technology

Prices are rising, but technology can help restaurants stay ahead

By Mo Chaar

Canada’s inflation is at its highest level in over three decades and the price of food is skyrocketing, but this news does not mean that restaurants have to suffer. Technology has helped restaurants survive some of the most challenging times in recent history, and this time is no different. Restaurants can use technology to their advantage to reduce operational costs, incentivize new and repeat business, and drive customer spending.

In January, Canada’s inflation rate hit 5.1 per cent — the highest since 1991. According to Canada’s 2022 Food Price Report, restaurant menu prices will increase by six to eight per cent this year “as businesses contend with rising food prices, rising commercial rents and labour market challenges.” These findings suggest that guests will need more incentive to dine out in 2022, and restaurants will need to find ways to attract and retain business.

To offload a portion of the rising costs, some restaurants may be forced to raise their own prices. Tim Hortons’ parent company, Restaurant Brands International, recently warned that menu price increases are coming. Across the border, U.S. menu inflation is at its highest in 40 years. So, what can restaurants do to reduce overhead costs, keep customers walking through the door and spending their hard-earned money?

How technology can lower costs and increase sales

As prices rise, there are a few things restaurant operators can do to help keep costs down.

First, they can make sure to have the right point-of-sale (POS) system in place, one that has been intentionally selected to create and support the efficiencies that will best serve the restaurant’s needs. Some examples include online ordering systems, kiosks, and QR codes that direct customers to the menu for ease of ordering and payment, cutting down costs on printing paper menus. Having an integrated system in place will also help turn tables over faster by automating manual processes that servers previously had to perform — ultimately reducing labour costs.

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Second, restaurant operators should revisit their menu analysis. Doing so will ensure that their POS system can provide data insights on menu items to avoid stocking and trying to push inventory that customers don’t want. A good POS system will help to streamline a menu and control food costs by providing menu reports. Inventory analytics also work to reduce food wastage, which is critical when food costs are high, so restaurants are not spending unnecessary money on food that ultimately gets thrown out.

Other tech like tableside ordering tablets and kitchen display systems (KDS) can be used in conjunction with one another to ensure orders are accurate. Together, the two systems reduce the chance of meals being sent back to the kitchen due to incorrect orders. This technology not only saves money on food over the course of time but also helps to improve customer retention — one bad experience could turn a customer away forever.

We know now that tech can increase operational efficiencies and lower costs, but how can it boost sales?

One idea is to create a contest for servers to promote high-profit menu items. Identify a number of dishes with the highest profit margins, use the POS system to track results, and reward the servers who sell the most. A contest like this can be duplicated to boost loyalty programs where servers must incentivize guests to sign up, and the server who gets the most sign-ups at the end of the week wins a prize. Restaurant operators can leverage the POS system to keep track of loyalty program members, who are likely to spend more money in the future. Creating friendly competition is a fun way to engage staff and drive sales — a win-win for operators and employees alike.

Leveraging loyalty programs to boost spending

Loyalty programs collect purchase information that tells restaurant operators not only where customers are spending their money, but it also tells them which customers are not spending. This data allows restaurant owners to target low-spending, casual customers and incentivize them to visit and spend more money. At the same time, restaurants can reward the high-spending customers who visit often, to keep them coming back time and time again.

Customer information gathered by loyalty programs also helps staff provide better customer service — another path to repeat business. For instance, data provides servers with customers’ names, anniversaries, cooking preferences and more. Servers can use this data to give customers a better VIP-like experience where guests feel special and inclined to spend and tip more. Owners can track customer spending and traffic trends through analytics and customer segmentation to create relevant programs targeted to each customer segment.

Typically, consumers spend more and are more engaged when they belong to a loyalty program. Interactive and branded loyalty websites allow guests to quickly and easily check their loyalty balance, which, in turn, encourages them to spend more to qualify for and achieve the next reward level. Restaurateurs can also use loyalty programs to promote gift card sales, creating yet another revenue source for the owner, and another reason for the customer to visit and spend.

The bottom line

Like the pandemic and the labour shortage crisis, rising prices are yet another challenge that restaurant owners must contend with and find ways to overcome.

To reduce labour costs, streamline menus, and combat inflation, restaurant operators need to invest in and roll out a full suite of restaurant technology, including a robust POS system. An effective loyalty program is a vital tool in restaurant operators’ customer attraction and retention toolkit. The insights are invaluable, and restaurants that have a good understanding of who their customers are and what they want will be well-positioned to keep them coming back — even as prices rise.

Mo Chaar is the Chief Commercial Officer of Givex, where he oversees commercial strategy and development worldwide, including the development of GivexPay, as well as managing sales teams within North America.