The restaurant industry is undergoing a major shift which corresponds with the retail industry, which is rapidly moving towards the digital world, online sales and digital apps. A recent report highlights how the restaurant industry is embracing digitization – and is increasingly dependent on digital and delivery sales. According to a report from Zacks, analysts expect 25 percent of all restaurant sales to be generated from digital ordering and delivery over the next four years.
According to the report, the restaurant industry is seeing modest growth in same-store sales, but at the same time, they are experiencing a decrease in in-store traffic. What this means is that consumers are using delivery, takeout, and digital services more, and eating on-premise less.
Digital ordering – whether for delivery or takeout – has become an essential component in restaurant success, and more restaurants and relying on both third-party apps as well as deploying their own. The digital restaurant trend isn’t limited to delivery and takeout though, even the in-store dining experience is becoming increasingly digital with fast food destinations like McDonalds now offering digital menu boards, mobile order and pay and self-service ordering kiosks.
The Digital Advantage
As restaurants embrace digitization, self-serve kiosks and mobile apps, they are discovering a big advantage – customers order more. Ordering takeout at the counter or over the phone creates a psychological sense of having to make decisions quickly, no matter how patient the employee behind the counter may be, and McDonalds’ CEO Steve Easterbrook noted in a recent article that people select more when they have more time to order at their convenience and feel less rushed.
Despite some initial resistance and the fear that the kiosks would reduce the number of employees needed at each restaurant, the kiosks have become a hit, and the chain’s global comparable sales rose 4.2 percent in the third quarter, topping the 3.5 percent gains seen in the entire industry. In the third quarter earnings call, Easterbrook revealed that in addition to the popular ordering kiosks, the restaurant would expand its delivery service. Delivery is now available at 15,000 locations through its partnership with Uber Eats, and thousands more stores will add delivery service.
Takeout Orders Get a Digital Boost
Digital delivery apps and self-service ordering kiosks have gone a long way towards increasing restaurant business, encouraging larger orders and improving accuracy, and the latest innovation is taking on takeout orders as well.
While it’s easy now to use apps like GrubHub or DoorDash to order delivery from your favorite restaurant, takeout food has lagged behind, with restaurants still relying on inefficient call-in orders. Still, many restaurants have added online ordering, including Pizza Hut and Panera for example, with Panera noting that digital orders now make up 26 percent of total sales at company-owned locations.
But making the digital takeout work requires not only good strategy, but good tools. Starbucks faced some struggles because they were unable to handle their digital orders, with problems that included congestion at the handoff, according to reports. The congestion at the Starbucks handoff counter was an unforeseen result of the initial success of the digital ordering. While executives are working on a plan to solve the problem with innovations such as a text-message notification when orders are ready, other startups like Tyme Commerce are offering elegant solutions to help avoid that congestion.
Tyme Commerce, in addition to offering a consumer digital app with a friendly “concierge” named Emily who knows your preferences, they have addressed the congestion issue head-on with a taketech platform that places a set of insulated cubbies at the restaurant, where orders can be placed when ready. Consumers then use the app to unlock their cubby and retrieve their orders.
The Future of the Restaurant Industry
The restaurant industry is following other industries like retail, and restaurants already have changed significantly as they continue to embrace digital and adapt to the preferences of a millennial audience which uses delivery and takeout more often, and is more comfortable with digital technology.
That digital technology is going to continue. A restaurant in Japan has introduced robot waiters to deliver food and drinks. More restaurants will embrace digital apps for both delivery and takeout. The millennial demand for increased convenience will also trigger a rise in the meal kit business, and the ordering kiosks will likely take on more sophistication. While some restaurants have experimented with pilot programs using robots, we’re not likely to be served by Rosie the Robot any time soon – but we will see more sophistication, and especially artificial intelligence as seen in Tyme Commerce’s digital concierge, which knows for example, that you don’t like onions on your burger and will remember that preference whenever you make an order.
The restaurant industry will continue to see growth throughout 2019, and that growth will be dependent on the restaurant’s ability to embrace new trends, deploy new technology and adapt to the changing demands of a younger audience.
Image credit: Reuters, Melissa Wen
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Dan Blacharski is a thought leader, advisor, industry observer and author of the book Dotcloud Boom. He has been widely published on subjects relating to customer-facing technology, fintech, cloud computing and crowdsourcing, and he is editor of NewsOrg.Org. Follow @Dan_Blacharski