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Daily news and analysis about the food tech revolution

Technomic

Technomic: Over Half of Restaurant Operators Will Spend More on Tech in the Future

Of all the things in the restaurant industry accelerated by the pandemic, technology adoption has been one of the biggest. That’s unlikely to change in the near future, a point underscored by new survey data from Technomic that notes 68 percent of restaurant operators “believe their technology spend will either somewhat or significantly increase” over the next few years.

The research firm’s recently released report, “The State of Foodservice Technology 2020,” surveyed restaurant operators in order to uncover both the factors accelerating tech adoption for restaurants and those hindering it.

Systems that enable contactless payments are one area of restaurant tech we’ll see a whole lot more of in the future. More than half, or 51 percent, of operators surveyed for the report said they already have contactless payments in place, and another 31 percent plan on implementing it. 

What’s incredible is that less than one year ago, the word “contactless” barely existed. Now it’s a regular part of the restaurant vernacular. Front-of-house-focused restaurant tech companies rolled out “contactless” dining room kits in droves this year, all of which included the ability for a customer to pay via their own mobile device. “Contactless delivery” is now the norm, and major QSRs are redesigning their store formats to provide a more contactless experience to customers.

None of this is terribly surprising, seeing as we’re currently fighting a deadly virus that’s spread through human-to-human interaction. Investments in contactless technologies will be the norm going forward, even after the pandemic subsides.

That said, the model isn’t without its challenges, the biggest one being that it takes more than a mobile app or QR code to make a process truly “contactless.” Moving into 2021, we’ll see more restaurant tech companies attempting to solve this bigger-picture issue.   

 

Report: The Restaurant Industry Could Lose $300B by the End of 2020

Technomic has revised its forecasts for the rest of 2020 and into 2021, according to a news release the firm sent out this week. The reason for these new numbers? You guessed it: the pandemic. Speaking in this week’s announcement, Joe Pawlak, a managing principle at Technomic, said to expect “continued decline” in restaurant sales for the rest of the year but “aggressive growth” in 2021.

“Few industries have felt the repercussions of the COVID-19 pandemic quite like foodservice,” he wrote, adding that restrictions (e.g., reduced capacity, no bar seating) “are wreaking havoc, especially on the segments that depend upon on-premises consumption.”

In light of that, the firm has made revised forecasts based on Best, Middle, and Worst Case scenarios. While the bulk of those numbers are behind Technomic’s paywall, the firm did release some telling facts based on the new forecasts:

  • Based on the Middle Case scenario, the restaurant industry will grow by 21 percent in 2021, but sales will still be down 11 percent compared to 2019 sales.
  • The restaurant industry is expected to lose between $250 billion to nearly $300 billion in sales for 2020, depending on the scenario.
  • QSRs are faring the best of any restaurant type at the moment; full-service restaurants and bars are struggling the most.

The firm also notes that the state of the industry’s prospects are “directly tied to medical advances related to COVID-19” such as a vaccine. 

It’s no secret that spikes in COVID-19 cases are in part tied to the reopening of states’ economies, of which restaurants are a major part. Just this week, the New York Times noted that “Data from states and cities show that many community outbreaks of the coronavirus this summer have centered on restaurants and bars, often the largest settings to infect Americans.” In a separate article, it also noted that indoors, the six-feet-apart rule for social distancing is misleading because “people think they are protected indoors and they’re really not.” Little wonder, then, that the CDC lists indoor dining as the highest-risk setting of all restaurant formats for spreading of the virus. the virus becomes easier to spread at a restaurant that offers on-site dining, even with reduced table capacity, according to the CDC.

None of that makes for an exactly encouraging scenario restaurants face in the coming months. Even in a Best Case scenario, full recovery will be slow at best. As we putter towards that prospect, businesses are best advised to keep their foot on the gas when it comes to offering off-premises formats.   

Technomic Survey: Three in Ten Consumers to Eat Out Less Amid COVID-19 Fears

Even as the outbreak of coronavirus/COVID-19 continues to evolve and grow, we still don’t have a clear idea of exactly how much it will fundamentally change our entrenched, traditional behaviors. Are handshakes a thing of the past? Is working from home the new normal? Will we travel less for both work and fun?

While we can only wait to discover the answers to those bigger questions, a whitepaper from Technomic this week outlines some of the more immediate ways COVID-19 is impacting consumer behavior as it relates to how we get our food.

