By Rajat Suri, CEO and Founding father of Presto – 8.23.2022
The previous few years have introduced problem after problem for the restaurant trade, and by all accounts, a brand new one is looming: a recession, which threatens to drive down discretionary shopper spending and preserve diners at their kitchen tables quite than in full-service eating rooms.
If historical past is any indicator, although, a recession needn’t be a loss of life knell for QSRs. Reasonably, a recession provides a novel alternative for operators on this phase to seize long-term model loyalty by delighting clients with speedier, higher service whereas contending with among the main challenges going through the trade at present.
How can eating places do that? By adopting expertise—and quick. Within the coming months and years, QSRs that embrace expertise can have the instruments they should serve a rising quantity of consumers whereas combating macroeconomic headwinds.
The restaurant trade faces a number of challenges
For the reason that begin of the COVID-19 pandemic, the restaurant trade has battled a hydra-headed spate of challenges. A pervasive labor scarcity has pressured firms, together with eating places, to lift wages.
The labor scarcity has led to points on a broader scale. As Restaurant Enterprise reported in a Might article, “The labor market has been the first offender of a lot of the inflationary issues as a result of firms have needed to increase wages aggressively to draw employees.” These fears have prompted the Fed to lift rates of interest within the hopes of slowing inflation. “For eating places, [raising interest rates] means greater debt prices, which can lead some operators to decelerate expansions or reduce on expectations for development.”
Sustained inflation has produced a domino impact of challenges for eating places. Meals costs are up greater than 10% year-over-year, based on the U.S. Bureau of Labor Statistics, and in June QSR Journal reported that each one six main grocery retailer meals group indexes have elevated over the previous 12 months—and 5 of these teams have risen greater than 10%.
Eating places thus face a recession with fewer servers, much less obtainable money, decrease margins, and the specter of decreased demand—significantly for full-service eating places.
In a recessionary surroundings, QSRs can truly see an improve in demand
Throughout instances of recession, customers tighten their proverbial purse strings. Which means quick informal and full-service eating places can anticipate a lower in buyer quantity.
QSRs, although, proceed to draw clients with their budget-friendly costs. Based on QSR, “Throughout the week of December 13, 2021…visits to full-service eating places have been up 53 %, year-over-year, and 43.4 % at quick-service places. However as of the week of June 6 [2022], visits to full-service eating places have been down 4 % however nonetheless up 7.3 % in counter service.” In its 2022 State of the Trade Report, the Nationwide Restaurant Affiliation discovered that 63% of adults (and a full 75% of millennials and 70% of Gen Z) consider eating places are “important” to their existence. Even throughout a recession, diners gained’t keep away from eating places utterly; as a substitute, they’re extra prone to commerce down and patronize cheaper choices, like QSRs.
That is what occurred through the Nice Recession of 2008. As Oracle famous in a July weblog put up, “[A] development the trade has seen in current recessions is when clients commerce down. Maybe a weekly fine-dining outing is changed by informal eating, informal eating turns into fast-casual, and so forth.” In 2013, the Journal of Hospitality Monetary Administration examined how completely different restaurant segments carried out through the Nice Recession and located that “the inventory efficiency of the limited-service restaurant phase was proof against the recession. No vital lower was recognized after the recession began.” Certainly, in 2008, quick informal eating places represented 7% of restaurant gross sales. By 2020, that quantity had practically doubled.
Recession presents a chance
A trade-down market and its related surge in demand presents a chance for QSRs. These restaurant operators want to arrange to serve a rising variety of clients effectively and successfully so as to capitalize upon this chance. Whereas brief on money and brief on workers, although, delivering fast, high-quality service turns into practically inconceivable to do with out the help of expertise.
Expertise can assist eating places cut back working bills whereas enhancing the client expertise. This, in flip, can enable eating places to satisfy rising demand from clients whereas positioning themselves to seize long-term loyalty and sustained enterprise.
Eating places have traditionally been sluggish to undertake expertise—maybe partially out of concern that an more and more digitized expertise would detract from the personalised service diners have come to anticipate.
They needn’t concern. Presto’s current Pulse of the Trade survey revealed {that a} vital majority of customers are receptive to expertise of their drive-thrus and at their quick meals counters. Particularly, respondents are receptive or very receptive to:
- Computerized voice help within the drive-thru line (61%)
- Customized menus primarily based on order historical past and dietary preferences (69%)
- Custom-made food and drinks strategies primarily based on preferences (69%)
- Ordering and paying by telephone (69%)
Basically, respondents reported being receptive to applied sciences that would promise quicker, higher service. Half mentioned {that a} restaurant’s use of expertise might make the eating expertise extra environment friendly, and practically a 3rd (29%) reported that it makes the eating expertise extra fulfilling.
What tech can do
When leveraged strategically, expertise is a game-changer for eating places going through macro pressures. This has at all times been the case, starting with the usage of the primary digital point-of-sales system within the Seventies. After the Nice Recession, restaurant firms that had embraced expertise benefited, and the next decade bore witness to the event of game-changing applied sciences like cell apps, self-service kiosks, and digital cost choices. As Restaurant Enterprise reported in 2018, “Shopper-facing expertise has develop into a should because the trade has grown extra aggressive.”
Right this moment, expertise can assist QSRs cut back their reliance on workers, cut back wait instances that frustrate clients, and ship a quicker, extra personalised expertise that delights diners and retains their enterprise. Now could be the time to spend money on expertise and stage up the client expertise whereas combating ongoing headwinds. QSRs can’t afford to attend.
Rajat Suri is CEO and Founding father of Presto. The corporate’s enterprise-grade contact, imaginative and prescient, and voice applied sciences assist hospitality companies thrive whereas delighting company. With over 100 million company utilizing Presto every month and 300,000 techniques shipped, Presto is among the largest expertise suppliers within the trade. Rajat based Presto in 2008 whereas pursuing his doctorate at MIT. He has additionally cofounded Zimride (now Lyft), the favored ride-sharing firm. He holds a bachelors from the College of Waterloo and in addition attended a Ph.D. / MBA program at MIT.
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