Reflections on the Retail Technology Show
A Focus on Indoor Leads Restaurants to Digital Signage
Blog written by Brandon Lafving
Restaurants have turned to delivery apps over the last two years as a way to sell their products when customers would not come into the restaurant. But will this practice continue?
A few looming issues are forcing restaurateurs to reconsider. Delivery apps provide access to a larger pool of customers. However, is that larger pool really necessary when customers return to indoor dining establishments? Restaurants that are now seeing plenty of customers for on-premise dining no longer see the need (or value) in third parties.
The cost-benefit analysis is shifting dramatically. The cost of third-party delivery options is rising. Mandates that limited the cost of delivery applications, such as Uber Eats and Grubhub, have expired, leading delivery app royalty fees in some states to skyrocket as high as 14% and up.
To make matters worse, severe labor shortages still challenge operators. In fact, 75% of restaurateurs claimed labor as their primary issue in late summer, 2021, according to National Restaurant Association (“State of the Restaurant Industry: Mid-Year Update”). Short-staffed kitchens might not have the bandwidth to serve in-house and out-of-house customers, while disproportionately fewer servers might mean the opposite.
Low-margin delivery is also ineffective advertising. Restaurants that hope to woo new customers to their restaurants via an online delivery purchase might be misled. There is always the question of food quality. By the time a meal arrives at the final customer, the food can be cold and generally of lower quality than it would be fresh from the kitchen. That advertising might not have its intended effect.
These trends leave restaurants with little incentive to continue third-party delivery services, and fewer means to fulfill them.
Restaurateurs are starting to opt for more nuanced strategies. Instead of delivery at all hours of the day, for all menu items, we are seeing a variety of measures designed to prioritize on-premise diners during peak hours.
The situation with aggregators shifts quickly, but restaurants are responding to price hikes and demand spikes in a variety of ways. One option is to intermittently shut down aggregator delivery during peak hours. Other restaurants are reducing menu options to easily fulfillable and transportable items. But the result is similarly focused on delivering better food and experience to customers who take the time to come into the restaurant.
QR Codes have become a common ingredient in the fine-dining experience. Approximately one out of two fine-dining establishments use QR Codes (National Restaurant Association, 2021) to cater to on-premise guests. These practices changed considerably during the pandemic, but restaurants are finding that QR codes are the bridge to digital.
Recreating and modernizing the restaurant experience hinges on digital technologies, since these allow restaurants to:
Digital signage is an important element in delivering a modern, on-premise dining experience.
You want to make that customer connection? Deliver consistent, branded communications that are tailored down to the specific location, even relevant to the diners currently sitting down to eat.
No one has seen the effectiveness of digital signage more than the restaurant industry. Quick service and fast casual restaurants stole market share during the pandemic due to drive thru coupled with digital innovations including suggestive sell, and digital menu board automation.
We expect that brands that have invested in digital will continue to win. Only now, instead of outdoor, the competition will focus on indoor service.