As soaring prices threaten restaurant growth, many are turning to digital technologies both to retain cost-conscious consumers and, internally, to manage pricing and labor.
In fact, digital ordering options are ubiquitous today, according to research from the latest edition of the PYMNTS Restaurant Readiness Index, created in collaboration with customer experience management solutions provider Paytronix (CXM ) Software-as-a-Service (SaaS). The study, which is based on a survey of more than 500 quick-service restaurant (QSR) and full-service restaurant (FSR) managers across the country, found that 87% of restaurants offer online ordering. line for in-store pickup.
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Additionally, the study found that nearly two-thirds of the restaurants surveyed are available on third-party aggregators, 50% have direct order apps, and 15% are available through Google ordering. Plus, offsite channels aren’t the only ones benefiting from digital processing. One in four restaurants now offers table ordering via QR code, and 18% offer self-service terminals.
However, even the most digitally available brands face challenges as the costs of food, raw materials and labor rise. Take, for example, the fast-casual giant Chipotle Mexican Grill, a leader in the loyalty business. Analyst Jared Garber told Seeking Alpha that while the brand remains “one of the restaurant industry’s most compelling growth companies,” new challenges are impacting its outlook.
“We see the risk that continued cost inflation will make it harder for the company to generate incrementally higher profits,” Garber said, “particularly as consumer spending slows.”
The consumer price index for all urban consumers (CPI-U), released by the U.S. Bureau of Labor Statistics (BLS) on Wednesday July 13, found that food prices rose 10.4% year-over-year in June, and non-food and non-energy commodity prices were up 7% year-over-year.
Faced with these challenges, many restaurants are using digital technologies not only to meet consumer expectations, but also to mitigate inflation and labor issues.
For example, many restaurants have redesigned their menus in preparation for lower-cost foods, and in the Restaurant Friction Index survey, 17% of managers said they had largely or fully automated the menu change process. . Additionally, many restaurants adjust prices in response to changing food costs, and 28% of managers said they have automated pricing.
Meanwhile, restaurants may get some relief for their labor issues in the near future, though restaurants are far from out of the woods.
“As far as labor is concerned, recent corporate commentary and BLS data suggest that staffing levels have recently improved,” wrote Christopher Carril, senior restaurant equity research analyst at RBC Capital Markets, according to Seeking Alpha,” and while we believe this could potentially lead to easing Y/Y wage pressures in the 2H of the year, we are still hearing about pockets of union pressure.
Given the ongoing pressure, technologies that make it easier to manage employees can go a long way. However, the vast majority of restaurants do not use automated systems to manage background processes. Only one in three managers said they had automated payroll, one in four had automated supplier management, one in five had automated order management, and one in six had automated personnel management and inventory management.