3 Trends in Technology for the Foodservice Industry
The Canadian foodservice industry, like the foodservice industry around the world, has seen incredible uncertainty and change since the beginning of the pandemic. That uncertainty has created challenges and opportunities that are going to be long lasting — especially in relation to technology and the new, and ever expanding, role it plays in foodservice.
There are three important technology trends that we’ve seen take hold over the past year.
Trend #1 – Tip-flation
Tip-flation, that ever-so-clever word that means tipping is being offered in more places and the default starting point is higher, is a very real phenomenon. But where is it coming from? What’s driving it? One key factor is technology in the form of new POS and payment terminals being deployed in more places than ever, particularly in quick service locations and coffee shops — where tipping was never historically part of the transaction. Layered onto that this is the fact that in Canada pre-set tips now typically start at 18% with a middle option of 20% and a high option of 25%. Psychologically, the pre-set is nudging you toward the middle option — it feels like the lowest option represents poor to standard service, the middle is standard to good service and the high is great service. But these numbers are much higher than the historical norm of 15%, being considered a good tip. Add to this that these are percentages of costs of food, beverages and meals that are also rising and tip-flation is a big deal in the foodservice industry.
So, is this likely to continue? Yes, we’ll see more foodservice locations upgrade their technology, enable tipping and use high presets. But I don’t think we’ll see an increase in the percentages since we’re starting to see a significant backlash against the technology-driven aspects of tip-flation that will keep the numbers in check. This also means that as customers or guests of foodservice, we shouldn’t feel guilty about putting in our own tip numbers or skipping the tip entirely for certain quick service settings where a tip has historically been for staff that truly went above and beyond.
Trend #2 — Loyalty Programs to Combat Third Party Delivery Companies & Marketplaces
The incredible and rapid rise of third-party delivery & marketplaces has given more restaurants access to consumers they may not have previously had, but the cost is significant. It’s typical that third-party delivery company owns the data, the relationship, the branding and the quality of the experience. This is a big problem for restaurants that have put a lot of effort into establishing their brand and building relationships with customers.
One way for hospitality chains to combat this is through loyalty programs where they can offer customers perks that third-parties can’t or don’t. Perhaps the greatest example is one that dates back to 2008 when Starbucks introduced the star rewards program (you would even get a gold card mailed to you when you collected enough stars). Now, of course, it’s entirely app-driven and a hugely successful digital play by Starbucks to connect with their customers and really own the relationship. Others have taken notice, with McDonald’s launching MyMcDonald’s Rewards late in 2021.
This is a trend that We’ll definitely see growing over the next few years. It’s invaluable for brands to own the relationship (and the data) with their consumers, building brand loyalty and receiving near real-time feedback on what’s working through the available data.
Trend #3 — Dining Goes Digital
As we all well know, social distancing, mask mandates, and general restrictions on gathering during the pandemic pushed hospitality brands into putting technology budgets and resources into off-premise channels. The goal was simple, to stay in business, or possibly even thrive, when the dining room is forced to be closed or, at best, half-capacity. Now, as Canada has emerged from lockdowns and the pandemic itself, the focus for hospitality brands will be on supporting the return of full capacity on-premise and in-room dining.
Though lockdowns may feel a thing of the past, there are still a vast number of challenges, with labor shortages being right at the top of the list. There’s also new customer expectations and the rapid adoption of digital that occurred during the pandemic. Hospitality brands will need to find solutions that support these new expectations and that can help mitigate the extreme challenge of labor shortages. Digital menus, loyalty programs and new self-pay technologies will play a huge role in mitigating these challenges moving forward as there are solutions that can alleviate staff burden and provide guests with an elevated experience that gives them the option to have control over their ordering and payment.
Change, challenges and times of difficulty can have long-lasting impacts as we’re seeing with the foodservice industry as it emerges from the pandemic. The rapid adoption of technology solutions in the Canadian foodservice industry has been breathtaking, and the three trends I’ve looked at here, tip-flation, loyalty programs, and in-room dining going digital, stand out to me as key in the short term and long term of the Canadian food service landscape.
If you want to find out more about how Ready’s order & pay hospitality, entertainment and restaurant tech can help your brand increase revenue and improve customer experiences, please get in touch with our team today.
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Ready partners with innovative restaurant, foodservice, and hospitality brands to create frictionless order & pay experiences that WOW guests.
Our mobile-first flexible order & pay software platform empowers guests with more choice, boosts revenue, and connects brands directly with customers.
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