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Hospitality is on the Cusp of a New Technology Era

The restaurant industry as a whole is currently under-invested in artificial intelligence, cloud, automation, and the other tools that can give brands better visibility into demand and stronger ways of predicting and meeting challenges.
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The relationship between the Quick Service Restaurant (QSR) category and emerging digital technologies is changing fast, accelerated in large measure by pandemic-related shifts. The most visible technology adoptions, at least for consumers, have been in the areas of ordering and delivery, and those changes are likely here to stay — but challenges in areas such as talent, supply chain, inventory and accommodating new patterns in guest behavior are just as vital.

In the face of those challenges, the restaurant industry as a whole is currently under-invested in artificial intelligence, cloud, automation, and the other tools that can give brands better visibility into demand and stronger ways of predicting and meeting it.

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Addressing these needs will take not only vision, planning and investment, but also new approaches to workforce expectations and franchise relationships. The opportunities are there. The industry can benefit from a broader, deeper embrace of what they make possible.

Laying the foundations

We’re seeing solutions already at work in areas such as order accuracy and quality control. Some hospitality brands are putting new tools front and center with guests — such as one QSR brand that has voice-enabled ordering up and running in at least 100 restaurants right now, with perhaps 300 more to follow by the end of this year. Remember, though, that means 400 or so in a brand with thousands of locations in the US alone.

Where else can technology take hospitality brands? One place to look is behind the scenes. Predictive analytics can hone inventory management based on real-world demand patterns, resulting in less waste, lower carrying costs, and fresher food. Supply chain forecasting can reach backward all the way to the grower, to track and trace specific ingredient SKUs in real time.

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Look around a hospitality operation and use cases for advanced technology present themselves. Workforce training can become more interactive and immersive, leading not only to happier employees, but also happier guests. Equipment applications can benefit from IoT sensors and automation not only in the course of regular operation, such as filling or dispensing, but also in predicting maintenance needs based on the life of the unit or its parts.

It’s also time for brands to know more about the potential of industry clouds. These are pre-configured cloud environments that are matched to a specific sector need, in our case hotels or restaurants. They serve as customizable accelerators that have an industry’s most important building blocks built in, which makes them particularly useful for “greenfield” cloud migrations. In layman’s terms, an industry cloud is one that comes “out of the box” ready to support the most up-to-date technology cases an industry may wish to use.

In Deloitte’s latest US Future of Cloud survey, 95% of respondents overall view industry clouds as catalysts for transformation and automation of industry-specific business processes. The most important potential benefits they cited were faster time to market for business capabilities and use cases, agility and accelerating the capacity to change, and supporting cloud migration for legacy solutions that the industry currently uses.

A segment of one

Making each hotel or dining guest feel special has always been a hallmark of the hospitality industry. Traditionally, that spirit depends on personal attention, which can be difficult to replicate and maintain on a mass scale. It can be difficult to serve customers this way without in person interaction — which is a pattern the pandemic accelerated and still appears to persist today. Technological advances can bring new life to the “segment of one” approach in a variety of ways, including contactless and at-home interactions.

For example, a geofenced application can sense when a customer passes near a location. Not only can this drive a prompt to pay a visit, but it can also compile and offer the customer’s “usual” order or a targeted promotion—all ready to be realized with a single click. Similarly, an arriving hotel guest may find that an accommodation has already been prepared with his or her past behaviors or propensities in mind. Or perhaps a one-click option to take advantage of a nearby entertainment or dining experience. Digital tools can even sense customer sentiment to guide interactions or adjust the customer experience one person at a time based on known preferences for a season, time of day, or occasion.

The segment of one benefits brands as much as it does customers. The hotel that uses these technologies can measure an individual guest’s long-term commitment to the brand and tailor offers to meet those tendencies. And those QSR locations that have installed voice ordering? They can help give employees more time to spend interacting meaningfully with customers, face to face.

Making the case

The structure of hospitality brands may complicate decisions about these technology investments, because of the divisions of ownership and responsibility inherent in the franchise model. It may be the franchisor who pushes for new functionality, with brand value and customer satisfaction in mind, while the franchisee feels the more direct impact of the technology cost and may feel the franchisor is forcing change on owners.

It doesn’t have to be that way. There is a case for making the technology journey together, with both parties sharing in the investment and its rewards. That approach depends on trust and will ultimately help customers have a smooth digital experience. Roughly 40 percent of customers who order off-premises prefer to use a brand’s own website or app, according to a Deloitte study, and only about 11 percent prefer using third-party delivery platforms.

But a franchisor brand shouldn’t rely on the allure of the shiny new thing to make the case for new technologies. Rather, it should clarify and quantify the bottom-line benefits the technology can produce—for example, customer sentiment sensing, predictive maintenance, new workforce solutions, and interoperable digital ecosystems that can function across chains—and keep them from becoming lost in translation.

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A new era

The hospitality industry is at the crossroads of several long-term changes. The new technology possibilities discussed here intersect with COVID-altered customer and staffing patterns, the rapid evolution of consumer tastes and demands, and wariness about new investments. Despite these challenges, the hospitality industry has the chance to blaze new trails with technology, building on the experiences retail and other industries have compiled in recent years. The need is clear; the tools are there. The benefits wait for those who commit to becoming a restaurant of the future.

About the Author

Siva Kantamneni is a principal at Deloitte Consulting LLP, where he serves as Technology Leader for the Transportation, Hospitality and Services practice.

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