Unpacking the Shift in Restaurant Tech Spending
One of the most popular sessions at MURTEC, year after year, centers on the debut of our Restaurant Technology Study and the new insights to come out of it. This year was no exception. Robert Firpo-Cappiello, Editor-in-Chief of Hospitality Technology magazine hosted a lively panel discussion with Chris Heard, CEO, Olive; Akanksha Talya, Chief Product Officer, Service Channel; and David Naumann, Marketing Strategy Lead, Verizon. Here are some of the insights that came out of that discussion.
What are your thoughts on the statistic that 78% of restaurant IT budgets will increase in 2024?
Talya: This is not surprising to me at all. Every brand I’ve met so far, here at MURTEC, really wants to be a technology company first and bring products to market through technology. Technology has been proven to improve customer experience and revenue.
Heard: We’re very excited that people want to buy more technology. We’ve seen a 30% increase in RFP creation in Q1 of 2024 versus last year. There are very few industries where technology had such an impact when it came to COVID. Pre-COVID it was only about money in the till, and technology was an afterthought. But now restaurants have embraced technology.
Naumann: As we research and talk with different restaurant companies, we hear regularly about how customers have higher and higher digital expectations. Digital experiences have become the norm, and I think there’s a big gap between how we deliver on those expectations. And we also need to look at the associate experience as well. We did a study and found only 20-30% of companies feel that they are meeting their associates' digital expectations. So we have an opportunity to improve that by empowering them with digital tools that will make their job easier.
We asked restaurants to select which emerging technologies they’ll be using in 2024. We found that 67% will be using IOT, 63% will use automation or robotics, 63% will use voice enabled tech, 59% will use geo-fencing and location-based marketing, 41% will use VR/AR and 30% will use drones or autonomous vehicles. What does this data mean to you?
Heard: When we look at the keywords in the RFPs to see what restaurants are actually asking from their technology vendors, we see data and integration as the two most commonly included terms. To me, that’s screaming that people are adopting technology but maybe too quickly. Maybe we need to take a step back before we bring on any emerging technology and make sure the backend is fixed. If you’re looking into emerging technologies, make sure that it integrates really well into what already exists. Don’t grab something and figure out the integration later.
When asked how they’re using AI, 53% of restaurants said they’re using it to analyze data to predict future sales, 33% report they’re using it to make personalized recommendations to customers, 26% are using it to improve inventory tracking and the purchasing process, 26% report they’re using it to improve cost tracking and menu pricing, and 22% are using it to make the food production process faster and safer. How does this align with your expectations?
Naumann: I’m not surprised to see forecasting as the highest use case for AI. Companies have been using it for that purpose for many years. But I think a lot of the other use cases are a bit premature, and they’re not as predominant or pervasive as we would like to hope they’d be because companies are not only dealing with a lot of other issues right now, but also they realize that they need good accurate data in order to leverage AI successfully. That being said, I think there are a lot of opportunities out there for AI. But we have to be smart about how we us it. Just because we can use it, doesn’t always mean we should.
Talya: The reason restaurants exist is to create joy, and I think AI has a lot of potential to help restaurants create more joy for their customers. However, we’re just at the beginning of exploring the potential of AI in the restaurant space and there are significant data standardization challenges. For restaurants that do want to use AI, I like to say: Goal-oriented AI is much more powerful that AI-oriented goals. Know what problem you’re trying to solve and then apply AI to solve it.
In 2024, 26% of operators report that they’ll change inventory management suppliers, 22% plan to change business analytics suppliers, 22% will change POS suppliers, 22% will change workforce management, and 19% will change CRM/loyalty suppliers. What does this data indicate to you?
Naumann: I think we'll continue to see more traction in real-time inventory visibility. Now is the time for companies to really invest in IOT or RFID tracking of inventory so as to have greater visibility into the supply chain and to identify if there are any disruptions in the supply chain because it really does impact your business. If you run out of a key ingredient, it can affect multiple menu items and then you're going to disappoint some of your customers. Anything you can do to help improve that visibility and improve the cost effectiveness of your inventory is a huge operational improvement for the company.
Talya: I’ll make a comment on why restaurants aren’t happy with their vendors. When we’re a 'vendor,' we understand why the brand isn’t happy. But when we’re a 'partner,' happiness increases. For example, if we’re able to combine our data with their data to help them put together an important story and answer important business questions, we’re not just a vendor but a true partner. But I also think that everyone is hungry for driving revenue in the restaurant industry, and the vendors who are faster to innovate are getting a better share of the dollar.
Heard: I think changing suppliers is more a human issue than anything else. When you have vendors you trust, you can treat them as your own engineering team and leverage them for your own needs. We want to hear from our customers and understand what they want. Be confident and ask your vendors to do something new. The worst thing they can say is 'No.'
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