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Turning Up the Heat on Tech to Deliver ROI
Digital and data-based innovation drive the on-demand culture
that is redefining what it means to be a restaurant
The 2020 Restaurant Technology Study is the 22nd edition of this annual report. The survey was emailed to subscribers of Hospitality Technology magazine in Q1 of 2020. Respondents are responsible for IT decisions at 26,409 units. In cases where respondents were allowed to select multiple responses to a question, total percentages will exceed 100%. In cases of single-select response options, results were rounded to the nearest whole number and will equal 100%, +/-1%.
Click here to see who responded.
Technology
Innovator 24%
Early Adopter 59%
Late Adopter 15%
Laggard 2%
Data & Analytics
Innovator 34%
Early Adopter 37%
Late Adopter 27%
Laggard 2%
Digital
Innovator 24%
Early Adopter 51%
Late Adopter 20%
Laggard 5%
Competitive Maturity Landscape
Methodology
SEGMENT BREAKDOWN
QSR/Fast Casual 54%
Full Service 56%
Fine Dining 22%
SEGMENT TYPES
Corporate 90%
Franchisee 5%
Unit 5%
ANNUAL REVENUE IN 2019
<$50 million 44% 27% 57% 33%
$50 million to $99 million 27% 41% 22% 22%
$100 million to $499 million 17% 14% 17% 33%
$500 million to $999 million 2% 5% n/a n/a
$1 billion+ 10% 14% 4% 11%
Total QSR Full-Service Fine Dining
Business Type
Franchisor of Single Brand 34% 50% 13% n/a
Franchisor of Multiple Brands 5% 5% 9% 11%
Franchisee Operator 2% 5% n/a n/a
Non-Franchised Operator 59% 41% 78% 89%
Total QSR Full-Service Fine Dining
BREADTH OF OPERATIONS
Global 24% 36% 17% 33%
National 22% 27% 13% 22%
Regional 54% 36% 70% 44%
Total QSR Full-Service Fine Dining
JOB FUNCTION OF RESPONDENTS
Owner/Operator 12% 5% 9% 22%
IT/Technology 59% 77% 52% 33%
Restaurant Operations 12% 5% 22% 11%
Corporate (Finance, HR, Strategy) 15% 14% 13% 33%
Total QSR Full-Service Fine Dining
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The evolution of restaurant technology is one that has revealed a number of paradoxical conundrums: quality must be quick; convenient must be customizable; automated must be high-touch; and intangibles like experience and loyalty must yield ROI.
While digital engagement does not tie directly to reducing costs, it does dovetail with objectives to bolster ROI and relates to the call to drive off-premises business. Owning the customer relationship will only increase in importance as third party providers insinuate themselves into the ordering process. Digital touchpoints that drive and foster loyalty are key.
To gain a better sense of how restaurants plan to derive ROI from technology spend, respondents were asked to select key tactics for achieving strategic objectives. Systems integration and automation dominated the list with reducing disparate systems getting 59% and automating services 56%. QSRs are putting more priority on collaborating with third party service providers second only to integration.
of full-service restaurants say automating services is key to achieving strategic tech goals.
70%
About one third (32%) of restaurants claim that improving employee satisfaction is a key tactic to ensure the success of technology rollouts. This aligns with the need to reduce the number of disparate systems and ensure seamless integrations that offer single versions and views of important business information.
QSRs are more frustrated by integration than other restaurant segments and place it just behind replacing legacy systems and delivering projects faster. This segment also feels equally challenged by a lack of skilled resources, insufficient IT budgets and struggles with scaling innovation chain-wide, all of which tied for third place in QSR’s top challenges.
Surprisingly, a small percentage of restaurants are feeling held back by security and compliance concerns (15%) despite privacy legislation coming into effect in several states and GDPR continuing its march across the EU, which has an impact on global companies.
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With 27% of restaurants naming enabling seamless orders across multiple channels as a strategic goal, HT queried operators for the first time to get a sense of what percentage of overall sales come through digital channels.
