QSRs: Pivoting From Quick to Quickest

There’s no denying that the restaurant industry has been dealt a devastating setback by the pandemic, with more than 110,000 restaurants closing in 2020, some never to open again, according to the National Restaurant Association’s 2021 State of the Restaurant Industry Report. 

But the same report also found that 68 percent of consumers are now more likely to order takeout than they were before the pandemic. In fact, 53 percent of consumers say that takeout and delivery are now an essential part of their lifestyles.

Consumer demand for takeout and delivery — fueled by a desire for contactless transactions, social distancing, and convenience — has offered some QSRs and fast-casual brands an opportunity to grow when the industry overall is contracting. Fast food consumption has grown 37 percent since the start of the pandemic, according to MBLM’s Brand Intimacy COVID Study.

“There is a dichotomy in dining; experiential and transactional,” says Joe Tenczar, CIO at Sonny’s BBQ and co-founder of Restaurant CIOs. “For the last year, the balance clearly shifted toward transactional dining. QSRs are transactional dining at their core.”

The ability to meet customer demand for efficient delivery, pickup, and drive-thru has proved essential. “QSRs had the digital channels already in place to accommodate the demands of guests,” says Tenczar. “Because of the new requirement for guests to stay in their cars or at least not to come into the restaurant to get their food, the QSR could now make ubiquitous a lot of tech that was built for them before COVID.”

Uniquely prepared and ready to pivot to off-prem models that customers demand, many QSRs have actually made gains during the pandemic.

“It's no surprise that they thrived and, as a wonderful byproduct, greatly increased adoption across the industry of tech that was built to specifically increase QSR efficiency,” says Tenczar.

Whether a QSR is developing in-house tech or seeking third-party solutions to meet customer demand for off-prem, here are some important considerations for enhancing efficiency and ROI.
 

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HT Insights on POS and Customer Demand

The POS is often at the heart of a QSR's ability to pivot and meet new customer demand. HT’s 2021 POS Software Trends Report offers some insight for QSR operators. We found that operators are especially interested in adding new functionality/features/modules to current POS software — a priority for 65% of operators who responded. But we also noted that 25% of respondents plan to install POS software from a new vendor in 2021, up from 12% a year ago. In addition, 50% of respondents plan to develop and/or deploy POS for use on a mobile device, and enabling new payment options, such as e-wallet, was the top business driver impacting POS upgrades for 68% of respondents. Other top business drivers included enabling self-service options (58%) and adding mobile POS (53%).

Customer demand for off-prem and mobile is reflected in HT’s 2020 Customer Engagement Technology Study. More than 60 percent of respondents identified drive-thru, curbside pickup, online ordering, and the ability to order from a mobile device as some of the most important factors when selecting a restaurant.

Front-of-House Wins

With customer demand in mind, guest-facing technology roadmaps and implementations have evolved quickly over the past year. 

“The recent major business disturbance caused by the pandemic and the national response to it has clearly highlighted that guest experience is defined and measured not by the operator but by the customer,” says Toby W. Malbec, Managing Director, ConStrata Technology Consulting. “The operators and the supplier community in the QSR marketplace have responded by extending the functionality and interoperability of their systems to support features such as curbside pickup, remote pickup, enhanced delivery and tracking, and better location-service functionality to improve the quality and timeliness of service.

Some major QSR brands were already racking up FOH wins pre-pandemic, and continue to build on them. As McDonald’s identified drive-thru as a growing share of revenue, it successfully sped up the process in 2019 and 2020, reducing average drive-thru time by 30 seconds (an eternity in the quick-serve world) via menu streamlining, menu-board simplification, and staff monitoring processes.

Chipotle, a fast casual brand that competes in the QSR space, has pivoted exceptionally well over the past year. Digital sales in 2020 grew 174 percent, representing 46 percent of sales. The brand is experimenting with “carside” pickup, has opened a pilot digital-only location in the New York suburbs, and continues to see growth from its Chipotlanes dedicated to digital-order pickups.

