The ouch of technology

Big operations are ensuring it’s not for everyone, no matter how much everyone might want it, says RB's Reality Check.
illustration: Shutterstock

reality checkGood news, masochists and depressives! Restaurateurs now have two more reasons to wonder why they chose this business over simpler and safer trades. Like cobra ranching. Or lion dentistry.

As if the industry needed more challenges, all indications suggest it’s about to be rocked by a pair of aftershocks from the technology influx that’s already remaking restaurants. That process was all about Restaurant X becoming a customer of Tech Vendor Y. In a flash, it’s morphed into thick-walleted operators buying the suppliers outright, so they get the best and sometimes only access to the next shiny thing.

The newfound techies range from Landry’s founder Tilman Fertitta, better known as a collector of restaurant and casino concepts, to an investment company formed by fine-dining master Danny Meyer, to the players that might be expected to diversify by virtue of their size and strategic acumen—McDonald’s, Yum Brands and Starbucks. 

They’ve secured access to digital systems that do everything from fielding and processing online orders (Fertitta and Yum) to maximizing drive-thru sales by adjusting to almost any variable (McDonald’s) to generating wind and solar power (Starbucks).  

Not all of the investors have pockets deep enough to scratch their knees while jingling change. Dickey’s Barbecue Pit is a few units and several billions in sales behind McDonald’s, but its parent company is also looking for tech opportunities. NRD Capital, better known as the parent of Fuzzy’s Taco Shop and Ruby Tuesday, formed an investment arm in January called NRD Tech Ventures. It already holds stakes in Harri, Shift One, Next and several other digital suppliers serving the restaurant field.

But for right now, tech aspirations and Warren Buffett-scale resources are too perfectly aligned to suggest coincidence. McDonald’s and Yum, for instance, both spent hundreds of millions in their shopping efforts. Buying tomorrow’s tech capabilities is largely a rich system’s prerogative. 

Which brings us to the volcanic rumblings that should concern any operator who’s yet to know the challenges of parking a Rolls. Won’t a tech arms race give big brands even more of an advantage than their size already provides? Will upstarts even have a chance if technology is crucial to winning, and they can’t even make the ante at the billionaires’ table? 

Hardware and software are only part of the advantage big chains’ greater wherewithal can buy. Wielding technology to maximum advantage requires specialized talent, and, as always with labor, the industry’s surging needs are outstripping supply. Tech has emerged at light speed as a key restaurant tool. The development of the experts to manage it can be clocked with an hourglass. The rare ones who have the know-how are prime hires right now, and their salaries likely reflect it.

In short: Score another advantage for the big brands. 

For the sake of every entrepreneur with an idea for a restaurant venture, let’s hope this is Chicken Little talk. The industry has always been a business of constant disruption, with the old guard incessantly challenged by upstarts with a new twist, a better process or a fresh appeal. Losing that unceasing reinvention would make the business as exciting as working a toll booth. 

But for right now, it looks as if the haves might have it.

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