Technomic surveyed 1,000 consumers between Feb. 28 and March 2 and found “more than three in 10 consumers say they plan on leaving the house less often, not go to restaurants as often or not order food or beverages at away-from-home venues as often.” Additionally, of those refraining to eat out, “31 percent say that decreased frequency will last for between one and three months.”

Image via Technomic.

This isn’t great news for full-service restaurants, which are already having to work harder to attract foot traffic as off-premises grows more and more popular.

You might think this decrease in on-premise eating would translate into a wave of delivery orders from restaurants, but Technomic found that of people eating out less, only 13 percent think they will order more restaurant delivery because of the outbreak.

Technomic is quick to point out that there are still a lot of unknowns when it comes to the virus’ spread, so it’s too soon to tell exactly what its full impact will be. However, the survey does point out a couple of areas where the food industry could face the biggest impacts.

On the negative side, as alluded to earlier, Technomic says on-premise dining at restaurants could face the biggest downturn as people hole up at home and avoid crowds.

And while it’s weird to think of an “upside” to a global pandemic, Technomic rightly points that that if people do refrain from sitting in a restaurant to eat, drive-thrus and delivery restaurants (think: pizza) could become more popular.

Additionally, supermarkets, which have already seen a surge in panic shopping, could also see their foodservice items benefit as people grab meals while grocery shopping.

And while they don’t mention it specifically, an increase in food delivery could bring with it a boom in ghost kitchens and virtual restaurants as restaurant brands look to pare down their physical footprint and infrastructure costs.

We’ve been chronicling how COVID-19’s spread is already altering how the food industry does business — whether it’s food conferences being canceled, reducing human-to-human contact with delivery, using robots to deliver food, or Kickstarter projects being delayed.

But when it comes to this outbreak, there’s not a whole lot we can do but wait (and wash our hands!). Technomic’s survey certainly won’t be the last word as this crisis evolves, but at least it provides some numbers to help businesses prepare.

Report: 56% of Consumers Want to Know How Restaurants Use Their Data

Over half of restaurant customers want to know more about how restaurants use their personal information, according to Technomic’s recently released Technology Consumer Trends Report. The report, which is part of Technomic’s ongoing research into how technology is impacting the foodservice industry, looks at U.S. consumers’ preferences and demands in this area. 

Restaurant these days are testing out all manner of technological tools, from self-service kiosks to digital menu boards at the drive through to AI-powered mobile apps that increasingly rely on customers’ past orders and dietary preferences to offer the most relevant recommendations. All these tools require at least some level of customer data, as do delivery apps from the likes of DoorDash or Grubhub. 

Customers’ control over their own data is a key theme in Technomic’s report, which notes that “control over personal data is becoming the expectation.” Over half of consumers, 56 percent, want to know more about how restaurants use their personal information. Currently, less than half (37 percent) say they trust food service brands not to misuse their personal data. 

At the same time, restaurant customers seem more willing to part with personal data if it means getting an easier, faster, more personalized experience with a restaurant. As one survey respondent noted, “The benefits of using technology to order/pay for food and beverages from restaurants outweigh the risks to my personal data.”

We see this adoption in the success brands like Chipotle and McDonald’s, who wouldn’t have billion-dollar-plus digital businesses if customers weren’t willing to hand over at least some of their data. And it’s not just your past orders and address restaurants are after, either. Some, notably Sevenrooms, envision a day when any restaurant will be able to know things like a customer’s dietary restrictions, birthday, and favorite dessert, thanks to data. Others, like 5Thru, are using license plate scanning technology to collect data and make the drive-thru experience faster and more personalized for customers. Then there are ghost kitchens, which more or less run on customer data, as all orders are placed digitally.

As consumers get more comfortable parting with their personal data to navigate the drive-thru line faster or speed up food delivery times, the next big challenge for the restaurant industry will be establishing trust with these customers. As Technomic’s report noted, “. . . brands must meet consumer expectations for privacy and control over their personal data, especially as more brands leverage technology to obtain customer data to personalize the experience.”

Right now just over half of those surveyed for Technomic’s report said they want to know what restaurants do with their data. We can expect that figure to jump over the next several months as demand for off-premises experiences increases and the number of customers ordering digitally goes up. That makes establishing trust a major priority for the rest of 2020.

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