By Rajat Suri, CEO and Founding father of Presto – 8.23.2022
The previous few years have offered problem after problem for the restaurant trade, and by all accounts, a brand new one is looming: a recession, which threatens to drive down discretionary client spending and hold diners at their kitchen tables relatively than in full-service eating rooms.
If historical past is any indicator, although, a recession needn’t be a demise knell for QSRs. Slightly, a recession affords a novel alternative for operators on this section to seize long-term model loyalty by delighting clients with speedier, higher service whereas contending with a number of the main challenges going through the trade immediately.
How can eating places do that? By adopting know-how—and quick. Within the coming months and years, QSRs that embrace know-how may have the instruments they should serve a rising quantity of consumers whereas combating macroeconomic headwinds.
The restaurant trade faces a number of challenges
Because the begin of the COVID-19 pandemic, the restaurant trade has battled a hydra-headed spate of challenges. A pervasive labor scarcity has compelled corporations, together with eating places, to boost wages.
The labor scarcity has led to points on a broader scale. As Restaurant Enterprise reported in a Might article, “The labor market has been the first offender of a lot of the inflationary issues as a result of corporations have needed to elevate wages aggressively to draw staff.” These fears have prompted the Fed to boost rates of interest within the hopes of slowing inflation. “For eating places, [raising interest rates] means larger debt prices, which can lead some operators to decelerate expansions or in the reduction of on expectations for progress.”
Sustained inflation has produced a domino impact of challenges for eating places. Meals costs are up greater than 10% year-over-year, in keeping with the U.S. Bureau of Labor Statistics, and in June QSR Journal reported that each one six main grocery retailer meals group indexes have elevated over the previous 12 months—and 5 of these teams have risen greater than 10%.
Eating places thus face a recession with fewer servers, much less accessible money, decrease margins, and the specter of lowered demand—notably for full-service eating places.
In a recessionary atmosphere, QSRs can truly see an enhance in demand
Throughout occasions of recession, shoppers tighten their proverbial purse strings. Which means quick informal and full-service eating places can count on a lower in buyer quantity.
QSRs, although, proceed to draw clients with their budget-friendly costs. In response to QSR, “In the course of the week of December 13, 2021…visits to full-service eating places have been up 53 p.c, year-over-year, and 43.4 p.c at quick-service places. However as of the week of June 6 [2022], visits to full-service eating places have been down 4 p.c however nonetheless up 7.3 p.c in counter service.” In its 2022 State of the Business Report, the Nationwide Restaurant Affiliation discovered that 63% of adults (and a full 75% of millennials and 70% of Gen Z) consider eating places are “important” to their life. Even throughout a recession, diners received’t keep away from eating places utterly; as a substitute, they’re extra prone to commerce down and patronize cheaper choices, like QSRs.
That is what occurred throughout the Nice Recession of 2008. As Oracle famous in a July weblog publish, “[A] development the trade has seen in latest recessions is when clients commerce down. Maybe a weekly fine-dining outing is changed by informal eating, informal eating turns into fast-casual, and so forth.” In 2013, the Journal of Hospitality Monetary Administration examined how completely different restaurant segments carried out throughout the Nice Recession and located that “the inventory efficiency of the limited-service restaurant section was resistant to the recession. No important lower was recognized after the recession began.” Certainly, in 2008, quick informal eating places represented 7% of restaurant gross sales. By 2020, that quantity had almost doubled.
Recession presents a possibility
A trade-down market and its related surge in demand presents a possibility for QSRs. These restaurant operators want to organize to serve a rising variety of clients effectively and successfully with the intention to capitalize upon this chance. Whereas brief on money and brief on employees, although, delivering fast, high-quality service turns into almost inconceivable to do with out the help of know-how.
Know-how may also help eating places cut back working bills whereas enhancing the client expertise. This, in flip, can enable eating places to fulfill rising demand from clients whereas positioning themselves to seize long-term loyalty and sustained enterprise.
Eating places have traditionally been gradual to undertake know-how—maybe partially out of concern that an more and more digitized expertise would detract from the personalised service diners have come to count on.
They needn’t worry. Presto’s latest Pulse of the Business survey revealed {that a} important majority of shoppers are receptive to know-how of their drive-thrus and at their quick meals counters. Particularly, respondents are receptive or very receptive to:
- Computerized voice help within the drive-thru line (61%)
- Personalised menus primarily based on order historical past and dietary preferences (69%)
- Personalized food and drinks options primarily based on preferences (69%)
- Ordering and paying by cellphone (69%)
Generally, respondents reported being receptive to applied sciences that would promise sooner, higher service. Half mentioned {that a} restaurant’s use of know-how may make the eating expertise extra environment friendly, and almost a 3rd (29%) reported that it makes the eating expertise extra pleasing.
What tech can do
When leveraged strategically, know-how is a game-changer for eating places going through macro pressures. This has all the time been the case, starting with the usage of the primary digital point-of-sales system within the Seventies. After the Nice Recession, restaurant corporations that had embraced know-how benefited, and the following decade bore witness to the event of game-changing applied sciences like cell apps, self-service kiosks, and digital fee choices. As Restaurant Enterprise reported in 2018, “Client-facing know-how has turn out to be a should because the trade has grown extra aggressive.”
Right this moment, know-how may also help QSRs cut back their reliance on employees, cut back wait occasions that frustrate clients, and ship a sooner, extra personalised expertise that delights diners and retains their enterprise. Now could be the time to spend money on know-how and degree up the client expertise whereas combating ongoing headwinds. QSRs can’t afford to attend.
Rajat Suri is CEO and Founding father of Presto. The corporate’s enterprise-grade contact, imaginative and prescient, and voice applied sciences assist hospitality companies thrive whereas delighting visitors. With over 100 million visitors utilizing Presto every month and 300,000 methods shipped, Presto is without doubt one of the largest know-how suppliers within the trade. Rajat based Presto in 2008 whereas pursuing his doctorate at MIT. He has additionally cofounded Zimride (now Lyft), the favored ride-sharing firm. He holds a bachelors from the College of Waterloo and likewise attended a Ph.D. / MBA program at MIT.
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