Tech Check is a regular column on restaurant technology by Senior Editor Joe Guszkowski. It's also a newsletter.
A universal truth about technology is that however great it is when it works, it’s that much worse when it fails.
As restaurants become more dependent on tech, they’re learning that truth the hard way. Not that there’s any other way to learn it, really.
In just the past two weeks, widespread tech outages at McDonald’s and Panera Bread brought business to a halt and drew attention to this less-discussed downside of technology.
McDonald’s system crashed worldwide on March 15, with the effects lingering in some international markets into the next day. The chain said the outage was caused by a third-party vendor during a configuration change. If it can happen at McDonald's, it can happen anywhere.
Case in point: On Saturday morning, Panera's app and website went down and seemed to be only partially back as of Tuesday. The timing could not have been worse: The 2,000-unit bakery-cafe chain is about to launch a major menu overhaul as it looks to woo investors for an initial public offering.
Panera has yet to reveal the source of the problem, which is naturally fueling speculation that it might be a cyberattack.
Issues like these are becoming more common in all sectors. It’s what happens when the demand for something outstrips the infrastructure needed to support it. And they can be extremely costly. According to analytics company New Relic, tech downtime can cost businesses from $100,000 to $1 million an hour. Multiply that across multiple days, and you have a recipe for not just a bad week, month or quarter, but potentially a bad year.
That is the risk restaurants take as they add more tech to their operations and push more transactions to digital channels such as mobile apps and kiosks. As I've covered recently in this column, there are a few brands making an effort to reach 100% digital ordering. If their tech fails, they will be literally out of business until it's fixed.
In some sense, the industry is playing catch-up on this. Restaurants made a huge technological leap four years ago, with much of the evolution happening on the fly. While the fast pivot saved many operations from disaster, the underlying IT investments needed to support it were probably not made at the time.
It’s notable, for instance, that human error is often cited as a leading cause of tech outages. Mistakes happen, but they’re more likely when IT teams are understaffed and overworked. Restaurants have also partnered with more tech vendors since 2020, which has expanded their tech capabilities but increased the odds that something will go wrong.
The proliferation of technology has, in turn, created more points of entry for hackers, which continue to be a growing threat to restaurants. There are simply more points of entry and more data in the system for criminals to exploit these days.
Loyalty programs, one of restaurants' top tech line items these days, are a particular liability. Those programs typically contain sensitive customer data like birthdays, addresses and credit card numbers—all of which are key ingredients for identity theft.
Restaurants are frankly behind the curve on cybersecurity. But they do seem to be taking steps to improve it. According to the National Restaurant Association’s State of the Industry report, 45% of operators plan to invest more in cybersecurity this year. That was an 11-point jump from a year ago.
At least five restaurant chains or industry suppliers were hit with cyberattacks last year. These attacks can cost hospitality businesses $3.5 million on average, according to IBM. They also attract unwanted attention and can prompt lawsuits from customers or employees whose data was exposed.
Beyond cybersecurity, restaurants should be making sure they’re investing enough in the IT department in general. Once viewed as a cost center, tech is now integral to pretty much every part of the business and should be treated that way.
And finally, operators should be quizzing prospective suppliers on their defense measures and their response to outages. How often do things break and how long does it usually take to fix them? That should help restaurants make smarter decisions about who they partner with and ensure that their tech stacks are stable.
None of this stuff is as cool as loyalty programs, drone delivery and artificial intelligence. But it’s just as crucial to restaurants’ path to true digital maturity.