TOP 10 CHALLENGES FACING TECH TEAMS
1
2
3
4
5
6
7
8
9
10
Held back by legacy systems (hardware, software)
39%
Delivering technology projects faster
37%
Lack of skilled IT resources
in-house
29%
Guests expect greater technology than we can keep pace with
24%
Difficult to measure ROI
for technology
24%
Effort required for system integration
22%
Lack of sufficient IT budget
22%
Scaling innovation chain-wide
22%
Poor IT-business alignment
20%
Resistance from franchisees to pay for new technology
17%
32%
DIGITAL ORDERS DRIVE RESTAURANT SALES
The largest percentage of respondents (32%) say that digital sales fall into the 11-19% range of overall sales. About a quarter (24%) claim 6-10% of sales come from digital orders and 22% log less than 5%. Another 22% of restaurants log 20% or greater of overall sales from online sources. The percentage garnering that amount of digital sales is greater for QSRs specifically, with 32% of that segment.
CLICK HERE TO REVEAL THE TOP FIVE RESULTS
Enabling Off-premises Redefines
Restaurants & IT Strategy
There is no denying that takeaway and delivery have been driving much of the conversation in the restaurant business over the last several years. Technology decision makers cannot ignore this trend, as 29% specifically name driving off-premises businesses as a top objective for IT investments. While delivery and the hot potato topic of third party delivery providers, is certainly relevant, restaurants are seeing the real ROI of off-premises coming from other strategies such as BOPIS (buy online, pickup/pay in store).
Driving catering sales and off-premise
business stands apart from third party
delivery, which 58% selected. This gap represents
the fact that restaurants see more benefits and path
to ROI in off-premises business that they control.
The guest demand for delivery is not waning, which has also given rise to more restaurants seeking out options like delivery only kitchens. Ghost kitchens, despite their paranormal sounding moniker, have become the new normal in the restaurant industry.
MAXIMIZING THE PROMISE OF OFF-PREMISES
75% Online Ordering for Pickup
75% Catering Sales
58% Third-Party delivery partnerships
42% Ghost Kitchens
25% Drive-thru lane for pickup orders
25% In-house Delivery
25% Curbside
17% Improve drive-thru speeds
8% Second make lines
Combatting Labor Challenges with Smart Strategies
A low unemployment rate is generally acknowledged to be a positive thing, but for restaurants, which already struggle with employee retention, a hot job market, means more competition to find and keep good workers. With turnover perpetually an issue, restaurants are always focused on improving productivity and efficiency.
Respondents who selected improving productivity as a strategic goal, were asked to identify what technology strategies they deem important to being able to achieve the objective. The majority (62%) believe mobile devices are key. Also sitting in a top tier is providing devices that will empower workers to report on when and why they might be becoming disgruntled or dissatisfied in their employment.
Occupying a middle tier at 31% are same day pay, artificial intelligence and wearables. Some view same day pay as promoting poor financial habits and others feel it won’t foster true loyalty to an employer. Despite the naysayers, nearly a third of respondents consider the capability to payout staff on a daily basis as a viable means to attract and retain employees.
TECH TACTICS TO IMPROVE EMPLOYEE
PRODUCTIVITY & SATISFACTION
62%
Mobile Devices
Sentiment/
Satisfaction Devices
54%
Same
Day Pay
31%
Artificial Intelligence
31%
Wearables
31%
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This year’s study illustrates that restaurant IT executives continue to rise through the ranks from soldiers keeping the point of sale plugged in, to savvy leaders strategizing in bits and terabytes. Today, a quarter of restaurants (24%) believe they are technology leaders compared to last year’s 19%. In 2019, 16% professed to be leading in data and 12% cited superiority in digital engagement. In 2020, those numbers increased to 34% for data leadership and 24% in digital leadership.
Strategy
Looking back over the past eight years of HT ’s Restaurant Technology Study, goals for technology investment have most often prioritized digital guest engagement, data and analytics, and improving efficiency.
For the last three years, improving data and analytics has been coupled with efforts around digital customer engagement to drive technology initiatives, followed by improving efficiency. In 2020, it seems the directive has come down: innovation cannot be for innovation’s sake. Being a technology leader is great, but IT has to – apologies to Cuba Gooding Jr. – “show restaurants the money.”
Demand for delivery and convenience reshapes restaurants and puts hyper-focus on costs
Bottom Line Bolsters Need for Practical Innovation
Budgets
In 2019, restaurants closed out a decade of growth with $863 billion in sales, according to the National Restaurant Association. That amount also represents a 3.6% uptick from 2018 when reported sales were $833.1 billion.
