What’s next for restaurant payments and ecommerce?
Restaurant Payments Think Tank
As digital engagement, ordering, and payments grow, restaurant operators must learn to think like retailers.
How payment technology can open up ecommerce opportunities.
Challenges restaurants face when bridging the offline-online gap.
New products and services restaurants can offer.
What’s Next for Restaurant Payments & E-Commerce?
How restaurant operators can think like ecommerce brands
Meet the Think Tank
Bridging the online-offline mobile experience
The most important restaurant payment tech capabilities
Meet the Think Tank
VP, Payment Partnerships, Adyen
VP, Engineering and Analytics, Taco Bell Corp.
VP, IT, Hospitality Technology, The Howard Hughes Corporation
Chief Strategy Officer, Sonny’s BBQ and CIO & Founder, Restaurant CIOs
Editor-in-Chief, Hospitality Technology
What’s next for restaurant payments and ecommerce?
Meet the Think Tank
How To Think Like an E-Commerce Brand
The Most Important Capabilities
Bridging the Online-Offline Experience
New payment technologies are empowering restaurant evolution
Top strategic goals for restaurant tech investment
Improve digital customer engagement
Support revenue-generating opportunities
Increase and drive off-prem. business
Improve business analytics
As restaurant payment technology evolves, it’s become critical for restaurant operators to think more like ecommerce brands and retailers. We spoke with our Think Tank participants to hear how payment technology can open up ecommerce opportunities and what new products and services restaurants can offer to get ahead.
Today, most of us find ourselves with the basic restaurant tech – either we built it or bought it, but somehow it’s integrated. The real question, though, says Vadim Parizher, VP, Engineering and Analytics, Taco Bell Corp., is: “How do we integrate all these channels seamlessly?”
“That’s the key,” says Joe Tenczar, Chief Strategy Officer, Sonny’s BBQ and CIO & Founder, Restaurant CIOs. “Link the guest to the transaction, then take full advantage of those customer analytics – understand who the customer is and segmenting and targeting, all those things that have proven to be effective in the marketing world.”
“COVID highlighted the need to diversify operations and allow for other channels to produce incremental revenue in the best of times – while keeping the business afloat when foot traffic is limited,” says Giancarlo Fiorarancio, VP, IT, Hospitality Technology, The Howard Hughes Corporation, which operates The Greens, a contactless restaurant concept at New York City’s South Street Seaport.
“If we think about ecommerce and the things that make it accessible, there are some principles that don’t necessarily translate one-to-one to the restaurant world,” notes Rehman Baig, VP, Payments Partnership, Adyen. “For instance, restaurants are unlikely to offer 30% off everything in the store, the way a retailer might. Instead, their focus is more towards how to stay top of mind, how to drive the next visit to the restaurant, the next online order. Lessons learned can include proper application of an e-wallet, app, and notifications. Iterations here will help define the next five years of restaurant technology.”
COVID was an important wake up call
For the vast majority of restaurants, they’re going to need to get wise to [unifying their channels] in order to survive the next generation."
Source: Hospitality Technology's Restaurant Technology Study 2021: Building the Next Normal
The challenge is recognizing a customer online, as well as offline, and using all the available information to serve them better and make a sale. Adds Parizher, “We can’t be purely online. We mustn't ignore the in-person operational component.”
Traditionally, though, restaurants have not had a good grasp of their customers’ behaviors, says Tenczar: “Some high-frequency, low-check brands, like Starbucks, do a great job of that and have great loyalty programs. But for the vast majority of restaurants, they’re going to need to get wise to this in order to survive the next generation.”
To get a clear picture of a customer, look at your online and offline data.
To understand customers better, link customers to their transactions.
Diversifying operations can help you weather those times when foot traffic is limited.
Payment technology like e-wallets can help open up new opportunities online.
Drop Down Menu: What's Next
Introducing the new and emerging must-haves in tech capabilities.
Adoption of tech features that customers demand
Free WiFi (4% plan to add for the first time)
Alternative to paper/physical menu (22% plan to add for the first time)
Mobile payments (33% plan to add for the first time)
Mobile ordering (33% plan to add for the first time)
Menu and nutritional information previews (33% plan to add for the first time)
As we peek at what 2022 restaurant tech investments may look like, there are certain capabilities – such as mobile ordering and payments and enhanced digital customer engagement – that have evolved from “nice to have” to table stakes.
“Whether it’s through the restaurant’s app or a CRM system or through a passive payment ID, there’s a common need for card on file to drive the ultimate consumer experience” notes Baig. “Is there a target, at some point in the future like 2025, when we should be at a certain percent? So the transactions are truly card-free – not contactless tap, not insert the chip, not giving my card to a server, but completely without any card exchange? It would require a lot of work underneath, but card on file as a foundational element is quite important.”
“Payment tech is evolving,” says Tenczar. “There’s still a lack of a ubiquitous digital wallet, for instance. The challenge for restaurants has always been that in order to have electronic payment, you had to have an app for your brand. And it’s hard to get customers to widely adopt a restaurant app. The development and adoption of a digital wallet will be a chicken-and-egg process: Both restaurant adoption and consumer downloads will drive the process.”
“Our restaurants are mostly franchises, so accounting becomes very complex in terms of third-party delivery, fee structures, commissions, markups,” says Parizher. "Our emphasis is to help them deal with this complexity. We still haven’t figured out the magic formula of whether to connect payment providers with franchisees or to accept a single form of payment as most retail ecommerce brands would.”
