Adapting to the Digital Era: The Changing Dynamics of the Restaurant Industry
The restaurant industry has experienced changes in consumer habits in recent years, largely due to the coronavirus pandemic. Some restaurants have not been able to adapt to these changes. One of these being Pizza Express, which has shut down over 96 branches since September 2020. Although all restaurants experienced a reduction of growth during lockdowns, some restaurant chains managed to return to normal quickly. This can be seen with McDonald’s, which returned to profit with a 40 percent increase from February to March 2021, even though some parts of the world remained in lockdown. This was thanks to a diversification of its services, including a greater focus on food delivery and drive-throughs.
Keeping Up With Technology
Restaurants must keep up with new technological advancements including mobile payments in order to keep up with the competition. In 2020, the number of people who had registered for mobile payments in the UK rose by 75%, to over 17 million people. A restaurant without these new payment options is alienating a large part of the potential market.
In 2020, many restaurants implemented online ordering and menus. Some have kept these initiatives on after the pandemic as several customers have grown accustomed to this way of ordering. These people are less likely to go to a restaurant that doesn’t offer these options. Furthermore, online ordering and mobile payment make it easier for customers to order and pay for their meals, reducing wait times and increasing efficiency, therefore increasing the level of customer satisfaction.
Managing Online Reviews
With the rise of review websites such as Google Reviews, online reputation is important to pull in new customers. Restaurants need to manage their online reputation to avoid negative reviews that harm their business. The only way to do this is to make sure that every single customer is served to a high standard. This makes recruiting more lucrative and difficult, but if a restaurant picks polite and efficient staff, a good reputation will quickly spread.
Social media also provides opportunities to spread brand awareness. An example of a restaurant chain which has used social media to its advantage is Wendy’s. Despite having millions of followers on Twitter, they respond to everyone’s complaint on its page with solutions, increasing the reputation of its customer service. They also post new menu items and popular memes which increases traffic to their profile, therefore increasing brand awareness and bringing more customers into their branches.
Maintaining Data Security
Maintaining data security includes taking steps to protect customer data from cyber attacks. This is expensive, but failure to do so could lead to the restaurant’s reputation being diminished if customers data gets leaked.
Online delivery
There is a relatively new large market for online deliveries on apps such as Uber Eats. This demand was exacerbated by the pandemic and was a way in which restaurants could make some business despite the implementation of coronavirus lockdowns. The demand for online delivery is still growing, despite the fact that people no longer have to stay in their homes, with an annual expected growth rate of 10.47 percent per year from 2023–2027 in the UK. If restaurants don’t implement online delivery, they automatically lose out on this large market.
Balancing online and offline experiences
It is important to remember that there is still a market of customers who want to dine in a restaurant and experience the social atmosphere that comes with it. This can be seen in a survey done by the National Restaurant Association where 60 percent of adults stated that they prefer to eat in a restaurant than to order online. However, these people’s experience can be improved with online advancement, by implementing improvements like providing the option to order online, for convenience and efficiency. Starbucks implemented a new mobile ordering and pickup system in 2020, which helped to drive sales growth. In the third quarter of 2021, Starbucks reported a 10% increase in comparable store sales, largely due to these implementations. For this reason, it is crucial for a restaurant to evolve its online prescence while still keeping a high standard for its dine-in customers, as oftentimes these two sectors complement each other.
Restaurant automation
In a digital age, restaurants have an opportunity to increase profits by using automation technology, such as robots or self-order kiosks, to increase efficiency and labour costs. Self-order kiosks can be seen around the UK, especially in fast food restaurants such as Mcdonald’s. It is likely that we will see robots in restaurants in the future, with “The Spoon” reporting that “many restaurant operators” see robots becoming mainstream by 2025, to do tasks like cleaning, service and food preparation.
Challenges and the Impact on Small Businesses
Constantly keeping up with technological advancements and a changing consumer market can be very expensive, and therefore difficult for small businesses. They don’t have the same resources as larger restaurant chains to invest in technology such as online delivery and self-order kiosks. Furthermore, small business owners may not have the technological know-how that a big chain can have available to them. This can often lead to the replacement of small businesses by chain restaurants that have the money to invest in technology. A study done by the National Restaurant Association revealed that the number of independent restaurants declined by 11 percent from 2010 to 2020, but the number of chain restaurants increased by 16 percent during this same period.
Overview
Restaurants that have the money and resources to seize the opportunities of an expanding market have unlimited potential to thrive in this new, digital age. From online delivery to AI, there are so many ever-advancing ways to improve a restaurant business in 2023. However, small businesses that don’t have the money to keep up, may find themselves being left behind by restaurant chains that have been able to embrace technological advancement.
