PHOTO COURTESY OF ZIOSK
From the front counter to the back of the house, restaurant chains are launching IT projects that aim to reinvent the way they do business. In this highly competitive sector, breakthrough technology can help restaurant owners break away from the pack, creating more loyal customers and more efficient operations. With the global consumer food service industry hitting US$2.7 trillion in sales last year, according to the market research company Euromonitor International, the payoffs aren't just small potatoes for fast food and “casual dining” chain restaurants.
The projects garnering the most attention are using tablet and smartphone apps to change the way customers make reservations, place orders and pay. According to tabletop tablet maker Ziosk, a company with a client roster that includes the Olive Garden and Red Robin, when customers order from a tablet instead of a human, appetizer sales spike by 20 percent. After U.K.-based Pret a Manger rolled out chip-and-PIN credit card reading machines in its locations in Europe, Asia and the U.S. last year, transaction times fell by 20 percent, speeding up lines. And when Chili's completed a project to roll out 45,000 tabletop tablets at 823 U.S. locations in June 2014, dessert sales rose by 20 percent, the company reported.
“You have to embrace technology projects if you want to be a relevant restaurant chain in today's marketplace,” says Jason Smylie, CIO and CMO of Capriotti's, a sandwich restaurant chain based in Las Vegas, Nevada, USA. His organization has been rolling out a series of technology projects in recent years to track point of sale, ordering and other operations data. (See case study on page 38, “Made To Order.”)
“Everywhere from Turkey to Taiwan we are seeing a boom in restaurant technology innovation projects.”
—Aaron Allen, Dubai, United Arab Emirates
Panera Bread, a “fast casual” U.S.-based bakery and sandwich chain, sponsored one of the industry's most high-profile recent tech projects: Panera 2.0, a US$42 million, five-year initiative scheduled for completion in 2016. After years of testing, the company developed and installed a digital platform that allows customers to order in advance via a mobile app or a tablet kiosk in a restaurant. The project's primary goals were to provide a more customized customer experience, reduce wait times and increase order accuracy.
The company began rolling out the Panera 2.0 system last year to all of its 1,800 North American locations. It expects robust same-store revenue growth in fiscal year 2015, in part due to the implementation of this project.
When customers order from a tablet instead of a human, appetizer sales spike by 20 percent.
Source: Ziosk
BETTER, SMARTER, QUICKER
The restaurant industry's adoption of state-of-the-art technology isn't just a U.S. phenomenon. “Everywhere from Turkey to Taiwan we are seeing a boom in restaurant technology innovation projects,” says Aaron Allen, a Dubai, United Arab Emirates-based restaurant industry consultant. “These projects are touching every aspect of the global restaurant industry.”
The global Jamie's Italian restaurant chain, for example, is rolling out new technology at its first Brazil location this year, in São Paulo. Handheld devices will enable servers to place orders and accept payment at the table, while new software will automatically synchronize item changes on menus to back-of-the-house inventory needs. A cloud-based mobile app will allow managers to track analytics covering sales, speed of service and overall store performance. And this data will help drive stronger decision making.
“Being able to track operational data is key to growing a franchise business and improving efficiency,” Mr. Smylie says.
Indeed, most restaurant IT projects include analytics features that let owners track business trends in real time in order to improve service while cutting costs. Thirty-six percent of U.S. restaurant operators already consider their operations to be data-driven, according to food industry research company Datassential.
“Any project that can help restaurants speed the accumulation of data to track key performance indicators (KPI) is seen as a real benefit,” says Darrel Suderman, president and CEO, Food Technical Consulting, Denver, Colorado, USA. “Restaurants today are focused on performance management, and technologies that can help them achieve that.”
That was exactly what Tanya Endicott found when she began developing iWaiter, an app that allows customers to send requests to servers wherever they are in the restaurant. When she and her team initially launched the project, which is still in the pilot stage, they assumed the biggest value would come from improved customer engagement. But when they showed early iWaiter prototypes to restaurant owners across Texas, USA, the feedback was different.
“They weren't very concerned with customer communication needs, but they all really liked the idea of getting analytics on what customers requested to support process improvements,” says Ms. Endicott, CEO, iWaiter, Dallas, Texas.
