2023 may be remembered as the year of artificial intelligence, but the technology having the biggest impact for restaurants right now are things that have been around for a while.
A survey of recent earnings calls for publicly traded restaurant chains found that familiar products like ordering tablets and kiosks are making a real dent on the bottom line. Meanwhile, the answer to some of the industry’s traffic woes could be hiding in plain sight with loyalty programs and third-party delivery.
Here’s a closer look.
Full-service dining chains continue to invest in handheld tablets that allow servers to send orders directly to the kitchen rather than walking them back and forth.
Outback Steakhouse just finished putting tablets in all 689 of its U.S. locations and expects them to contribute to a projected $55 million in productivity savings this year. It also hopes the speedier experience will translate into better traffic.
Applebee’s is also planning to equip servers with tablets when it begins installing a new POS system next year, a change that Dine Brands CEO John Peyton said will be “transformative” for employees and customers.
The updates come as casual-dining chains are increasingly searching for ways to drive sales. Tech that provides a better, faster experience is one possibility.
Self-service kiosks are sort of QSR’s answer to the handheld ordering tablet. Not surprisingly, they are also gaining ground.
At Shake Shack, kiosks are the chain’s highest-margin ordering channel. They now make up more than 50% of total on-site sales, an increase of 140 basis points year over year. And the chain is doubling down on them, investing in better upsells and software to keep pushing those numbers upward.
Kiosks are also growing at El Pollo Loco, Burger King and the massive Yum Brands. At Yum, nearly 40% of KFCs outside of China have them, as well as all company-owned U.S. Taco Bells and 70% of Habit Burgers. The company expects kiosks to be in the vast majority of its restaurants by the end of 2026.
Yum said the kiosks generate higher check averages and help margins because a cashier isn’t taking the order. They also provide another way to collect customer data.
Customer data, by the way, is becoming increasingly important as restaurants compete for diners. The rise of loyalty programs and customer relationship management (CRM) software is fundamentally changing how marketing works, allowing brands to learn and store customers’ preferences and hit them with tailored messaging rather than blanket ads.
Chili’s Grill & Bar is a microcosm of the two approaches. While the chain has returned to the TV airwaves in a big way this year, it is also building a CRM strategy that will allow it to “tokenize” its guests, said CEO Kevin Hochman. By that he means “we can identify guests no matter how they transact with us, and then be able to better target them with the right messaging and the right offers,” he said.
A similar effort is underway at The Cheesecake Factory, which this summer launched its first loyalty program, Cheesecake Rewards. While members currently get access to reservations and a free slice of cheesecake on their birthday, the chain is testing rewards that are targeted to certain segments to give it more granular control over traffic.
“I think that's why we launched rewards, right, as a means to drive incremental visitation,” said CFO Matt Clark.
Reports of delivery’s death may have been greatly exaggerated. The biggest U.S. delivery provider, DoorDash, had a record quarter, with total orders up 24% and gross order volume up 27% year over year.
Meanwhile, the service has become a major sales driver for Papa Johns, where 15% of sales came from third-party delivery in the quarter, even as competitors like Pizza Hut and Little Caesars join the market. Delivery transactions also grew at Wingstop, which uses both DoorDash and Uber Eats.
“We see the delivery channel as another opportunity to build awareness for Wingstop and we are nowhere close to a point of maturity,” said CEO Michael Skipworth, according to a transcript on financial services site Sentieo/AlphaSense.
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