Big restaurant chains are tech laggards no more

Things like mobile ordering and digital loyalty programs are now table stakes for brands at the top of the Top 500. So what will separate the truly high-tech from the rest?
Whataburger opened its first digital-only location last year. | Photo courtesy of Whataburger

The pandemic was a watershed moment for restaurant technology. With dine-in service closed or severely limited, things like online ordering, third-party delivery and contactless payment became necessities. 

Four years later, just about every large restaurant chain now offers customers the ability to order online and on a smartphone app. The vast majority allow them to earn rewards while doing so. And even the in-restaurant experience is becoming widely digitized via self-service kiosks or tabletop tablets. 

That’s according to a Restaurant Business review of tech adoption at the 50 largest U.S. chains, as ranked by Technomic’s 2024 Top 500 Chain Restaurant Report.

The chains were measured on whether they were using seven different types of technology: web ordering; mobile ordering; third-party delivery; digital loyalty programs; self-service kiosks or tabletop payment devices; digital payments; and digital-only locations. 

The average brand checked more than five of those boxes, proving that a digital strategy is now a nonnegotiable for the nation’s biggest restaurants.

“Everyone has the same basic three or four things,” said Meredith Sandland, CEO of software company Empower Delivery and co-author of the book “Delivering the Digital Restaurant.” “That tells you that the consumer just expects a certain level of digital availability today.”

As a result, consumer-facing tech is no longer such a big advantage for brands that were ahead of the curve 10 years ago, such as Starbucks and Panera Bread. Customers will now find the same stuff at Jack in the Box, Jersey Mike’s and Denny’s.

Indeed, just three of the top 50 chains did not have web or mobile ordering last year: In-N-Out Burger, Dutch Bros and Waffle House. The latter two have since added those options, making In-N-Out the lone holdout.

Only six chains abstained from third-party delivery apps like DoorDash, Uber Eats and Grubhub, which became wildly popular during the pandemic and continue to grow.

Nearly 8 out of 10 brands, meanwhile, have a digital loyalty program that allows customers to earn points or some other reward when they visit. 

A third of chains have installed self-service ordering kiosks, while 20% give customers the option to pay their bill on their phone or with a device at their table.

Digital wallets like Apple Pay and Google Pay, meanwhile, are ubiquitous: All 50 of the biggest chains accept these common digital payment methods.

And about a third of brands have one or more locations that are dedicated solely to digital or off-premise business, with no dining room to speak of.

“Coming out of the pandemic, what’s been interesting is it took restaurants however many years to realize that tech is really, really important,” said Chris Heard, CEO of Olive Technologies, a company that helps businesses source tech products. “It feels like restaurants are one of those verticals that used to be a super laggard and now are almost at the forefront.”

What is less clear from the data is how much of an impact that is having on restaurants’ performance, if any. Chains that have been generating strong same-store sales for years, such as Texas Roadhouse, tended to have the same amount of technology as those that have struggled, like Red Lobster.

Meanwhile, early adopters such as Chipotle and Starbucks may have seen a boost when they launched mobile apps 10 or more years ago, but that growth will have long since been absorbed into their annual run rates, Sandland said. 

And then there are outliers such as In-N-Out, where systemwide sales rose 12.7% last year and are up 138.6% over the past decade, according to Technomic. That’s without digital ordering, third-party delivery, kiosks or a loyalty program. 

It suggests that while technology can be a helpful tool, it’s no cure-all, especially when almost every large chain is offering the same thing.

“Existing tech solutions are like band-aids on a bullet wound,” said Liz Moskow, a restaurant consultant and tech specialist. “People don't just come to a restaurant because they can order ahead on an app. They come for a great experience.”

In the case of In-N-Out, the chain has earned a cult following thanks to its reputation for hospitality and high-quality, affordable food. “People are going to order from them no matter what,” Sandland said. 

And though restaurants have made massive progress on tech in a very short time, most of it has come on the front end. “In my mind, it’s now time for back-end innovation that allows restaurant to fulfill the promise of the front end,” Sandland said. That will entail things like kitchen display systems and workflows that are built with digital business in mind.

Chains that want to separate themselves from the pack will also need to build stronger connections within their existing tech and make good use of customer data. "Solutions that better integrate and make their tech stack more usable and accessible will be helpful," said Moskow. She gave the example of middleware that integrates a restaurant’s loyalty, marketing and delivery programs to unify customer data.

“I definitely don’t think that people have a clear view on their data today,” said Heard, but restaurants are working to change that. A study published last month by Olive found that data reporting is the No. 1 priority for businesses when evaluating new technology. 

“It feels to me the last year or so has been a ‘let’s grow fast’ mentality, and that’s all about brand and understanding the customer,” Heard said.

This next phase will be largely invisible to customers, Sandland noted, “but it will cause a much better outcome, and the consumer will be better off because of it.”

That, in turn, should translate to growth for brands that can get it right. And a few have already offered glimpses at what’s to come. Texas Roadhouse, for instance, is in the process of installing a digital kitchen system at 200 of its restaurants, and said it is already seeing faster cook times and a more organized back-of-house as a result.

“It’s that kind of thing that I think is going to drive the next wave of sales growth: Being a more efficient restaurant,” Sandland said.

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