The Industry’s Digital Evolution is Here to Stay – QSR magazine

Most people have spent the past year (more, in many cases) in various states of quarantine. During that period, we have learned how convenient ordering from our favorite restaurants can be. Given it only takes a few months to develop a habit, it is easy to see why digital sales for the restaurant industry are sustaining, even after the country emerges from the COVID-19 pandemic. In many ways, this global event will continue to change the restaurant industry forever across operations, real estate, human capital, technology, etc.

The most apparent evolution within the restaurant industry is the customer experience and how guests interact with the restaurant. The majority of these interactions now happen outside of the four walls. Having it your way now means allowing customers to order-ahead digitally for curbside pickup, delivery, drive-thru, takeout, or even order-ahead for dine-in. The last, ordering ahead for dine-in, is the latest trend which has even larger implications for real estate and floor plans.

When customers order-ahead even when they are planning on sitting down in a restaurant's dining area, it questions the value of a point-of-sale and a waiting line altogether. Much like Apple Stores re-invented the format for a retail environment, we will see the physical layout of restaurants dramatically change in the near future. Eliminating the counter and waiting line provides more effective use of space to accommodate guests that do prefer to dine in, while requiring less interior space overall.

We can certainly expect to see more digital-only restaurant formats like Chipotles Digital Kitchen, where 100 percentof orders happen on mobile apps or websites. In the past year, many major restaurant chains (Shake Shack, Burger King, Panera Bread, etc.) have unveiled their store of the future concepts, all of which have less and repurposed dining areas, and more attention for off-premise handoff modes like drive-thru and curbside pickup. In the case of Wingstop, where digital ordering has reached 63.3 percentof sales according to their latest quarterly earnings report and continues to climb.

An underlying effect of this shift to digital order, which cannot be understated in its importance, is a new wealth of first-party customer data. The restaurant industry has never seen or leveraged so much information about their visitors before, which is paving the way too much more sophisticated digital marketing practices. In an industry that has always relied on traditional advertising and mass media communications, the ability to capture and action upon real-time customer data is allowing marketers to edge closer into the world of personalization. Digital marketing tactics like triggered CRM campaigns that leverage first-party data, A/B testing, multi-touch attribution, etc., all of which have been employed by other industries (retail, travel, finserve, etc.) for years are now being added to the arsenal of restaurant marketing teams. As a result, many brands in the restaurant industry are quickly bringing in talent from outside the industry to help advance their digital marketing capabilities.

Meeting and exceeding customers expectations across convenience, contactless, and value will require more reliance on technology. However, it is up to the brands themselves to find ways to make a more meaningful connection even in a virtual world that will win the hearts and minds of their customers. Despite the explosive growth of digital, brand marketing and creativity will be more important than ever.

SHIFT TOWARD CURBSIDE PICKUP & FIRST-PARTY DELIVERY

While in-store pickup orders are down, curbside pickup is seeing over a 50 percentlift when comparing the latter half of February with the first half of March. Restaurant brands are already starting to adapt to support this shift by operationally facilitating curbside pickup in stores. Additionally, brands that have their own delivery are seeing an uptick, while those relying on third-party are seeing a drop.

Convenience and safety are primary decision criteria when selecting handoff mode.In general, convenience was the primary motivator across all handoff modes, followed by safety.For those who identified Delivery as their preferred handoff mode, only 11 percent were motivated by free delivery, as convenience and safety were still theprimary decision criteria.

Source: Hathway Consumer Insights Survey | March 21

As the CMO and co-founder of Hathway, Kevin Rice uses his entrepreneurial spirit and drive to understand the digital landscape across the retail, restaurant and CPG industries. This skill allows him to solve real business problems for the large brands Hathway partners with while also helping him accelerate the company's growth. Kevin has been published in CMO.com and Chief Marketer and speaks around the country at digital marketing conferences.

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The Industry's Digital Evolution is Here to Stay - QSR magazine