, featuring each customer’s local menu. “Order Now” is prominently displayed on the homepage and at the top right corner of the site, diners can easily sign in with their credentials to prepopulate many subsequent information details.

Across the country, single-unit and multi-unit operators who are still able to accommodate dine-in services face an uphill battle, with the flurry of new restrictions due to the surge of coronavirus. Restaurants are utilizing QR codes and mobile ordering more frequently as customers who dine-in seek out lower-contact options for placing their orders. In Washington for example, Puerto Rican restaurant La Famosa provides a QR code that links to an ordering portal where diners can select menu items and complete payment tableside.

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DoorDash, a third-party delivery service that went public in November, is among third-party providers across the United States that also fulfill ordering and payment services. As the largest such provider in the country, DoorDash has a penetration of half of the third-party market share.

Restaurants can encounter drawbacks to third-party delivery: ordering may be easy, but delivery is not always precise and can take up to an hour in many markets. When ordering is made frictionless but the delivery is not so smooth, consumers may still end up disappointed. Today’s pandemic consumer wants to order without friction and expects food to be delivered hot. Cold food and other delivery problems can damage a restaurant’s brand equity over time. Conversely, as technology improves over time, the third-party delivery experience will also become more diner-friendly.

When restaurant operators are overwhelmed with various orders from different marketplaces and third-party providers, orders don’t get fulfilled quickly. Juggling tablets and interfaces doesn’t help operators turn tickets. Integration of disparate online ordering systems, including third-party, can help operators be more efficient in fulfilling orders at the restaurant, producing a quicker turnaround time and making it more likely that food will be delivered hot.

Tech company Olo has created a tool that is becoming more and more essential: their online ordering mechanisms integrate all facets of ordering into the POS at a restaurant. Consolidating the vast array of ordering sources positions operators better for success.

The ghost kitchen trend: cloud and dark kitchens

Cloud kitchens help restaurant chains and other multi-unit operators to expand into new markets without investing in full-scale restaurants. Jollibee partnered with Epic Kitchens to expand into the Chicago market and fulfill orders across much of the city without building a restaurant. Likewise, Fat Brands used a cloud kitchen to expand its presence into the Dallas market. Two of its brands, Fatburger and Buffalo’s Express, entered the market as a result of a partnership with franchise partner Croft Ventures. Additional ghost kitchens will launch as a result of this development agreement.

Some restaurant companies will grow through dark kitchens, which enable the use of commercial kitchens and underutilized restaurants to launch new brands, like Satellite Sandwiches
Satellite Sandwiches is a virtual restaurant concept operated out of a dark kitchen in Washington, DC. Photo by Scott Suchman.

Some restaurant companies will grow through dark kitchens, which enable the use of commercial kitchens and underutilized restaurants to launch new brands. At existing restaurant establishments around the country, restaurant operators are launching new concepts that are delivery & pickup only but have no front-facing space or storefront.

In Washington, DC, Astro Beer Hall launched Satellite Sandwiches, to sell Philly-inspired cheesesteak sandwiches out of an underutilized restaurant. Hearty selections there include Chicken Parmesan, a grilled lamb Gyro, and the Portobello Mushroom “Asteroid,” a vegan-friendly iteration of Astro’s popular hot chicken offering. The team also offers Wings, spiced-rubbed steak fries, and a soul-warming chicken noodle soup on the all-day menu as winter fast-approaches.

Another multi-unit operator launched pop-up Itty Bitty Sandwich City, peddling tiny sandwiches and big cocktails out of Washington, DC’s The Imperial. Offerings include mini-sandwiches in 3, 6 and 12 portion sizes per box, such as Filet O-Fish-inspired cod (IPA battered); a crispy, onion-straw-topped sloppy joe; chili maple-drizzled fried chicken on herb waffles, and vegetarian Buffalo’d cauliflower po’boy.

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Artificial Intelligence

Looking beyond the next six months, artificial intelligence provides an opportunity for restaurant operators to use historical and customer data to build systems that help boost the likelihood that production planning and suggestive selling efforts will succeed.

The more data that AI is fed, the better it can be utilized, says Henkes. With regard to production planning, AI can help predict sales based on weather. It can also predict dine-in demand versus carryout/delivery. AI is also helpful in creating a dynamic-pricing environment.

Starbucks is tapping AI to suggestive-sell to drive-thru customers. Upon ordering, customers will be presented with various menu options that like-minded customers have selected in the same store and/or market, with the objective of increasing the average check per customer.

Starbucks is using AI in the drive-thru to suggestive-sell. Photo by Starbucks.

McDonald’s recently acquired AI company Dynamic Yield. According to Restaurant Dive, the acquisition will help suggestive sell to customers based on location, time of day and previous purchases. Dynamic Yield will help McDonald’s build incremental sales at the drive-thru. McDonald’s accompanied this acquisition with the purchase of Apprente, a voice-order technology company, to further improve the ordering experience inside and outside its restaurants.

At this time, the largest restaurant chains will be the benefactors of AI technology, which still needs further vetting. Restaurant chains want to drive revenue and reduce costs and AI will help; however, “it’s not a solution for every chain,“ says Henkes. “It’s just for the big guys.”

Photo credit: Starbucks (featured preview image, inline 2), Scott Suchman for Satellite Sandwiches (inline 1)

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