MAKING CHANGE
Despite the potential benefits, restaurant tech projects must often overcome internal resistance to change. When there's a technological divide separating restaurant owners from their staff and clientele, Mr. Allen says, initiatives can hit major snags. While a chain's executive leadership may support using new technology to engage customers, many franchise owners drag their feet because these projects can be disruptive, time-consuming and in unfamiliar technical territory. But the core customer base for many restaurant chains is digital natives who expect to engage with their favorite brands via mobile devices—just like they do with everything else, he says.
“Project managers have to help owners understand the value of the technology,” Mr. Allen says. “Otherwise they won't adopt it.”
When Ms. Endicott's team executed an iWaiter pilot project at a Texas bar and grill, for example, the father and son owners took very different approaches to using the tool.
“When the father ran the restaurant in the morning he didn't turn the platform on, which meant customers couldn't take advantage of the app. But when the son worked in the evening, he did turn it on,” she says. That kind of inconsistency can cause a lot of problems, both internally for staffers who don't know which processes they should follow, and for customers who may grow frustrated when customer-facing technologies don't work from one day to the next. “Management needs to drive these projects, and everyone needs to be on board 24/7 for them to work,” Ms. Endicott says.
This means project managers have to act as change agents, as well as IT experts, Mr. Allen says. Demonstrating how new tech tools can help restaurant owners track KPIs like food, material and labor costs can help practitioners maintain a high level of engagement with key stakeholders, which can make a new system more viable. After showing owners how analytics tools can help them create efficiencies—through reduced kitchen waste, calibrated inventory management and smarter performance management, it's easier to win buyin, Mr. Allen says.
“You need to align the value proposition with business goals, and provide executives with data and dashboards that let them view progress and see the impact of the project to win their support,” he says. “That's how you get them invested in a solution.”
Faster Food
Watching servers write down an order and waiting for the check to arrive is starting to seem quaint. Here are a few organizations redefining the way restaurateurs do business in a networked world.
Say Hello to Dom
Ordering is getting even easier at the world's largest pizza chain. Late last year, U.S.-based Domino's Pizza, which has locations in more than 75 countries, completed a project to develop and debut a voice-ordering mobile app named “Dom.” The service, which is capable of thousands of specific responses to customer order commands, complements an array of other digital ordering options, which along with the organization's website include a smartwatch app and Internet-connected televisions sold by Samsung.
Fusing Food and Tech
The creators of the Asian fusion restaurant Inamo in London, England were determined to make long waits for food and drink a thing of the past. So they launched a project to develop a multipurpose, interactive tabletop system allowing orders to be placed and paid for and lighting to be customized. Now patented, the technology also provides diners with games, a live camera feed of the kitchen and the ability to order a cab home.
The Robots Have Arrived
At a restaurant in Harbin, China, customers aren't greeted by servers. Instead, a robot says “Earth person, hello. Welcome to Robot Restaurant.” Brightly colored robots do the cooking, serving and entertaining, with humans’ role limited to charging batteries every five hours to keep robots moving along magnetic strips that take them from the kitchen to diners.
The restaurant challenges the industry's traditional workforce. But the labor-saving robots aren't cheap: Each costs between CNY200,000 and CNY300,000. Still, since their debut, other Chinese restaurants—and a few in the U.S.—have announced projects to do the same. —Ben Schaefer
“You have to embrace technology projects if you want to be a relevant restaurant chain in today's marketplace.”
—Jason Smylie, Capriotti's, Las Vegas, Nevada, USA
CASE STUDY
Waste Not, Save Lots
Tabletop tablets and other digital ordering tools are hot project topics among restaurant operators. But some of the industry's most innovative and valuable projects are happening in the back of the house.
In London, England, a government initiative used digital scales, Bluetooth technology and analytics dashboards to help stop a bad kitchen habit: food waste. Called FoodSave, the project helped restaurants, hotels, hospitals and other organizations monitor and eliminate waste, which helps cut costs and shrink their environmental footprint.
“It helped small and medium-sized businesses in London reduce their waste, put surplus food to good use and dispose of unavoidable food waste more responsibly,” says Victoria Moorhouse, former head of programs at the Sustainable Restaurant Association and manager of the FoodSave program. Sponsored by the European Regional Development Fund, the London Waste and Recycling Board and the mayor of London, the project ran from 2013 to 2015. Businesses could participate for free.
