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Tech companies are keying in to the crucial need for customer data as the key to improving the guest experience.

How restaurants should prepare for the on-demand digital economy’s peak

Customers want ‘everything everywhere all at once,’ and restaurants will have to meet them where they’re at

The future of restaurants is here: a future where your digital footprint is more crucial than your physical entryway, where customers expect online hospitality to be just as (if not more) easy to use and as convenient as in-person dining, and where every operator knows more than just your name. Essentially, restaurants must be “everything everywhere all at once” to customers who have become used to an on-demand economy, thanks to tech giants like Amazon, Google and even Netflix.

It might sound harsh, but the days of mom-and-pop restaurant operators being able to rely on word of mouth for marketing and resisting digital investment because they “are food experts, not tech/social media experts” are over.

While at first experts predicted that the end of the COVID-19 pandemic would bring about the end of the traditional restaurant experience as we know it, with dining-in becoming the new dining-out, this proved not to be the case. Instead, customers keep wanting more from restaurants. They want operators to offer everything: classic dine-in, easy and flexible online ordering and delivery, and personalized experiences like customizable rewards based on their purchasing habits and subscription programs. They want the omnichannel experience, which has been the hospitality buzzword of 2022.

“I think digital is going to become the dominant way that people engage with restaurants,” said Meredith Sandland, CEO of Empower Delivery and advisor to Butterfly Equity. “I remember thinking years ago, ‘How long before the size of our signs doesn’t matter?’ I knew that there would come a time when people just type a restaurant name into their phone and it just guides them directly there, and they don’t even have to look for a sign out front. We’re getting close to that time where digital has become so dominant that is supersedes other ways we discover and interact with restaurants.”

Here is what technology experts think digital innovation inside the restaurant of the future might look like.

Data will be number one

As customers continue to expect personalized, customized restaurant experiences both in-person and online, data becomes more crucial. For a long time, digital customer data — from demographics to ordering preferences — was hoarded by third-party delivery companies, though now that’s beginning to change as tech startups like Lunchbox give restaurants the tools to own their own data and use it to upgrade guest experiences. Even third-party delivery platforms like DoorDash are beginning to reverse their staunch stances on keeping their data under lock and key.

“One day, restaurant companies are going to figure out that they need data scientists on their teams,” said Josh Boshard, chief operating officer at Savory Fund.

Tech companies are keying in to the crucial need for customer data as the key to improving the guest experience and increasing return visits. That includes POS software company Lightspeed.

“Let’s say a customer goes to a restaurant for the first time and they don’t know who you are yet, but you order a pizza and then you swipe with your credit card,” said Peter Dougherty, general manager of hospitality at Lightspeed. “Now we know your name, but if you come back another time, we’ll be able to build a profile on you. The next time I swipe your credit card, I might say ‘welcome back,’ and tell you about our loyalty program. Soon, the restaurant might know that you order wine but not beer, you like pizza and oh by the way — we know that people who order pizza are more likely to be upsold on the tuna tartare.”

It’s not just about customer data, either. In the future, Boshard said, it will be crucial to use digital data to improve the employee experience and to receive predictive analytics on things like inventory to improve the bottom line to your stores.

Tech stacks will simplify

Right now, building a tech stack can be confusing because there are so many companies out there offering different bells and whistles and add-ons. But in the near future, getting a restaurant connected to digital infrastructure will be much easier, especially as tech companies continue to merge and consolidate and offer end-to-end solutions.

We’re already seeing the tech world getting simultaneously smaller and more powerful, with companies like Lunchbox and Thanx aiming to become an end-to-end digital tech solution for restaurants with each new version of their software, and third-party delivery companies are delving into areas like marketing, reservations, and advertising to their suite of functions. 

“As the restaurant tech companies get bigger and stronger, rather than a restaurant having to understand every little thing that’s required to run a restaurant or engage customers digitally, you end up with tech consolidation,” Sandland said. “These are features that plug into a more general platform. Then we could eliminate a lot of the complexity that way.”

Essentially, as restaurants become more digitally engaged, operators will be able to shed a lot of “tech bloat” — whether that means getting rid of your app because customers don’t really want to download yet another app, or focusing more on software rather than hardware like kiosks or tabletop ordering systems.

