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Why Restaurants Are Going Digital
Why Restaurants Are Going Digital

By Ira Brodsky
June 5, 2014 10:03AM

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The biggest growth is going to come in mobile payments. Today, restaurants are processing about $23 billion in mobile payments, but mostly in the form of gift cards that can be purchased and reloaded online. But who wants to carry around multiple gift cards, loyalty cards, and credit cards, when there's a better solution?
 



You can’t download your dinner, but often, you can order and pay for it with your smartphone. Consumers are increasingly using connected devices to locate restaurants, make reservations, browse menus and nutrition information, order food for delivery or pickup, pay for meals, and instantly redeem rewards. And restaurant operators are using consumer-facing connected devices to keep in touch with customers, accept online and mobile orders and payments, increase sales and tips, and respond quickly to complaints.

It’s all part of a bigger trend. Bricks-and-mortar retailers understand that they must also compete online. Walmart, for example, recently reported that it has grown its online sales to $10 billion. What’s perhaps more surprising is that online merchants have come to the realization that if they are to continue growing, then they need physical presence. Amazon, for its part, is experimenting with lockers in supermarkets and small unmanned helicopters for same-day delivery.

In the future, nearly all retailers will employ a combination of online and physical techniques, because the combination enables marketing that is more continuous, interactive, and powerful. That type of approach though creates both opportunities and challenges for retailers’ IT departments. Fortunately, much can be learned by examining the best and worst examples of how restaurant chains are already using consumer-facing connected devices.

The Sweet Taste of Ka-Ching!

The success of connected technology in the restaurant market is demonstrated by the growth of online and mobile ordering, mobile payments, and online loadable plastic and electronic gift cards.

Online ordering is producing billions of dollars in business for chains including Pizza Hut, Domino’s, and Papa John’s. Mobile payments already account for a big portion of Starbuck’s revenue. In addition, a growing number of restaurant chains offer electronic gift cards and online management of plastic gift cards. And chains such as Chili’s and Applebee’s are deploying tablet computers to virtually all of their tables.

Pizza customers say that online ordering is faster and more reliable. Restaurants benefit from ordering automation because it means less time spent on the phone and fewer errors. Underscoring their commitment, the top three pizza chains continue to innovate: Papa John’s launched a Kindle Fire ordering app in 2012; Pizza Hut introduced an Xbox 360 ordering app in 2013; and Domino’s recently teamed up with Ford to develop voice-activated pizza ordering for vehicles equipped with the SYNC communications and entertainment system.

Today, online ordering accounts for about $12 billion in restaurants’ annual revenue. However, that’s a small fraction of the roughly $675 billion in U.S. restaurant total revenue. Online ordering for carryout and delivery is expected to more than double over the next few years as more restaurants make the switch. (continued...)

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Tell Us What You Think
Comment:

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Rohit Mudgal:

Posted: 2014-06-07 @ 5:25am PT
I would like to share my views on the first line of this article. Well, Technology is growing very fast and now it is possible to download a physical product (dinner also) on our table by using our smartphone. We are working on it for the last 3 years and will launch it very soon.

Craig W:

Posted: 2014-06-06 @ 8:26am PT
Why Restaurants Are Going Digital? The article was nice but the simple answer is the cost of labor. Customers will win and employees will lose. The minimum wage momentum is not going away and businesses are responding as they usually do. They can't raise prices to cover increased so they move towards tech.



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