Despite positive economic factors, restaurants temper consecutive growth
with conservative technology spending
IT Budgets Increase, but Moderation Trumps Innovation
$863 billion
Source: National Restaurant Association 2019 State of the Industry
post annual revenue above $50 million
56%
74%
of QSR/fast casual brands post annual revenue over $50 million
We reported last year that declining traffic has not hampered growth. This is due
to the shifting of business to off-premises dining and increases in menu prices.
An expanding marketplace has spawned the creation of non-traditional channels
gaining market share that appeal to consumers who are not as loyal to chains and
seek convenience over all else.
The industry saw shifts among some big brands to adjust to this new normal, although budgets to enable a tech-driven future have remained light. Examining restaurants’ overall technology budgets in 2020, the vast bulk (76%) plan midrange tech budgets of 1.0% to 3.9% of revenue. Only 12% plan to spend more than 4% of overall revenue.
2020 RESTAURANT TECH BUDGETS REMAIN CONSERVATIVE
More than half (64%) of restaurants plan to increase IT budgets in 2020, with 32% planning to boost technology spend by more than 5%. This planned investment is aimed at fueling a heavy focus on driving growth through digital channels.
HOW MUCH WILL IT BUDGET CHANGE
of restaurants
plan to increase
IT budgets in 2020.
64%
10%
22%
32%
34%
2%
by 10%+
by 5-10%
1-5%
NO CHANGE
by 10%+
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IT budget allocations in 2019 remain on par with last year. However, looking back to 2011 we find big changes. External service providers got a mere 10% of IT budgets in 2011 and in 2019 the budget doubled to 20%. Hardware gets 19% of IT budget today compared to 2011 when it dominated by getting 30%.
Clearly the shift to the cloud has enabled the budget for personnel to drop from 37% in 2011 to 15% in 2019 as well as the increase from 6% for network/telecom in 2011 to 14% in 2019.
56%
Maintaining Existing Systems
30%
Building & Scaling New Systems
14%
R&D Innovation
SYSTEMS Maintenance TAKES LARGEST
SLICE OF TECH BUDGETS
What is one of the top restaurant
challenges the Presto platform
can help solve and how?
INSIGHTS
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Answer: The unemployment rate has hit a 50-year low, staff turnover rates are skyrocketing, and
minimum wage increases will hit more states in 2020. As a result, many restaurants are struggling to keep labor costs down and stores open. But there is a benefit to the low unemployment rate worth noting. Fast casual and casual dining chains rely on healthy consumer spending to grow. As unemployment decreases and wages grow, workers make more money that can be spent on restaurants. Theoretically, the restaurant industry can benefit from the boom in demand that results from low unemployment. Rather than shutting down stores, restaurants can acquire technology to make their labor more productive. Leveraging technology has become a highly cost-saving option for restaurant operators. The use of Presto Server Handhelds can result in up to 26% larger check sizes and achieve a 10:1 table-to-server ratio. If a restaurant experiences higher demand and leverages technology to make its business more efficient, it will land the most profit in the years to come. Restaurant owners who embrace technology will
have the ultimate advantage. CLICK HERE TO VIEW MORE INSIGHTS FROM OUR SPONSOR
TRACKING SOFTWARE BUDGETS
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2020 IT BUDGET ALLOCATIONS
20%
2011
10%
2011
30%
2011
37%
2011
6%
2011
n/a
2011
n/a
2011
20%
20%
19%
15%
14%
8%
4%
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QDOBA’s Transformation
Anchored in Stable Network
INSIGHTS
POWERED BY
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Answer: Since Jack in the Box spun off QDOBA Mexican Eats in March 2018, there have been a lot
of behind-the-scenes changes, but what hasn’t changed is the robust, HughesON Managed network.
For years, Hughes has managed all broadband and the entirety of the restaurant’s networking
infrastructure across the enterprise, including Wi-Fi and guest Wi-Fi. It is also responsible for
the brand’s PCI compliance for the network.
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What is one of the top restaurant
challenges VROMO can help solve
and how?