“The TikTok generation doesn’t want to touch a kiosk; they want to control the whole ordering process from beginning to end with the kiosk in their hand,” said Stratis Morfogen, founder of Brooklyn Dumpling Shop and Brooklyn Chop House.

Mobile will be your most important tool

In the future, a restaurant’s success will largely be determined by how nimble their mobile experience is. As restaurants de-bloat their tech stack, a lot of what they’ll be left with can be found on your phone.  

“The single most common denominator in our culture is the smartphone,” said ShiftPixy CEO Scott Absher. “If you’re not adapted to that part of the customer’s lifestyle, then they’re not going to engage with you.”

Engaging with customers on mobile might not look like having an app for your restaurant, but at a minimum, it should be about making it easy for customers to find you online, place an order for delivery or pickup, pay on their phone and get their food how they want it. The simpler the experience with the least amount of friction is the best one.

“Our phone is the first place where there's a convergence of commerce, content and communication,” said Shawn Walchef, founder of Cali Comfort BBQ and Cali Comfort Media. “The problem is that we’ve made it all so complicated. Make it a one-click, simple text message. Don’t send me to another website or ask me to download another app. We have to think, ‘How easy can we make this communication?’”

The digital world will expand while in-person dining will shrink

Many of our experts agreed that as the importance of digital engagement increases, our in-dining occasions will diminish. That does not mean that traditional dining or hospitality will go away, but it might change.

“I think we will end up with a very bifurcated system,” Sandland said. “There will be beautiful dynamic experiences that people are willing to pay for and have a night out, and there will be many more foodservice manufacturing plants that are heavily optimized for delivery and takeout.”

It’s a tale of two restaurants: One restaurant that exists to satisfy the needs of the on-demand economy, and one that is for special occasions and socializing. As the digital world of restaurants expands, experiences like the metaverse — where the new generation of rewards programs and brand engagement collide in Web3 — and digital subscription programs will become more prevalent. Each of these represents a new way to meet and engage with customers.

“With subscription services, you would pay, say, $12.95 per month to get a certain number of meals,” Morfogen said. “It will be almost like your streaming apps that you have 30 subscriptions to and forget about a few over time. I think this the direction hospitality is headed.” 

Social media will even the playing field

Before social media, local restaurants had to rely on people in their immediate vicinity to discover their restaurant and become regular customers. But in the future, restaurants of all sizes will be able to expand their reach simply by attracting a following on the social media platform of the moment — right now it’s Instagram and TikTok — and create a wider potential audience. Tomorrow, it might be the metaverse, where you don’t need to be a local to discover a new restaurant walking down a VR street. Then, restaurants can use CPG and ghost kitchen hubs to create new revenue streams and get their products in front of new audiences.

“You can be a small fish and yet reach all the fish in the pond if you perfect the frequency of digital storytelling on the right platforms,” Walchef said. “You can sell significant volume of product no matter where your restaurant is located if you are in the right [virtual] place at the right time.”

All you need is a phone to film a how-to video of smoking your brisket or whatever is in your kitchen, Walchef said, and upload it to TikTok or Instagram. In the future, he said, restaurant operators will become social media pros and influencers, as well as culinary and business experts. 

“Marketing today is about telling your story,” he said.

Divisions between ghost kitchens and restaurants will continue to blur

When virtual brands burst onto the scene several years ago, they were known as “dark kitchens,” where you didn’t know where your food was coming from or who was making it. You just clicked through on a delivery app and a pizza or burger showed up at your door.

In a post-pandemic world, delivery-centric brands will continue to be just as important, but ghost kitchens are starting to step out from the shadows. Our experts predict that hybrid ghost kitchens — brands that put transparency first in their digital footprint, and many of which you can visit in person — will be the future.  Morfogen is adding virtual brands to many of his dumpling shops because it’s a cost-effective way to increase his bottom line without expanding physically.

“I designed more menus around the current kitchen equipment we have,” Morfogen said. “To me, it’s like, why not? If we can add a really cool brand that uses the same payroll, the same overhead and the same operations, why not have three brands operating out of the same address? You have three restaurants in one.”

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