How COVID-19 upended restaurants' conservative approach to tech

Restaurants getting by on old, patchwork systems had to shift gears last year, according to a new report from J.P. Morgan and FreedomPay.
Photograph: Shutterstock

If you had to choose one word to describe the impact of COVID-19 on restaurant technology, "acceleration" would be a pretty solid choice. 

After all, restaurants made a huge technological leap in 2020, as tools that were already growing in adoption, like third-party delivery and online ordering, became crucial to survival.

But a new report from J.P. Morgan and payment provider FreedomPay shows that the pandemic didn't just speed up activities that were already happening. It actually reset restaurants' tech priorities altogether.

The report, based on interviews with 50 executives and IT leaders across retail and hospitality both before and during the pandemic, found that priorities shifted from getting the most out of existing technology to rapidly digitizing and integrating to meet consumers' changing needs as COVID-19 took hold.

Prior to the pandemic, the report paints a picture of executives more focused on immediate tech needs than getting ahead of the curve. Nearly two-thirds of C-level leaders said their top challenge was making tech investments that would minimize risk and help optimize existing systems.

That was balanced somewhat by "head of function" tech leaders, who were split between wanting to support systems already in place (32%) while also investing in the future (31%). 

The conservative approach resulted in a patchwork of tech products that weren't very useful.

"Underfunding of technology and undercapitalization of people have led to capability gaps and poor integration," said the SVP of operations for a major hospitality company before the pandemic. "We have sophisticated tools (ERP and CRM) but they are siloed, underutilized, or simply unused."

When the pandemic hit in March 2020, that piecemeal approach became a liability. Leaders quickly realized that they had to get disparate platforms working as one to enable things like curbside pickup and mobile to-go ordering that had suddenly become necessary for survival.

During the pandemic, nearly 80% of C-level leaders said integration of digital platforms was their top priority. And 69% of functional heads shifted their focus to digitalization and data integration. The future had arrived sooner than many were expecting. 

“We simply weren’t ‘e-set up’ for COVID-19,” a retail IT director said. “Customers couldn’t order online and then pick up curbside, which would have enabled our stores to still do business. There had been discussions, brainstorms and plans about the outdated back-end, but it took COVID-19 to put it on the front burner.”

Retailers and restaurants also shifted how they thought about their customers. Before the pandemic, they were working to engage new customers and demographics, the report found. During the shutdown, they switched to hanging on to guests they already had. That led to the rise of contactless payment, QR codes and other safety-first products that reduced human interaction.

It also made data more important for its ability to help restaurants understand their customers and respond to their needs. Nearly 45% of leaders surveyed said that data has become more valuable, and 38% are working to combine data sources to get a better picture of their customers and businesses.

"A key takeaway from the study overall emphasizes that the challenges experienced over the last 12 months are creating new opportunities for tech investment as retail and hospitality organizations reevaluate what's really important," said Chris Kronenthal, president and CTO of FreedomPay, in a statement. "Underpinning this is the recognition that better use of 'big data'—and real-time insight—is now vital to maintain operations, respond to rapid change and support growth."

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