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Technology Is Eating Restaurants And The First Course Is QSRs

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Michael Brown

October 24, 2019
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Technology is completely reinventing the modern dining experience, and the days of the luddite restaurateur are numbered. Startups are enabling certain parts of the restaurant industry to be faster on their feet and more aware of the behaviors of both consumers and employees. We see the most pronounced movements in the QSR (Quick Service Restaurant) industry–logically so due to the character of the business: high customer frequency and lower emphasis on human service.

To segment this discussion, we can segment the restaurant business into two regions of activity separated by the counter, and three moments in time: before the visit, during the visit, and after the visit. This makes six elements of the restaurant experience that are truly changing in various ways due to the influence of technology. These changes are reflected in both B2C evolution and enterprise B2B developments.

Behind the counter, before the visit:

RMS (Restaurant Management Software) facilitates the operations of a restaurant, which may include activities such as employee management and financial reporting. The top player in this space is HotSchedules, and the primary features are scheduling, logging, performance reviews, task management, and training. To some extent, RMS is a subset of the larger Learning Management System (LMS) sector. Employees and managers now have a platform to relate to each other in a focused manner to optimize the business and track important details and activities, resulting in better performance of both the workforce and the business as a whole. For instance, this B2B solution allows employees to be onboarded and upgraded with a drag-and-drop selection of training videos, and managers can forecast the necessary holiday staffing based on past data from that exact date, or from similar holidays. One of the implications for QSRs: certain POS (Point-of-Sale) systems will become more relevant in the future, as full integration of employee mobile tools becomes the most effective way to optimize the workforce in terms of centralized employee and task tracking.

Behind the counter, during the visit:

The cooking and food preparation process is still the last area to be disrupted. Human service still exists because Q&A cannot yet be replaced by machinery for liability and other purposes, though down the road, “cooking” in a Quick Service Restaurant may not mean more than pushing a few buttons and levers. On the front end of the QSR, we see automated order-taking and drive-thrus, which are enabled by both digital signage and kiosk systems. This offloads manpower from behind the counter, and reduces the need for training and the likelihood of human error. The primary issue we see dealt with here is the with a more tech-enabled process, low employee incentives to improve performance or quality-at least the machine looks the same every time, and can be optimized with A/B testing to sell to the customer. Beyond QSR kiosks and Siri-esque ordering, we also see the visit impacted by enterprise RMS: tracking customer count in real-time, along with sales and immediate task management with photo proof and employee recognition for quality or performance. This experience is the most important from a sales perspective: it helps drive loyalty. In the future we should see enterprises using client recognition either through face, voice, fingerprint, or payment method, to truly personalize the service to the client restaurant’s needs and maximize the chances of a return. An interesting play in the RMS space that just received $2MM in funding from High Line Venture Partners is Salido, which caps the movement of RMS with an “rOS” (Restaurant Operating System).

Behind the counter, post-visit:

The surge in tech-enabled traffic monitors give us data on customer movements and decision-making patterns. Two fields of technology are rising in this area as primary headwinds for change: online marketing technology and mobile rewards programs. The former is driving towards the holy grail of 360-degree customer insight: knowing everything about the habits of the human and capitalizing on the principle that the way to the consumer’s heart is through the gut (which is luckily also the way to the consumer’s wallet). The latter is actually a subset of the former, but is drawn into the open as it is the business end of the beast. Mobile rewards programs such as Button and Dabl3 drive sales through mobile integration, which is just another example of using behavioral data to drive promotional studies. The interesting phenomenon here is that the user of the promotional app can be either the manager or the hourly employee, providing a higher incentive for the franchise worker to improve quality and be responsible for bringing in the business. Quick Service Restaurants want their customers to become subscribers-both digitally and physically-and technology is increasingly providing that effective binding power. We see this general idea exemplified by Cloudtags (recently raised just under $1MM of debt), which enables a suite of customer intelligence and remarketing for the physical store.

Front of the counter, before the visit:

On the restaurant customers’ face, marketing tech is servicing their needs even before they think about eating. We eat with our eyes before we eat with our mouths, and automated marketing technology spoon-feeds us the matching visual and textual suggestions. In addition to the promotional systems that are growing in popularity, we see movements in food culture becoming the marketing guidelines-the desire for “real food”, microcuisines, and chef-driven fast casual establishments. If not soon, we should see digital signage content along roads catering intelligently to time and locality. Furthermore, not to neglect the delivery industry, we should see people instantly ordering what they want, and online advertising will suit that pseudo-storefront methodology. Sitting at our desks or in our beds, we can be instantly faced with a restaurant front through platforms like Seamless and Postmates, which may actually complement the speed and automation trends of the QSR storefront. On the enterprise side, we see players in the middle of the buying process preempting the order-such as Sweetgreen’s mobile preordering app.

Front of the counter, during the visit:

Technology knows what we eat and why we eat it, so interfacing with a kiosk that suggests “the usual” will not be far from the day. The experience for a Quick Service Restaurant customer is not only enabled by tech, but it will be aligned by tech: the same heatmaps and click-analysis we use to study customers on webpages and apps, we will use to design and optimize kiosk and menu interface systems. Recurring customers can be easily identified and served with loyalty perks and referral deals to up the influx of new potential addicts. Processing time for customers will be driven to an all-time low, and manpower use will be become minimized: the customer gets to choose what he/she wants from the window or the counter, increasing service choice and throughput at the same time. 360-degree customer recognition and intelligence will engender an optimal idea of how to sell and addict the customer-whether it is through imaging, scents, or sounds.

Front of the counter, post-visit:

The development of post-user experience now extends beyond the common storefront to the mobile and traditional computing device. Now that there’s both a storefront outside the home and on my connected device, post- and pre-visit experiences overlap even more than ever before. The implications of this is that customers who know they will return to the restaurant pretty much already know what they want, even if its subconscious. Marketing tech that studies customer choices and their eating patterns will realize substantial value if they consider the presence of the ubiquitous storefront. Visual and audio experiences while surfing the web at home can be almost instantly combined with a dietary experience-imagine the instant movie being accompanied by an embedded food-ordering window, allowing you to stream your favorite movie with your favorite food however fast it arrives. Even more interesting, imagine if your favorite food network show referred you to the restaurant being showcased, and referred you to the exact dish to order in Postmates. These digital-to-physical synergies are yet untapped, but soon should be on the horizon as they are both feasible and undeniable.

Quick Service Restaurant Kiosk

The overlying trend likely will culminate with the complete encapsulation of the restaurant industry inside the consuming technology. This evolution is most evident in restaurant management is being redefined by next-gen enterprise rOS (Salido). The meaning of this evolution is that the management technology will take a holistic approach to running the restaurant, seen as a packaged, transparent system that is deployed on any restaurant and easily suited to both the staff and the enterprise.