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Answer: Delivery economics and brand engagement with the customer, two topics that are intrinsically linked. Delivery economics is a very difficult thing to get right, and own channel deliveries is where restaurants can exert more control over not only the basket size, but the process, the fleet they use and the engagement that the customer experiences. VROMO provides restaurants with a tech stack that enables all of that functionality, whilst also utilizing the existing digital delivery channels of marketplaces such as UberEats, Doordash, Grubhub etc. Delivery is here to stay, and restaurants need to upskill and develop their own tech stacks in order to survive in an increasingly varied market. CLICK HERE TO VIEW MORE INSIGHTS FROM OUR SPONSOR
Diner Demands Are Driving New
POS Requirements for Speed, Security
INSIGHTS
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Answer: With smartphone and mobile devices, diners now expect the ability to select, order and
pay on-the-go. These demands are driving new POS requirements and restaurant owners need a
multi-channel payments solution that integrates easily into various points of sale in addition to
booking engines that allow customers to reserve a table and update their reservations online.
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What is one of the top restaurant
challenges Hathaway’s services and product(s) can help solve and how?
INSIGHTS
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4 Priorities for Your Digital Innovation Roadmap
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Answer: Since 2003, global multi-unit restaurant brands have partnered with Smartbridge to simplify their business transformation, execute their digital transformation initiatives, and modernize to compete in today’s marketplace. An empathetic approach to understanding the foodservice industry’s challenges is bred into the Smartbridge culture. As thought leaders with a track record of successful digital enablement, Smartbridge is committed to fueling your innovation.
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What is one of the top restaurant challenges Appetize product(s) can help solve and how?
Operators often struggle with Point of Sale (POS) systems that are unable to grow along with their business, due to a lack of features, an unscalable pricing model, or both. Appetize offers a cloud-based POS with the enterprise-class features growing operators need, including multi-unit menu & LTO management, unified real-time analytics, a library of APIs to enable swift integration to 3rd party services, and a pricing model that gives operators the flexibility and freedom they need to scale.
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What is one top restaurant challenge that Comcast product(s) can help solve and how?
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Paytronix all-in-one
customer engagement platform
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Restaurants need a high-performing network to deliver technology that will drive engagement, safeguard transactions and streamline back-of-house operations, enabling them to meet their connected customer base who demand more service options, personalized experiences, and greater connectivity. That means a network that supports AI, IoT, WiFi, secure cloud access and deployment options unique to their business needs. To meet this technology evolution in the restaurant industry, Comcast Business offers a variety of services including Gig-speed ethernet and a full suite of managed services.
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Paytronix helps QDOBA make it easier for guests to engage with our brand while providing the insights that will help us better understand our guests, which enables us to create relevant offers and increase their visit frequency.
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Digital-First Consumers Inspire Digital-First Tech Buys
Investments in 2020 seek to deliver on strategic goals by powering up and streamlining the path to purchase
INVESTMENTS
My how times have changed. In 2016, digital ordering made it onto restaurants’ innovation agenda with 28% of restaurants saying they were looking at the technology for investment. In 2020, it stormed to the top of the list with 56% of restaurants planning to make investments.
As noted previously in this report, more than half of restaurants say that digital sales make up more than 11% of total sales, so it is not surprising to see that mobile payments are a top investment for 34% of restaurants.
It is also not surprising to see loyalty (51%) and tableside ordering (37%) high on the investment priority list. However, one surprise is to see artificial intelligence (AI) not make the list with just 7% selecting it as a priority for 2020.
When asked about software changes 59% say they are either adding, upgrading or changing software providers for CRM/loyalty. In fine dining establishments, 56% plan to upgrade CRM/loyalty with 11% changing suppliers.
It is validating to see that software changes align with our top investment plans as in the case of 71% of respondents adding, upgrading or changing digital ordering software, which was our top investment priority for 2020. The majority of QSRs (64%) plan to upgrade online mobile ordering in 2020. Pressure is greater in this segment as quick-serve needs to be quicker than ever.
Getting payment from guests is naturally an area that no business wants to make difficult. Making this as seamless and frictionless as possible is driving investments in technology that allow guests to pay when ready. More than a third of restaurants (37%) are planning changes around pay-at-the-table, with 22% being first-time additions. In the full-service space, 35% of restaurants are adding for the first time.
#1 NEW SOFTWARE ADDITION
of restaurants plan to add voice-enabled technology in 2020.
