How and Why The Restaurant Industry is Evolving in 2016

By: Chris Comparato

6 Minute Read

Dec 05, 2017

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Restaurant Industry Evolving
restaurant industry trends

It’s hard to tally up all the new tools restaurant owners are using, but it’s clear that they all seem to center around one thing: improving the guest experience.

Cloud systems allow owners to access analytics to improve their menus and sales from any device with an internet connection. Software-as-a-service (SaaS) products give restaurateurs the most up-to-date features, automatically. Mobile tablets allow orders to be made faster, and more accurately. eCommerce features like online ordering and kiosks enable consumers to interface directly with what was traditionally a closed technology environment.

It’s a brave new world out there for aspiring restaurant owners, but it’s taken a while for us to get here. Ever since the World Wide Web was unleashed in 1989, we knew there were big changes on the way for technology. Client-server and web-based tools started to play very important functional roles to create process efficiencies and automation. Perhaps for a few key restaurant personas, however, they were not directly “enabling” a new or better experience for the restaurant.

When we started Toast in 2012, we were motivated by changing the experience. We knew mobile was going to be big in the restaurant industry and cloud would soon become more than a puff in the sky to restaurateurs. We knew that, to truly have an impact on the customer and restaurant operator experience, we would need to tap into (or replace) the restaurant’s central operating system, its nerve system so to speak: the restaurant POS system.

Fast forward almost four years to now, when restaurateurs are clambering for innovation in several areas of the business, not just their back-end operations. Toast is cognizant of these changes, and “ready for duty:” to further enable restaurant owners and managers, restaurant guests, and everyone else involved in advancing the restaurant experience. We intend to put more fuel behind that mission and are announcing that we’ve received $30 million in a funding round led by Bessemer Venture Partners with participation from GV (formerly Google Ventures) and others, and are committed to creating the best Android POS system for restaurants everywhere.

As we look at the future and the evolving experience, there are a few restaurant industry evolutions we are tracking and influencing. These are the top five in my opinion, in no particular order.

1. Handheld Restaurant Tablets Revolutionize the Guest Experience

Your restaurant can turn tables 15-20% faster at your busiest times because of the guests’ ability to order and pay at the table (Source). Handhelds can reduce order errors and speed up time to the kitchen. How many times have your servers had to walk back and forth between a central platform to swipe a credit card? And how many times have your guests become impatient waiting, degrading the experience? That is becoming less of an issue with handheld restaurant tablets, which restaurants are using more and more.

2. SaaS & Cloud Restaurant Tools Allow for Smart Insights and Better Analytics

46% of restaurant operators look at business reports and metrics every day (Source). Restaurant sales used to be the primary benchmark for restaurant operators. And while that’s great… That’s not all there is. Now advances in technology enable restaurant owners to see so much more: labor cost percentage, food cost percentage, specific menu item sales, the list goes on and on. With that information, restaurant operators are now making data-driven decisions about the future of their business, whether that means menu changes, employee shifts, or technology upgrades.

With SaaS and cloud tools, you can access these powerful restaurant analytics anywhere, update your system frequently and automatically, and see restaurant insights anytime. What’s more, cloud-based servers are more secure, so your data is protected and encrypted at all times. I look forward to seeing the future advances in analytics and insights as more and more data is captured.

3. Online Ordering Software Meets Guests Where They Are: On the Web

Online food orders grew by 124% between 2010 and 2015. Phone sale orders, however, decreased by 26% (Source). There are many reasons why phone food orders are on the way out, and one of them is that online ordering has become so much more convenient for guests and restaurant operators. Payment is guaranteed upfront, orders are always accurate, and transactions are quicker and streamlined when you don’t have to ask the same question five times in a row. We learned the importance of that during our early days in eCommerce at Endeca. Restaurant operators are investing more and more in online ordering, but sometimes “replicated” with outside vendors who charge up to 13% in commission fees on each order vs. directly integrated with their core POS, saving time and money.

4. Digital Gift Cards & Loyalty Programs Keep Guests Around

On average, consumers spend 46% more with businesses that have loyalty programs (Source). At Toast, we are passionate about hospitality, and that drives our core value of customer success. Similarly, your restaurant should also be focused on maximizing customer success. Now that guests are at the restaurant, how can you get them to come back and be a reference? One secret sauce is… your restaurant CRM system. What’s that? Customer relationship management (CRM) saves customer data such as email and phone number, and ties it to number of visits, recent purchases, and more. Digital receipts send to guests’ email inboxes or cell phones; digital gift cards can be redeemed online and in-store; and digital loyalty programs can tie guests’ credit cards to their rewards account, which they can track themselves. We see significant opportunity and value in the ongoing trends around restaurant loyalty.

5. Restaurant Marketing Isn’t Just Birthday Emails

67% of smartphone users read about restaurants online (Source). Restaurant marketing goes hand in hand with the trends we are seeing with CRM. For many restaurant operators, restaurant marketing is a significant focus of their business development and something they spend a good deal of time investing in. These gurus respond in a timely manner to Yelp! reviews, sign up their business for Google My Business (cinching them a spot on Google Maps), and post photos, coupons, and contests on Facebook, Twitter, and Instagram to attract new guests. They’re also regularly updating their website, checking their Google Analytics, and designing new and improved email campaigns. It will be great to see the advancements in how loyalty and better marketing tools create a “one-two punch” to impact your business.

Toast Restaurant POS Is Evolving Too

These trends are heavily influencing where we’re investing in the future. These are in parallel to our efforts to further scale and enhance our platform’s core infrastructure to be the most reliable, flexible and robust platform in our space. Ultimately, at Toast, we always strive to go above and beyond and enable the best experience for restaurants small and large. There will always be new features we can offer our customers, new trends emerging to change how consumers and staff interact, and new opportunities to innovate and improve upon to provide the best solution for the restaurant industry. That intersection of technology innovation and customer experience is where we love to work; it energizes us every day.

I want to thank everyone who helps make our vision a reality: our Toast team, our investors, and most of all, our loyal customers. Thank you for partnering with us on this journey! Best wishes to you all for a strong 2016!


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