How Smart Technology is Transforming Restaurant Operations Amid Rising Costs
Restaurants are increasingly turning to smart technology to cope with rising food and labor costs, which have been exacerbated by inflation and higher minimum wages in many states. To navigate these challenges, they are adopting various tech solutions such as inventory management systems, handheld devices, loyalty programs, menu auditing, QR codes, and other specialized restaurant technologies.
Mitigating Labor and Food Costs
With labor costs rising, especially in states with minimum wages exceeding $15 an hour, and food prices continuing to increase, restaurants are facing pressure to raise menu prices. The National Restaurant Association reported that menu prices have climbed by 4.1% over the past year. To counteract these financial pressures, restaurants are investing in smart technology to streamline operations, improve efficiency, and enhance customer experience.
Streamlining Operations with Smart Technology
Smart technology helps restaurants operate more efficiently by providing real-time data that reduces errors and improves cost accuracy. This includes real-time inventory access, which allows staff to quickly identify stock deficits and make informed decisions. For example, chains like Sbarro use technology to analyze trends across multiple locations, aiding in key business decisions and improving return on investment. By automating tasks like inventory tracking, restaurants can free up staff to focus on enhancing customer service.
Handheld devices are particularly useful in quick-service settings, reducing the need for additional cashier staff by allowing orders to be taken directly in drive-thru lanes. This approach, as demonstrated by Chick-fil-A and In-N-Out, speeds up service and improves order accuracy.
Enhancing Customer Loyalty
In response to inflation, cost-conscious consumers are increasingly signing up for digital loyalty programs to save money. Loyalty programs, once considered a nice perk, are now seen as essential by many consumers. Restaurants are investing in these programs to provide personalized offers and rewards, which can boost repeat business and revenue growth.
For instance, International House of Pancakes (IHOP) launched its International Bank of Pancakes (IBOP) loyalty program in 2022, attracting about 8 million members. Members of IHOP’s program visit twice as often and spend nearly 5% more than non-members, highlighting the financial benefits of a well-structured loyalty program.
Reducing Food Waste and Costs
Restaurants can produce significant amounts of food waste each year, which contributes to unnecessary expenses. Back-of-house software helps staff rotate stock effectively and alerts them when items approach their expiration date, reducing waste and saving money.
Moreover, conducting a menu audit with smart restaurant technology can help restaurants identify high-margin, popular dishes and eliminate or adjust those that are less profitable. This streamlining of menus not only cuts costs but also ensures that customers receive consistently satisfying meals, encouraging repeat visits.
Switching from physical to digital menus can further reduce costs and improve efficiency. Digital menu boards, tablets, and self-order kiosks are easier and cheaper to update, allowing staff to focus on delivering enhanced customer service. These tools can also personalize the dining experience by offering tailored menus and dish recommendations.
Leveraging Technology for Efficiency
In the face of inflation and rising labor costs, restaurants must leverage smart technology to remain competitive. By adopting systems like inventory management, handheld devices, loyalty programs, and digital menus, restaurants can operate more efficiently and deliver a better customer experience. This technological shift is crucial for surviving and thriving in today’s challenging market landscape.
