Restaurants cutting back, need to invest in technology to survive

When the chips are down, it's time to make some sacrifices. Household budgeters tend to cut back on the luxuries, the things they can live without for a while until the proverbial ship rights itself once again. Since the pandemic began, the ship has been listing left and right for the last three years or so, and people are getting a little queasy. Restaurant owners are making some tough decisions to stave off current and future economic anxiety. And while cutting the budget seems like a no-brainer, making key investments may not be an immediately apparent solution.

Technology is a valuable resource that is frequently overlooked by the restaurant industry. And for those who have taken steps toward incorporating tech solutions, they are often underutilized or not fully implemented. Customers expect ease and expediency in every facet of their lives, and introducing technology into daily operations can take the sting out of current economic instability.

Navigating the economic fallout from the pandemic

Economists and public policy researchers predict that the global cost of the pandemic will reach $14 trillion by the end of 2023. Industries worldwide incurred tremendous losses, but the food and hospitality industry was hit particularly hard. The U.S. Census reported that the financial damages to restaurant and bar sales were approximately $280 billion. During the height of the pandemic, over 110,000 eating and drinking establishments closed their doors either temporarily or permanently.

There is some promising news, the National Restaurant Association predicts positive industry growth in 2023, leading to an estimated $997 billion in sales, an increase of 500,000 jobs in the food service industry workforce, and total industry employment up to 15.5 million by the end of 2023, surpassing pre-pandemic levels. And in the U.S., restaurants are filling up again; Americans spent $86.6 billion eating out in January 2023.

But with the good news, there are still persistent struggles to overcome. The common post-pandemic themes of labor shortages and supply chain disruptions persist. The World Economic Forum (WEF)maintains that the "once-in-a-generation" inflation in the U.S. and Europe could constrict growth globally, leading to the possibility that the often-discussed-but-so-far-elusive recession could materialize in 2023.

Technology has measurable advantages

The restaurant industry has been slower than most in adopting technology and continues to rely on manual input methods that modern companies have long abandoned. Since smaller bars and restaurants tend to have lower profit margins, investing in digital solutions might seem financially irresponsible. But post-pandemic, consumer mindsets have changed, preferring digital solutions for speed and convenience. The National Restaurant Association reports that 40% of restaurant operators turned to technology to resolve pandemic-related challenges, such as solutions for contactless ordering and payment using smartphones.

In 2023, 86% of the world's population own a smartphone. And aside from the obvious benefits of improved mass communication, smartphones have reconfigured traditional business models, such as banking, healthcare, retail, and transportation. And yet, food service, a multi-billion-dollar industry, continues to depend on labor-intensive and flawed techniques that require more human resources and troubleshooting, contributing to lower productivity, decreased profitability and a poor customer experience.

According to a 2022 study conducted by Juniper Research, the global spend using QR (quick response) code payments is projected to exceed $3 trillion by 2025, an increase from $2.4 trillion in 2022. From January 2019 to August 2021, the height of the pandemic, QR code downloads increased by 750%. In 2023, nearly 90% of people who use smartphonesare already utilizing QR code technology, and 66% of restaurants are using QR codes for at-table ordering.

QR code technology produces tangible results

QR code scan-order-pay technology creates a personalized dining experience and produces observable benefits. Customers scan a QR code at their table, order from an interactive visual menu, and pay with one click. Diners tend to spend more time browsing a visual menu that offers suggested pairings, upsells and prompts for high-margin products, which increases customer spend. Virtual menus allow customers to order when they are ready, and they can request another round without waving down their server.

More high-tech QR code ordering systems also include marketing tools to help businesses experience growth, even during a challenging economy. Restaurant owners can remarket to customers across social media sites like Facebook and Instagram to drive repeat patronage and feature promotional opportunities, such as Happy Hour, specials, and package deals, to maximize the revenue potential of every order. Restaurants can incorporate promotions, track guests' dining preferences, feature menu items, and customers can easily opt in to customer loyalty programs. The insights acquired by looking at customer data and dining trends provide valuable data to inform advertising/marketing decisions.

Manual ordering is slow and prone to human error, which increases transaction risk. Using QR code technology, restaurant operators can reduce labor costs by improving server efficiency, enabling the waitstaff to cover larger sections, and increasing table turnover rates. Higher tips and a lighter workload for servers also incentivize employee retention. QR code ordering apps improve order accuracy and the speed of ordering, reordering, and payments, reducing the need for comps. Scan, order, and pay also provides additional payment security that can reduce fraud and chargeback risks.

All of these features and benefits add up to increased revenue, a more efficient workforce, and an elevated dining experience for guests.