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Hospitality Technology Study Reveals Restaurant Tech Strategies and Spending Priorities

Learn what IT experts from the quick-service (QSR), casual dining/full-service and fine-dining industry segments think are the most important issues in restaurant technology.

Omni-X. Nope, it’s not an age group.

It stands for omni channel experience, which restaurant operators say they want to put at the forefront this year, according to the 2017 Restaurant Technology Study published by Hospitality Technology magazine.

Co-sponsored by HotSchedules, the study presented the results from a survey of 18,845 IT decision makers representing the quick-service (QSR), casual dining/full-service and fine-dining industry segments.

Omni-What?

The Omni-X strategy uses customer and operational data to bridge mobile, digital and loyalty initiatives across each touch point in the customer journey.
“Restaurants that have invested in omni-experience strategies are the most likely to succeed,” the report concludes.

IT Budgets Aren’t Going Anywhere

Although the food service industry saw slower traffic and stiff competition in 2016, operators don’t think it’s wise to lop off their IT investments in 2017. Instead, they intend to start loyalty programs to draw out and leverage customer data in making decisions and gaining a competitive advantage.

Restaurant technology priorities in order of importance are:
  1. Digital customer engagement/loyalty
  2. Business/customer analytics
  3. Payment/data security

For nearly a decade, operators’ main reasoning for making IT investments was to improve business efficiency.

Although, operational efficiency is the backbone and the basis for the delivery of an excellent guest experience, 61% of operators say financing innovations in digital customer engagement and loyalty are top of mind.

To execute on their omni-channel vision, operators will still need to lay a strong foundation so that their architecture is capable of using data thoughtfully across proprietary and third-party vendors.

Legacy Maintenance at Odds Strategic Spending

The study says that, on average, restaurants allocate about 2.6% (up from 2.5% in 2016) of their revenue to technology. About 58% of restaurants intend to boost their 2017 IT budget 1% to 5%. By industry segment, 62% of casual dining operators, 54% of QSRs, and 60% of fine dining enterprises plan to spend more.

The fact that IT spend will remain consistent is good news for brands hoping to innovate further (or play catch-up). However, trouble arises when you consider that 58% of those dollars is dedicated solely to system maintenance. That’s a chunk of change when the IT department is charged with big innovative projects that outdated and clunky legacy systems may be unable to support.

Where restaurant IT departments are spending their budget:
Segment

Fast Casual/Quick Service
Family Casual

% of IT Budget

33%
25%

Software Spend Revs Up

Software spend took precedence over hardware in 2016. Operators think that software – particularly in regards to analytics, CRM/loyalty, digital and mobility functionality – give top brands nimble systems that lead to a competitive advantage in the marketplace.

About 46% of operators will install analytics software for the first time or upgrade existing software to enhance Omni-X.

For 2017, 64% of operators say they want to plunk down more dollars on customer relationship management/loyalty, digital and mobility software. They see this as an opportunity to pull away from the crowd.

Yet, in 2016 only 13% of their money went to CRM software versus the projected 17% they allocated. Although operators wanted to funnel more budget into CRM, digital and mobility, they weren’t able to “identify the funds or perhaps justify the investment when compared to applications that more easily tie directly back to revenue,” notes the study.

“Ultimately, restaurants that accomplish this will have gained visibility and control, enabling better operations while delivering on guest expectations.”

Threats to Restaurant IT Innovation

Restaurant operators aren’t particularly confident about their leadership in the area of innovation. Only 25% surveyed believe they are leaders. And some don’t have a firm grasp on using customer data and analytics to drive innovation. But operators are becoming more aware that smart decisions and ingenuity can come from data and analytics access.

The study revealed the top two challenges operators face when pursuing innovation:
  1. The difficulty calculating technology’s return on investment (ROI), and
  2. Not enough dollars to go around

Last year, justifying ROI and managing legacy systems were the top two challenges. It’ll be vital that legacy systems integrate to accommodate Omni-X strategies.

Asked what’s on their innovation roadmap for 2017:
  • 67% of restaurants named mobile payments as their first choice
  • 49% of restaurants offer that payment option
  • 41% said table-side ordering devices will be a priority in 2017

Integrating delivery services and offering interactive kiosks were other tactics mentioned as key priorities

Internet of Things (IoT), already in play at many restaurants, and upcoming Analytics of Things (AoT) initiatives will grow as smart technology gains a larger footprint in restaurants. The keys will be connected platforms and integrated systems on which to gather and spin data.

“Ultimately, restaurants that accomplish this will have gained visibility and control, enabling better operations while delivering on guest expectations,” the study notes.

Typically restaurant operators haven’t chased customer data, but with it, they can produce a continuous customer experience. The study recommends finding an initial starting point for customer behavior and segments by looking at pricing and labor.

2017 Restaurant Technology Study

HT analyzes data representative of 18,845 locations and compares restaurant innovators to laggards while highlighting how segments are addressing technology strategies and issues differently.

Download the Report

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