PINCHING PENNIES
From the project's outset, team leaders set measurable goals to track progress. “This project was very benchmark- and measurement-driven,” Ms. Moorhouse says. Goals included helping 200 organizations implement a food waste reduction solution, eliminating 1,000 tons of waste and saving £350,000 annually in food-related costs. “To deliver on those key performance indicators (KPIs), we needed to develop a methodology to audit and reduce food waste,” she says.
The final version of the FoodSave technology developed by Winnow Solutions features a scale and digital dashboard allowing kitchen staff to sort and weigh discarded food into categories, including inventory or spoilage damage, trimmings, cooking errors, unused prepared food and plate waste. “Being able to classify different kinds of waste was half the challenge,” Ms. Moorhouse says. Winnow customized the system based on a restaurant's ingredient costs, allowing it to convert wastage data into a monetary value.
Once kitchen staff got into the habit of sorting waste, owners could create daily reports about how and where waste was being generated—and then implement targeted solutions. For example, one participant in the project discovered that the staff peeling potatoes were creating hundreds of pounds of unnecessary waste. So a manager bought an automatic peeler that could be more precise.
“They reduced waste and were able to move that person to a more high-value task,” Ms. Moorhouse says. The solution paid for itself in approximately six months.
In another restaurant, staff discovered they were throwing away four pounds of burned toast per week, which added up to over £200 per year. “It turns out the timer on the toaster was broken,” she says. For £10, they fixed the problem. “Sometimes all it takes is seeing the cost of waste to spur a change.”
But not every fix was that simple. Even though the FoodSave project was free to join, due to stretched resources the biggest obstacle was getting restaurant owners and staff to participate. Because few restaurants measure waste in terms of cost, they aren't aware of how much money they may be throwing away due to inefficient processes. “If you don't see the need, you can't realize the value,” Ms. Moorhouse says.
Once project leaders got a few early adopters on board, they made the most of these engagements by sharing stories and demonstrating project benefits through the FoodSave website and related marketing efforts. “Getting endorsements from chefs and business owners has been very powerful for the success of the project,” she says. “That's why building case studies and measuring results is so important.”
TIPPING THE SCALES
One of the project's current champions is Simon Boyle, executive chef of Brigade Bar and Bistro, London. Although some restaurant operations were environmentally friendly—such as recycling oils and buying local food whenever possible—“we hadn't ever focused on food waste,” Mr. Boyle says. “So FoodSave seemed like a good fit.”
In January, the project provided his restaurant with two scales, and team members trained staff to use the technology and reporting tools. Employees were initially skittish, worried about being blamed for food waste, he says, but “we assured them that the project was designed to benefit the business, and that they wouldn't be penalized.”
The scales and software generated daily reports for Mr. Boyle to review and share with staff, and the FoodSave team met with them weekly to review the summaries and brainstorm solutions to reduce waste. One of the biggest discoveries they made was that the Saturday night chefs didn't always properly store ingredients to maintain freshness.
“We're closed on Sundays, which meant we threw a lot of fish away on Monday morning,” Mr. Boyle says. Seeing data in the reports helped the staff establish new nightly closing processes for chefs to properly store food. They also reduced the quantity of condiments they put on plates after discovering most of it became waste.
“In the first three months, we reduced our food spend by 2 percent,” Mr. Boyle says. By the end of the year, he estimates this will translate to £20,000 in savings. “For a £2 million business, that's quite a bit.” He plans to make the technology a permanent part of his kitchen as a way to keep waste front of mind for his team.
The FoodSave project saved almost 100 London organizations a total of roughly £550,000, averaging around £6,000 in annual savings—well over the team's target. Team leaders are now considering expanding the project to businesses outside of London, says Ms. Moorhouse. “We have only just scratched the surface of what we can accomplish.”
FoodSave data helped staff at Brigade Bar and Bistro, London, England, reduce food waste.
PHOTO BY RICHARD WAITE
“Getting endorsements from chefs and business owners has been very powerful for the success of the project.”
