The last few years have seen one challenge after another for the restaurant industry, but a new crisis is looming. A recession threatens to depress discretionary consumer spending and keep meals on the kitchen table rather than full-service meals. room.
But if history is any indicator, a recession need not be the QSR’s death knell. Rather, the recession will help operators in this segment to grow their long-term brands by delighting customers with faster and better service while addressing some of the major challenges facing the industry today. We offer a unique opportunity to earn loyalty.
How can a restaurant do this? By adopting technology, and quickly. In the months and years ahead, technology-embracing QSR will have the tools it needs to serve more and more customers while battling macroeconomic headwinds.
The restaurant industry faces multiple challenges
Since the beginning of the COVID-19 pandemic, the restaurant industry has battled a series of hydra-headed challenges. A pervasive labor shortage is forcing businesses, including restaurants, to raise wages.
Labor shortages pose a wider problem.As Restaurant business reported in a May article that “the labor market has been a major source of inflationary concerns as firms have had to aggressively raise wages to attract workers.” These concerns prompted the Fed to raise interest rates in hopes of slowing inflation. “For restaurants, [raising interest rates] This means higher debt costs, which may cause some operators to slow expansion or reduce growth expectations. ”
Sustained inflation is creating a domino effect of challenges for restaurants. Food prices are up more than 10% year-over-year, according to the U.S. Bureau of Labor Statistics, and in June, QSR Magazine reported that indexes for all six major grocery store food groups were up in the past year. Did. It’s up 10% or more.
Restaurants are therefore facing a recession, with fewer servers, less cash available, lower profit margins and the threat of reduced demand, especially in full-service restaurants.
In a recessionary environment, the QSR actually gain in demand
In a recession, consumers proverbially tighten their purse strings. This means that fast-casual and full-service restaurants are expected to see fewer customers.
However, QSR continues to attract customers with its budget-friendly prices. According to QSR, “In the week of December 13, 2021 … visits to full-service restaurants increased 53% year-on-year and visits to quick-service locations increased 43.4%. at the time of , visits to full-service restaurants decreased by 4%, while counter-service increased by 7.3%. According to the National Restaurant Association’s 2022 State of the Industry report, 63% of adults (and 75% of millennials and 70% of his Gen Z) believe restaurants are “essential” to their lifestyles. I discovered that Even in a recession, diners don’t avoid restaurants entirely. Instead, they are more likely to trade down and patronize cheaper options such as QSR.
This is what happened during the Great Recession of 2008. As Oracle pointed out in his July blog post, “[A] A trend the industry has seen in the recent recession is when customers go to trade-ins. Perhaps the weekly fine dining outing will be replaced by casual dining, and casual dining will become fast casual. In 2013, the Journal of Hospitality Financial Management examined how various restaurant segments performed during the Great Recession and found that “stock performance in the limited service restaurant segment was unaffected by the recession. We haven’t seen a significant decline since we started.” In fact, in 2008, fast casual restaurants accounted for 7% of restaurant sales. By 2020, that number has almost doubled.
recession is an opportunity
The trade-down market and accompanying surge in demand present an opportunity for QSR. To capitalize on this opportunity, these restaurant operators must prepare to serve an increasing number of customers efficiently and effectively. But while cash and staff are scarce, providing fast, quality service has become nearly impossible without the help of technology.
Technology can help restaurants reduce operating costs while improving the customer experience. This enables restaurants to meet growing customer demand while earning long-term loyalty and sustainable business.
Restaurants have historically been slow to adopt technology. Perhaps this is due to concerns that an increasingly digital experience will undermine the personalized service diners have come to expect.
They need not be afraid. His recent Pulse of the Industry survey for Presto revealed that the majority of consumers are embracing technology at drive-thru and fast food counters. Specifically, respondents are receptive or very receptive to:
- Computerized voice assistants at drive-thru lines (61%)
- Personalized menus based on order history and dietary preferences (69%)
- Customized food and drink suggestions based on preferences (69%)
- Order and pay by phone (69%)
Respondents generally report being open to technology that promises faster and better service. Half said the use of technology in restaurants could make their dining experience more efficient, and nearly a third said that 1 (29%) said it made their dining experience more enjoyable. .
What technology can do
Used strategically, technology is a game changer for restaurants facing macro pressures. This has always been the case since the first electronic POS systems were used in the 1970s. After the Great Recession, technology-embracing restaurant companies benefited, and his ensuing decade saw the development of groundbreaking technologies such as his mobile his app, self-service kiosks, and digital payment options. . As Restaurant Business reported in his 2018, “As the industry becomes more competitive, consumer technology has become a must.”
Today, technology helps QSR rely less on staff, cut frustrating wait times for customers, and deliver faster, more personalized experiences to delight customers and keep business going. . Now is the time to invest in technology and fight the ongoing headwinds to level up your customer experience. QSR cannot afford to wait.
Rajat Suri is the CEO and founder of Presto. The company’s enterprise-grade touch, vision, and voice technologies help hospitality businesses thrive and guests delight. With over 100 million guests using Presto each month and 300,000 systems shipped, Presto is one of the industry’s largest technology providers. Rajat founded Presto in 2008 while pursuing his PhD at MIT. He also co-founded the popular ride-sharing company He Zimride (now He Lyft). He holds a Bachelor’s degree from the University of Waterloo and a Ph.D. / His MBA program at MIT.
Are you an industry thought leader with a restaurant technology perspective you’d like to share with our readers? If so, please review our editorial guidelines and submit your article for consideration for publication.