We collectively applaud the entire restaurant sector for staying open and innovating on the fly for over two years so that burrito arrives hot and on time. Now, it’s on to phase two.
Any restaurant that was doing business in 2019 and still is today has, almost without exception, invested in a half-dozen points solutions to make it work — this loyalty platform, that QR code-powered ordering system, mobile order-ahead, delivery partners, payments providers, and the list goes on. This has carried them through unprecedented times, but times are changing.
Savneet Singh, CEO and president of PAR Technology, told PYMNTS’ Karen Webster, “The pandemic just threw a whole bunch of products on them, but those products don’t speak to each other, they don’t connect to each other. I’d say on an absolute basis we’ve got a long way to go, but they’ve done a remarkable, admirable job getting this far.”
Singh’s point comes down to the fact that front of house has advanced dramatically while back office and kitchen haven’t, and the eateries that make it out of the latest disaster intact will complete their digital transformation by dumping point solutions and pulling it all together.
Smarter Kitchens, Better Business
Noting that the pandemic saw digital ordering become up to 30% of a restaurant’s receipts in the blink of an eye, Singh said the “back of the restaurant didn’t change. You still had the same workflow, the same process, the same kitchen. Restaurants are really struggling there.
“I think the way that they’re going to go about it to solve it is more software. In the end, your kitchen needs to be as smart as your front of house. Your back office needs to be as smart as your front of house.”
That happens, he told Webster, by moving to a single unified system where all feeds combine into a single flow that’s highly efficient and easy to tweak for performance.
“Your system needs to be smart enough to say, ‘Let’s turn off our Ubers and Door Dash,’ or ‘Let’s send out messaging saying you ordered on our app, expect that order to take 90 minutes,’ i.e., maybe don’t order now. That ability to slot orders, to throttle orders, to dynamically manage your kitchen, all that needs to come together,” he said.
They call it “Unified Commerce,” and never has the need for tech unification been greater.
Singh said, “Mobile became a channel, online ordering, but tomorrow it’ll be Alexa and Siri orders or Snapchat glasses orders, Instagram orders, live shopping on TikTok. All these ways will be channels that you don’t want to stop.
“You want to be innovative; you want to be in front of your customers, but if those orders aren’t unified with the same system as your in-store orders, your drive-thru orders — which are still the majority of your transactions — you can’t really run an effective business.”
Dining Out on Data
Though it’s been around for about 40 years, PAR is among the next wave of innovators bringing a fully-connected concept to restaurants, in their case with a focus on enterprise chains.
Enterprise means data — oceans of it — and that’s the secret sauce of the successful coast-to-coast quick-service restaurant (QSR) chain when it comes to phase two of the digital shift.
“Implicit in the digitization of restaurants is the idea that you have a lot more data to make decisions,” Singh said. “What you’re finding is that restaurants are now able to say, ‘What if we cut these 25 items off the menu? Will that allow us to flow more orders through, piss off a small community of people, and not lose loyal customers?’ You’re going to see the optimization of that menu. And it’s not going to be the same menu for everybody.”
To that end, in August, PAR acquired MENU Technologies, called “an omnichannel ordering solution for international restaurant brands.” That’s a prosaic description for a clever solution that syncs with loyalty and app data to create customized menus that can end up making a restaurant operation more efficient, with happier customers into the bargain.
In time, the data generated will impact everything from what is (and isn’t) on the menu to how big restaurants are in the near future. If up to 30% of orders are through digital channels now, that could easily be 50% in three years, Singh said.
That, in turn, will bring about data-backed introspection like, “‘Does my store footprint make any sense? And not always does the footprint in the front of house make sense, but does the kitchen make sense? Are we optimized for delivery? Are we optimized for drive-thru?’
“I think what you’re going to find is more and more solutions like ghost kitchens or cloud kitchens — you’re going to have more delivery pick-up points, you’re going to have more drive-thru. I think restaurants will consolidate their footprints, focus more on the food, and I don’t think you’ll see them jump into the meal kits into the grocery side, because I think that will dilute the experience that they’re trying to deliver.”
It’s the shape — and taste — of things to come, as Singh said there will be more technology solutions, albeit unified, including kitchen robots, automated drivers and order bundling.
“The key again is how do you make all that happen at the same time, and it’s going to be getting unified systems,” he said. “The idea that you have a separate loyalty system, a separate online ordering system, a separate mobile app, a POS system — if that data’s not connected, how can you make those decisions?”
Ultimately, you can’t — which makes unified commerce and ideas like it sound appetizing to operators.
The Bill Gets Top Billing
Putting it into perspective, Singh said, “It’s an amazing statistic, but for most QSR chains, drive-thru is the majority of transactions. It’s a very surprising statistic. Most Americans depend on restaurants for their dinners.”
That being the case, the question of how to deliver the same quality of food and experience to the home as on-premises comes down, again, to data-driven decisioning.
He said, “That might require you saying, ‘We’re not going to offer this product in a takeout or a delivery, we’re going to actually limit that to an in-store experience.’ That’s where I think, again, data can be so powerful. I think you’ll see the refinement of menus. I don’t think the actual delivery of the product will change too much, because I think then the kitchen becomes more complex, and is it really worth it for that restaurant?”
Closing the loop on a totally unified system is payments, and PAR is working on bringing a new payment experience to restaurants and their diners for the unified meal, from ordering to payment.
Singh said, “My favorite sort of analog talking to restaurant companies is they’ll often say, ‘I know I’m getting ripped off by my payments vendor, I just don’t know how.’ I used to say, ‘Do you know what you’re being charged?’ and nobody really can tell you what they’re being charged. There’s all sorts of reasons.”
PAR’s solution is designed to be low-cost and transparent.
“You’re going to know exactly how much we’re charging,” he said. “We’d rather be Costco here than a vendor where you’re kind of going behind smoke and mirrors to figure out what we’d be charging. If somebody can beat us and that’s all that matters to you, then you have that visibility.”
The payments piece also allows PAR to be a growth partner to its clients. By being inside its payments ecosystems, he said, “We’ll use that to finance your hardware and capex purchases, so you don’t have to spend 10, 15, 20 grand on whatever you’re upgrading.
“The last thing I think is one that is sort of going [to] be our next layer, which is how do we take that payment data that you own, which is another big value proposition of Par, combine it with your loyalty data, combine it with your POS data, and give you something you didn’t have before?”
“We see that business growing like a weed,” he added. “Then later on, we’ll say, ‘Take that data, and here’s a product or here’s a service that you can use on top of it.’”
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