—Victoria Moorhouse, FoodSave, London, England
CASE STUDY
Made to Order
Jason Smylie began his career as an IT project manager in Las Vegas, Nevada, USA. He invested in a Capriotti's Sandwich Shop franchise on the side and eventually gave up his IT gig to focus on restaurants full-time. Seven years after acquiring the entire chain with a few partners, Mr. Smylie is CIO of Capriotti's, which now has 105 locations in 18 states.
Since buying the company, he has initiated a series of technology projects across the franchise, rolling out point-of-sale solutions, online ordering and back-office systems, online training, mobile operational tools, a mobile loyalty app and an intranet to link all franchisees together. “Our vision is to have all these projects integrated into a single IT system to provide business intelligence,” he says.
While progress has been steady, securing buy-in for new technologies from franchisees—and related process changes—has been challenging. “Getting franchisees to understand the vision is the biggest challenge on projects like these,” Mr. Smylie says. “You have to be sure they understand the ROI to make them work.”
One of Capriotti's technology projects is online ordering.
SECOND HELPINGS
This year Mr. Smylie has focused the portfolio on the front of house, rolling out a new loyalty program that lets customers use a branded mobile app to earn rewards based on how frequently they visit the restaurant and how much they spend. The project is central to Mr. Smylie's vision of transforming the organization.
“Loyalty tools in the industry have moved away from punch cards and phone numbers to mobile applications,” he says. He had wanted to launch a loyalty program in the mobile space several years ago, but decided to wait for the technology to mature and customer acceptance of loyalty apps to develop. “We held off until we felt that the business case made sense,” he says.
In May 2014 Capriotti's partnered with Punchh, maker of a mobile cloud-based customer relationship management suite for restaurant operators. Customers can use the app to earn and redeem rewards, interact with the brand, share reviews through social media and refer friends. Restaurants capture data detailing all that activity and can then offer deals based on individual customers’ preferences.
“Our long-term goal is to build a database of active customers and influence their behavior over time through customized rewards and incentives,” Mr. Smylie says. By allowing the chain to reward customers and track which incentives work, the mobile loyalty project helps reach this goal. “The Holy Grail in restaurants today is data aggregation,” he says. “This system will provide actionable insights that help us adapt our offerings.”
ONLINE ORDERING PHOTO COURTESY OF CAPRIOTTI'S. JASON SMYLIE PHOTO BY JACOB KEPLER
“Getting franchisees to understand the vision is the biggest challenge on projects like these.”
—Jason Smylie
THE TASTE OF SUCCESS
To customize the Punchh platform for Capriotti's, Mr. Smylie's team worked closely with the vendor team. Scope creep and delays were a problem at the beginning of the project. “We didn't have a clear set of requirements in place,” he says. “We didn't know what we didn't know, and that added time to the schedule.”
After requirements were eventually hammered out, rollout began in the second quarter of 2015, roughly six months later than originally planned. Mr. Smylie completed the project in June—but there were still change management obstacles to overcome.
As a franchisee, every owner has a level of autonomy to operate their Capriotti's location as they see fit. Some are more forward-looking than others, he says. “We have franchisees who didn't even accept credit cards until the ’90s, so this is a big step for some of them.”
It's not just an aversion to new technology: While part of the cost of the loyalty project was covered by a national market fund, owners were expected to pay a monthly fee to operate the new cloud-based service.
“We needed to present the project as an investment in the future of their business so they would understand the value,” Mr. Smylie says. So beginning in September 2014, his team ran a four-month pilot project in a small market (only six restaurants) to be sure the mobile app would deliver the desired results. In January they reviewed the results and tracked the ROI, which included increases in customer visit frequency and the amount of money spent per visit, and a higher participation rate in the loyalty program. “We set conservative ROI projections, but the data proved we were on target,” he says. The data exceeded expectations.
To set the stage for a successful nationwide rollout project, his team communicated the positive results across the franchise network via the organization's intranet and presentations to local stakeholders. But there was pushback from more conservative franchisees resistant to operational changes.
“It's definitely been a bell curve,” Mr. Smylie says. The early adopters love the technology and take advantage of the analytics tools, while middle-of-the-pack owners are more cautious but “understand that the technology is worthwhile,” he says. His team is now working to convince remaining franchisee holdouts.
“With this type of project, you need everyone to be on board, otherwise it upsets customers who discover they can't use the platform in every restaurant. But they will come, if grudgingly, once they realize it's worth doing.” PM
