For almost a year now, restaurants have been struggling. Amid widespread closures and job losses, there were times when it seemed difficult to have hope for the industry. Now, however, as vaccines roll out across the country, key players are placing big bets on the future of restaurants — $2 billion bets, specifically.
Andrew Robbins, co-founder and CEO at Paytronix, a SaaS customer experience management solutions provider for restaurants, joined PYMNTS CEO Karen Webster to discuss how leaders are shaping that future for the industry – ranging from the new market phenomenon of special purpose acquisition companies (SPACs) to the changing economics of delivery to the new restaurant recovery strategy.
The most important element in that recovery might be the disruptive effects of delivery services. For the past year, customers have been placing delivery orders in unprecedented volume, which has rapidly accelerated the rate of innovation in the delivery space. Most recently, micromobility startup Helbiz announced that it plans, post-SPAC acquisition, to marry its delivery infrastructure with the efficiency of ghost kitchens to make five-minute meal deliveries a very real possibility.
Of course, even with very promising startups like Helbiz, Robbins believes that today’s major players will likely retain the lead. “I think there’s something magic about the five minutes and how that changes the economics of delivery … if it’s successful, I think DoorDash could copy that or buy them pretty quickly,” he said.
With the consumer base and attention that the pandemic has afforded to major third-party delivery services, many are expanding into areas that may be more profitable in the long run than the financial tug of war of their current system. “You’re starting to see DoorDash and Uber get into the convenience store space,” said Robbins. “For both of those organizations, if they can make better use of their delivery personnel — to keep them busy or get them more tips —it’s going to drive down the costs for delivery.”
Restaurant Industry Leaders’ 2021 Playbook
As restaurants plan for their futures, patterns are beginning to emerge among key players. As Robbins describes it, “there’s no question that there’s some playbook that’s going around.”
So what is this playbook? According to Robbins, private-equity firms that own several restaurants are making note of what has worked in each subsidiary and applying those teachings across their brands. These firms’ experts have realized that as restaurant tech evolves, there is an opportunity to harness comprehensive consumer data to build deeper, longer-lasting relationships.
“People really want to own the customer and create great experiences, understand that customer data, and use that to help make better business decisions,” explained Robbins. “So it starts from owning the customer from the beginning, whether it’s customer acquisition through ads in Facebook and Google, and then following that lifecycle through online ordering, loyalty programs and really in-depth CRM.”
Some of that technology that restaurants are using to “own the customer from the beginning” was covered in the PYMNTS/Paytronix Delivering On Restaurant Rewards report, updated monthly with the latest innovations in the space. In the near future, it said, leading restaurants will also claim ownership of in-restaurant tech, offering a comprehensive consumer experience off-premises and on.
At first, when customers return for in-store dining, Robbins predicted, “there will be a period of mass experimentation. When you do that, sometimes you stitch together very odd experiences for the customer, so it really helps to have a platform for that customer experience, so you can create some continuity across all the new things you add.”
The Outlook For 2021
Even if the technology might look a bit messy at first, Robbins is optimistic that the restaurant industry will not only come back in 2021, but that it will be stronger and more technically advanced than ever before. Restaurants will leverage last year’s consumer-centric innovation to make consumers feel empowered, while using data to personalize the ordering journey to their needs. “I’m very excited about things … that put the consumer in the driver’s seat, but make it easier to identify them and then make the experience better,” he told Webster.
Part of the strength of the industry amid the vaccine rollout will come from catering to consumers’ pent-up desire to come together over food. In the coming year, Robbins predicted, “I see people coming back, and we’ve talked about 2021. There are all these celebrations from last year – graduations … [and] weddings that were put off. It’s all going to come back strong.”
SPACs On The Menu
Robbins also discussed what might be the most dramatic development in the restaurant business (or any business for that matter): SPACs. For example, Tilman Fertitta, CEO of Landry’s, the hospitality group behind Bubba Gump, Rainforest Café, Morton’s and other restaurant giants, is taking the company public via a SPAC in a multibillion dollar deal, reports Bloomberg.
SPACS can be a risky bet, but Robbins is not worried for Landry’s: “They’ve been doing it for 30 years. I actually think that makes a lot of sense. And right now, there are a lot of restaurants that you can probably buy at a value, and you’ve got a management team that knows how to do it, [with] a proven track record. Doing a SPAC is probably brilliant for someone like that.”
Fertitta’s controlling shares are valued at about $2 billion, while institutional investors including BlackRock and Fidelity are contributing $1.2 billion. Thirty-year track record or not, Landry’s would not be seeing these major investments from top financial services groups if the restaurant industry was the sinking ship it looked to be mid-2020. Yes, the industry is coming off a difficult year, but its future looks more promising every day as newly inoculated consumers come back in waves.
“It’ll be great for restaurants,” Robbins predicted.