24%
Digital Ordering (Online/Mobile)
Mobile Payments
CRM/Loyalty
POS
Business Intelligence/Analytics
Top Changes planned in Software for 2020
Add 1st Time
Upgrades
New Supplier
15%
29%
12%
-
15%
49%
32%
37%
47%
46%
17%
5%
10%
12%
7%
Point of Sale
Kitchen Display Systems
Digital Menu Boards
Kiosks
Server Handheld Tablets
Top Hardware Investments in 2020
Add 1st Time
Upgrades
New Supplier
-
-
15%
17%
20%
44%
32%
20%
15%
12%
7%
2%
2%
-
-
In the year ahead, the winners in the restaurant space will be those that deliver on convenience and best meet customers where they are at any given moment that
hunger strikes.
Internet of Things (IoT) has dominated the list of technologies that restaurants believe have the greatest potential to be transformative and this remains true as IoT evolves into the Intelligence of Things.
Restaurants are apparently ready to put the gloves on and fight to take back any market share they feel was lost. This is evident in the strong interest in ghost kitchens (34%).
Since many restaurant operators are starting to feel like third-party delivery partners can be wolves in sheep’s clothing, investments and strategies have shifted back to winning customer loyalty built through transformative technologies that are appropriate and user-friendly.
56%
Internet
of Things
41%
Location-
based Technology
39%
Voice-
enabled
Technology
39%
Third-Party aggregators
37%
Artificial
Intelligence
34%
Ghost
Kitchens
22%
Automation/
Robotics
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Tech to Table: What’s Table Stakes & What’s Transformative
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What is one top restaurant challenge that Comcast product(s) can help solve and how?
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Paytronix all-in-one
customer engagement platform
What is one of the top restaurant challenges Appetize product(s) can help solve and how?
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What is one of the top restaurant challenges TDS services can help solve and how?
Boosting Efficiency & Customer Satisfaction Through the POS
An operator can
increase efficiency and
revenue simply by adding
a self-service option
for their patrons.
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Restaurant Accounting
in 5 Easy Steps
“We always hear from our clients that the biggest challenge is implementing a new solution consistently across all restaurant locations. The best way to resolve is to take that extra time to plan the process with a detailed scope of work, thorough install guide, timeline goals, and education of restaurant staff to minimize disruption. TDS has the experience to help the operator execute a successful system-wide technology update.”
-Tim O’Connor, VP Professional Services, TDS
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Accurate, detailed restaurant accounting is one of the key factors for maintaining a healthy profit margin. But setting up detailed reporting about profit and loss statements, menu item sales, inventory and labor costs can be a daunting task.
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CLICK HERE FOR THE 2020 RESTAURANT TECHNOLOGY STUDY
Answer: Larger restaurant brands often run into limitations when using white-label web and app offerings from their SaaS platform providers like online ordering and loyalty systems. Hathway specializes in designing and building custom experiences using SaaS platform APIs so brands can break free from those limitations without needing to replace their backend systems and integrations. We’ve done this with a lot of great brands like Wingstop, who built an amazing digital business using the Olo platform starting with the Olo white label web/apps, then moved to a combined Olo+Hathway solution to take it to the next level. CLICK HERE TO VIEW MORE INSIGHTS FROM OUR SPONSOR
56%
Digital Ordering
2020
2016
28%
2016
35%
2016
17%
2016
33%
2016
7%
2016
15%
2020
51%
Loyalty
2020
37%
Tableside
Ordering/
Payment
2020
34%
Mobile Payments
2020
34%
Third Party
Delivery Integration
2020
22%
Guest Wi-Fi
TECHNOLOGY INVESTMENTS PRIORITIZE
ONLINE ORDERING & LOYALTY
TECHNOLOGY INVESTMENTS PRIORITIZE
ONLINE ORDERING & LOYALTY
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The guest demand for delivery is not waning, which has also given rise to more restaurants seeking out options like delivery only kitchens. Ghost kitchens, despite their paranormal sounding moniker, have become the new normal in the restaurant industry.
When asked to identify the top investment
areas to achieve the strategic goal of driving
off-premises business, 75% of restaurants say online ordering for pickup is where they identify a path to ROI. Driving catering sales and
off-premise business stands apart from third party delivery, which 58% selected. This gap represents the fact that restaurants see more benefits and path to ROI in off-premises
business that they control.
56%
Digital Ordering
2020
CLICK HERE TO REVEAL THE VALUES FROM 2016
“Investment as a % of total revenue”
New Software
Addition
of restaurants plan to add voice-enabled
technology in 2020
#1
24%
Strategic Objectives for Technology Investment
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