By Sam Zietz, CEO at GRUBBRR
In the past few years alone, food establishments have been making significant strides in moving beyond traditional dining experiences.This is due in part by the pandemic forcing business owners and consumers alike to change how they interface when it comes to food.Nearly every week, another dining establishment announces plans to implement technology and automation in a new way, and it’s something investors should be keeping track of.
Drivers of the Uptick in Dining Innovation
As with all industries, businesses react to consumer behavior.Customers are increasingly favoring more personalized experiences across the board, but especially when dining, and this entails everything from earning personalized loyalty rewards to customizable upgrades to their orders.
Because of this, more food chains, and establishments, like Chipotle and Shake Shack, have introduced self-ordering kiosks, putting the ordering power in the hands of guests.In particular, Gen Z guests appreciate these upgrades due to their affinity for online and app-based ordering and the personalization it allows.
Some businesses are even taking this a step further by implementing it in drive-thru windows, making the on-the-go ordering experience even quicker.
Labor Trends Play a Role
According to the National Restaurant Association , the industry’s workforce is projected to grow by 500,000 jobs, for total industry employment of 15.5M by the end of this year.While implementing automation has helped alleviate the burden of the recent labor shortage in many ways, the new positions that are expected will allow for new learning and training based on new technology.This also means that innovation-driven restaurants could be seen as favorable by employees who want to learn new skills, further bolstering overall productivity.
These new innovation-driven restaurants are also seeing other benefits with labor: increased productivity and efficiency, 24/7 staffing, and increased revenue and profitability.
For restaurants, one of the biggest loss-leaders is incorrect food orders, which then get thrown away.The disconnect that leads to incorrect orders most often occurs at the point of ordering.
A cashier hears the order wrong or inputs the wrong information.Technology eliminates that inefficiency.
But more than ensuring correct orders are made, technology also helps increase revenue and profitability by upselling additional food and beverage items.Upsells can be tailored to each customer’s ordering habits or to specific items to ensure relevance.This can greatly increase ticket sizes, thereby driving up revenue and overall profitability – a challenge most restaurants are facing these days.
Beyond that, technology helps eliminate inefficiencies when it comes to day-to-day labor.Since the pandemic, we’ve seen a shift where people are not coming back to take jobs as a cashier or dishwasher.
Technology can easily slot into these less desirable positions, leaving owners with more money to reinvest back into their restaurants.When you consider the literal financial investment in technology, it becomes a no-brainer.Self-ordering kiosks can cost as little as $2,500 plus monthly software fees less than $200.Compare that to the cost of labor and you’ve built in automatic savings.
AI and ML are Next
As the industry continues to innovate, it’s only a matter of time before artificial intelligence (AI) and Machine Learning (ML) become prominent players in the space.
Incorporating both AI and ML into a restaurant’s operations helps improve efficiencies even more, and improve a restaurant’s bottom line.These technologies can help with inventory management, ensuring that owners are only ordering the foods they need thereby reducing both food and financial waste, and they can help create more personalized experiences, helping restaurants upsell foods to people based on their order history and personalized data.For an industry that already operates on thin margins, AI and ML can help improve that line, making them more appealing for investors.
Competition Remains Hot
Needless to say, the innovation seen across the restaurant industry is also driving competition in the market as well.The National Restaurant Association reported that 47% of operators expect competition to be more intense this year than last.
This means investors must pay even closer attention to which companies are playing their cards right in this dining innovation boom.
Companies that continue to listen to these trends and act on them not only see an immediate return on investment but will remain favorable on the market and to investors.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc..