Checkers & Rally’s developed a mobile app with Paytronix that allows guests to browse the menu, save favorite orders, and track coupons and exclusive offers in a “rewards wallet” (see “Building on Loyalty,” below).

Mitra QSR, which operates more than 200 KFC and Taco Bell franchise locations across 15 states, has deployed an artificial intelligence (AI) solution developed by Hypersonix that enhances analytics. It has helped with menu optimization, operations efficiency and labor deployment, and drive-thru efficiency.

Revel Systems in partnership with Delphi Display Systems offers a drive-thru timing solution that monitors “speed-of-service metrics” in real time to optimize performance.

“While there is still room for greater improvement, the marketplace was able to step up and provide key business tools that allowed the QSR restaurants to weather the storm,” says Malbec.

Building on Loyalty

A range of research suggests that customers regard QSRs as an intimate, comforting brand experience. The word loyalty in its various meanings sums up the QSR-guest dynamic: It can be a feeling, a relationship, and a concrete program all at the same time.

Exhibit A: Starbucks. The coffee brand saw 15 percent growth in its Starbucks Rewards active membership when it expanded payment options so that members could earn rewards using all forms of payment, not just payment via Starbucks card. Significantly, Starbucks Rewards customers account for 50 percent of the brand’s company-operated sales.

Similarly, Chipotle Rewards membership doubled in 2020, rising to 19.5 million from fewer than 10 million. The brand’s marketing team leverages data from Chipotle Rewards to better understand guest behavior, frequency, and engagement.

Checkers & Rally's rewards program has been supercharged by the brand’s new app, when a customer downloads the app and joins the rewards program, they get introductory free food, bonus points for referring friends to the app, and start earning points immediately.

Infrastructure: More Vital Than Ever

Many of the essential components of an exceptional guest experience rely on a robust infrastructure. In recent years, that has moved beyond simply maintaining basic Wi-Fi to enable tracking orders, customer arrivals, delivery, and even supporting innovative functionalities such as facial and voice recognition. 

“Restaurants’ pivot to curbside pickup gave them an opportunity to stay open, but it also exposed a challenge,” says Tim Tang, Director of Enterprise Solutions for Hughes Network Systems. “Many restaurants buy consumer-grade internet and it’s not enough to handle everything they need — and in a restaurant environment, every congestion problem is significant. It speaks directly to ROI: How many digital orders are you getting? For some restaurants it is 70 percent of their orders, where it used to be 10 to 20 percent. Restaurants need to get as much network capacity as they can, including a congestion-capable solution like SD-WAN.”

Back-of-House Wins

Putting it all together means integrated solutions that allow various platforms and systems and functionalities to all speak to one another and work together toward a common goal. BOH operations may appear to be “behind the scenes” to guests, but play an integral role in workforce management, efficiency, and ROI.

“The need to conduct training virtually has also driven innovation,” says Felicia White, VP, Global Operations Training & Development at Church’s Chicken, who leads the brand’s worldwide, multilingual workforce training. “Use of advanced technologies for training beyond the LMS has increased the reach and effectiveness of training programs. Metrics used to monitor training can better be compared with ROI metrics and a clearer connection made to guest satisfaction and overall profitability.”

Finally, we must note a major BOH win for the Hospitality Technology family: Restaurant Technology Network (RTN) recently introduced the industry's first and only Open API Framework in a webinar that's available on demand. RTN's Open API Framework provides a standard approach for successful integration. 

"When any discussion takes place around system integration, you can sense tangible frustration from restaurant operators,” says Angela Diffly, Co-Founder of RTN. “They've invested far too much time, technical resources and budget, not just once, but every time they need to make technologies sync. It doesn't have to be this way. By embracing RTN's Open API Framework, technology suppliers can focus on iterating smart tech to be the best it can be, and restaurants can plug and play technologies faster, without integration headaches. This is the path forward for technology innovation in the restaurant industry."