The year 2016 was full of disruption for the restaurant industry – from an augmented reality craze causing a marketing stir to breaches and the continuing quest for best security practices. Here we recap a few hot topics that grabbed headlines over the course of the previous year and how these may impact business as usual in 2017.
Labor Issues: The battle surrounding raising the minimum wage has resulted in restaurants utilizing technology to necessitate fewer staff – this has increased interest in the use of kiosks or other forms of automation.
Revised overtime pay regulations, which are estimated to affect at least 4.2 million American workers, will increase the salary threshold for the overtime exemption from $455 a week ($23,600 annually) to $913 a week ($47,476 annually). New overtime rules went into effect in December of 2016, and restaurants continue to scramble to figure out how to adjust salaries and schedules. Having an accurate calculation of hours worked per week will be very important as restaurants seek to comply with new regulations. Many restaurants are turning to smart technologies to track labor or reduce staffing requirements. Which leads us to…
Automation: In addition to rising wages, automation is on an upswing due to consumers’ preferences. With more diners being accustomed to living on-demand lives, they are comfortable using technology to get what they want or need and a lack of human contact is becoming less off-putting in certain cases. Whether it be robots or kiosks, restaurants are embracing ways to offer streamlined, frictionless service that guests want and if technology can deliver it – it will become more widespread.
Delivery Disruptors: Amazon and UberEats entered the food delivery space. The rideshare behemoth and online retail giant joined the delivery fray along with the likes of Postmates, DoorDash, and Eat24. As restaurants look for ways to sustain and grow delivery services, these disruptors will continue to have impact.
Restaurants should keep an eye on Amazon – with the launch of AmazonGo, an 1,800 square feet of retail space for grab-and-go shopping in Seattle. In addition to groceries, AmazonGo also offers ready-to-eat meal options made fresh every day by on-site chefs and favorite local kitchens and bakeries.
Drones: While still a futuristic endeavor – and some will say marketing ploy, drones in foodservice grabbed some headlines in 2016. Dominos announced it was conducting pilots of drone delivery in New Zealand and Orange Leaf Yogurt, an Oklahoma-based frozen yogurt company delivered cups of frozen yogurt to college students.
Mobile App Battles: Restaurants were all about the app in 2016. Lots of new launches and upgrades were happening in the quest to find the perfect blend of personalization and expansion on omni-channel strategies. Dunkin’ Donuts updated its app to include gifting and loyalty. Starbucksredesigned its mobile app to feature more interaction and personalization. Outback launched an app allowing guests to pay from their phones and Applebee’s updated its mobile app for online ordering and to-go orders.
Augmented Reality meets Gamification: When PokemonGo in the summer of 2016 it had rabid fans searching for Pokestops everywhere – including restaurants. Savvy operators turned that into a marketing opportunity by playing along and creating lures to bring guests into their establishments. The augmented reality craze was a hit on social media as well, giving restaurateurs added leverage and another way to stay in front of potential diners. While the PokemonGo craze subsided, it has given restaurants inspiration as to how AR initiatives can have a place in operations. Beyond marketing tools for outside the restaurant, some restaurants are creating games for guests while they are eating or to engage them post-stay. In a slightly different vein, virtual reality is also finding application as restaurants have found VR to be an effective training tool. The lesson is that what could once be deemed a “flash-in-the-pan fad” can have practical longer-term applications for innovative and visionary operators.
Security: Breaches are always top-of-mind and an operator’s worst nightmare and several restaurant breaches topped headlines in 2016 shining a spotlight on the issues that still plague POS security. Wendy’s, CiCi’s Pizza and Noodles & Co. were among restaurant chains that had breaches come to light in 2016. What the companies could have done differently – and what other restaurants can learn from them – is a matter of debate. EMV while not a security solution in and of itself, continues to be a hot topic as many operators still are sluggish to upgrade hardware to chip reader systems. Speed of service has improved slightly, but still continues to be a problem – especially at QSRs. Even for restaurants that have upgraded to EMV systems since the liability shift that took place in October of 2015, the key is a layered security approach that includes tokenization, EMV and point-to-point encryption.
Catch up on my current posts along with industry articles