“We’ve worked with some of the biggest QSRs to adapt to their franchise structure and figure out the right way to offer seamless payment processing,” adds Baig. “The trick is reporting, reconciliation, and easy settlements, something that’s really predictable even if you’re taking a restaurant global. We’ve come up with an elegant solution that allows flexibility depending on the needs of the franchisee as well as the operating brand. It’s certainly not one-size-fits-all. In some cases, the operator sets the payments processing, in other cases the franchisees have a choice. For our solution, simplicity reigns supreme.”
“We’re moving the initial channels,” says Tenczar. “We started on the web, then moved into apps. We’re lucky enough to be one of the largest QSRs, so our app is really a thing. Our strategy is first-party. On the horizon is ordering via social media or text order, which is already happening internationally now, but growing in the US. Payment will become a question: What happens when a customer orders through TikTok?”
The challenge for restaurants has always been that in order to have electronic payment, you had to have an app for your brand..."
The new and emerging must-haves in payment tech capabilities
The challenge for restaurants around digital payments is needing an app.
Yet for many restaurants, driving app adoption with customers is hard.
Adyen sees card on file becoming foundational for restaurants in the coming years.
For franchisee brands, the main payments challenge is complexity can add up quickly.
Where restaurants are making off-premise investments
(Percentage of restaurants who have adopted or plan to adopt in 2021)
Online ordering for pickup
3rd-party del. partnerships
In-house, or native delivery
Looking at how leading brands are bridging the off-line/online mobile experience, there are challenges as well as innovative solutions.
“Tech companies want to move that way: Google wants to sell, not just search. So does Amazon. Gaming companies may want to transact within the food space,” says Parizher.
“We’ve seen prototypes of people ordering a pizza directly in-game,” says Baig. “A generational shift is happening – and some demographics, such as gamers, are aging. As your target market evolves with a different set of expectations on media interactions, we must adapt.”
“Streaming TV may expand into selling food,” notes Tenczar. “Autonomous driving is coming, closer than it’s ever been. Restaurants interfacing with cars is on the horizon over the next five years.”
Parizher believes interfacing with cars has huge potential: “Taco Bell is more of an impulse play, so the car is an important experience, and having a card on file so the driver can just stop by and pick up the food would be a great experience.”
“The interface can be the challenge,” Fiorarancio points out. “For example, ordering by voice didn’t take off the way it was predicted because the tech wasn’t quite there yet.”
Cross-channel shopping experiences are spilling into food and beverage.
A card on file approach can help turn possibility into reality when things like self-driving cars visiting drivethroughs becomes possible.
Industries are blurring as consumers’ expectations around immediacy and availability drive change for restaurant operators.
What’s next for restaurant operators
Looking at payments technology on the horizon in 2022 and beyond, there’s great potential in data strategies and analytics, hyper-personalization, and more to help identify customers before they even walk in the door.
Learn more about Adyen’s restaurant payment systems and ecommerce solutions by visiting Adyen.
Did you enjoy this Think Tank discussion on the payment technology issues facing restaurants?
Restaurants’ desire for data and analytics maturity continues to grow
of restaurants consider their data strategy for sales and service prediction/ optimization to be only moderately, slightly, or not at all effective.
“Try to understand why customers are comfortable with some identification like scanning a ticket at a sporting event, or scanning a car on the highway, or Amazon Go,” says Parizher. “How well will those examples work for the restaurant industry? I don’t see a quick solution for restaurants. But if we look at where it is working, it could be quite a lift to restaurants.”
“The challenge on the payments side,” continues Fiorarancio, “is that the different systems we have as restaurant operators, from POS to reservations to online ordering and ecommerce, make it challenging to navigate the payments space to find a solution that works with all those channels. Your POS will have a list of payment processors (or, in some cases, the POS provider is the payments processor), and each will have their own list of payments processors.”
“We need to incentivize customer identification,” says Tenczar. “With a ubiquitous digital wallet, you’ll be able to offer something like ‘global points,’ for instance. But the identification of non-digital transactions remains the Holy Grail.”
“There are some bets that are not necessarily going to pay off,” adds Parizher. “Do I put a face scanner everywhere? Probably not. A license plate scanner? That’s a bad idea, in my opinion. A barcode scanner? QR scanner? Those are big investments – hundreds of millions of dollars for a big brand like ours, and will it pay off? But the next big bet should be to better identify the customer, because once we do that we can complete the whole ecosystem. And I want to identify the customer before payment, so I can offer favorite orders and upsell.”
“There are still a large number of restaurants offering QR and self-service,” notes Baig. “That has implications for payments tech.”
“Yes, we’ve seen an increase in kiosk technology – we have a number of kiosk-only restaurants,” says Parizher.
“Some dining is transactional, and people have grown accustomed to that,” says Tenczar. “Sonny’s used to be 60% dine-in to 40% off-prem. And that has shifted and will likely continue. But experiential won’t go away, the personality of the server, the human touch. There’s a place for that.”
It’s helpful to try to understand why customers are comfortable with some identification."
Hospitality Technology's Restaurant Technology Study 2021: Building the Next Normal
“I’m comfortable to a point, but I don’t want a restaurant tracking my every move, which is what you’d need, for instance, to know that a return customer is approaching the store,” adds Tenczar.
Ultimately, customer-driven choices are here to stay
“Our goal as a restaurant is to increase the percentage of customers that we can identify,” says Fiorarancio. “There are fewer opportunities for full service restaurants to identify customers – if a restaurant takes reservations, that’s the low-hanging fruit opportunity.
“We’re in the process of tying reservations to loyalty and to transactions, so that would all become part of a customer’s CRM profile. We’re trying to incentivize that process, such as offering VIP events to customers who join our loyalty program.”
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