Restaurant Technology in 2015 Industry Report

As the adoption of restaurant technology persists in every facet of the restaurant industry, from cafes to fast casual restaurants, it’s imperative that restaurant owners understand not only which technology trends restaurateurs are gravitating towards, but why

Rather than make some educated guesses, the team at Toast surveyed hundreds of restaurateurs in the industry. Who better than restaurant owners, managers, and servers - the people using technology day in and day out - to answer this question? 

The result? The Restaurant Technology in 2015 Industry Report. 

Key Highlights

73% of restaurants are planning to upgrade their technology within the year.

46% of restaurateurs look at their business reports and metrics every day.

52% of restaurateurs said "advanced functionality" and "ease of use" would be their top reasons for replacing their existing method or software.

50% of restaurateurs currently pay for 2-5 restaurant technology vendors.

The top features restaurateurs are looking for in a POS upgrade are: inventory management (20%), online ordering (13%) and PCI compliance (9%).

Methodology

We polled over 300 managers, servers, owners, bartenders, and chefs about their experiences using technology, located in various locations in the U.S. and with varying years of business experience. We are able to segment the data based on their answers to a few key questions. A quick run-down of the polled:

What is your role?

restaurant-technology-survey

How would you categorize your restaurant?

restaurant-technology-quick-service

How many locations does your restaurant have?

restaurant-locations

What is the biggest challenge for your restaurant?

restaurant-technology-challenge

Key Findings

  • 46% of all respondents list hiring, training, and retaining restaurant staff as their #1 challenge.
  • Food truck workers list menu management as their #1 challenge.
  • Owners of bars and nightclubs list speed to sale (turn times, kitchen times, etc.) as their #1 challenge. 

Analysis

The top three challenges restaurants are facing today are: hiring and training staff, speed to sale, and low profit margin. Finally, restaurant owners know that simply “filling a position” is not the goal; the goal is to fill that position with the right person who embodies the values of your restaurant, and creating a culture that emphasizes training and retaining restaurant staff. This is an overwhelmingly universal and human challenge that restaurants face. Technology can serve as a tool to train your staff, and can help out with speed to sale, low profit margin, and many of the other challenges on this list, but the culture of your restaurant comes from you.

eli.png
Eli Feldman
Co-Founder of Clothbound
Owner of 3 Princes Consulting 

“The industry nationwide has a 67% turnover rate. Some of that is just the nature of the work: restaurants are a place where people can work for short periods of time in their life. One in two Americans has worked in restaurants at some point in their life. So some of that turnover is inherent, but a large portion of it has to do with poor job fit and poor job selection…

I would caution against using too many sales-based metrics around server performance or front-of-house performance in general unless you can really look in the mirror, and honestly ask yourself, ‘Did I really give people the tools they need to perform to the level that I expect them to perform?’”

 Click here for more from Eli Feldman on hiring and retaining top talent

What are you currently using to manage transactions and operations?

restaurant-management-software

Key Findings

  • 71% of respondents currently use POS software.
  • 21% of respondents currently use a cash register or pen and paper system.
  • Only 6% of respondents use a custom-built system.

Analysis

Based on our research, most restaurants -- across the board, including catering, full-service, quick-service, and even catering companies-- are using POS software in 2015. These are amazing, and honestly surprising results. These numbers indicate that more and more restaurants are seeing the benefits of restaurant POS software, and more and more technology vendors are communicating that benefit clearly. The only outlier here were food trucks. The food truck operators who answered this survey had an almost equal distribution of responses: 38% POS software, 31% pen and paper, and 31% cash register.

What would be your top reason for replacing your existing method or software? 

restaurant-software

Key Findings 

  • 32% of respondents stated advanced functionality as their top reason for replacing their existing method or software. “Ease of use” came in second with 20% respondents.
  • Catering companies listed ease of use and reliability as their top reasons, at 33% and 29% respectively.
  • Mid-size restaurants, with 11-20 locations, listed integrations and better support as their top reasons, at 38% and 21% respectively. 

Analysis

Advanced functionality was the clear winner in this case; restaurants want more features to be able to streamline their operations. As most of them are already operating on POS software, they know what it’s capable of, and are itching for more. However, it’s interesting that ease of use is number two. With modern restaurant POS systems offering online ordering, gift cards and loyalty programs, and enterprise management, there are so many features to use, but they must be usable. Restaurants know that simple, easy to use restaurant software will perform the best. Mid-size restaurants, however, have different pain points, most likely due to their giant customer base and growing pains. They want more integrations and better support to handle all their enterprise locations.

What is most important to you when it comes to restaurant technology?

restaurant-technology-features

Key Findings 

  • 39% of restaurant operators list “efficiency” as most important when it comes to restaurant technology.
  • Only 3% of respondents deemed cloud-based systems important.
  • Managers are more concerned about efficiency, while owners are more concerned about security. 

Analysis

Restaurateurs chose "efficiency" as most important for restaurant technology. They want their software to be efficient, but they also want their software to increase efficiency at their restaurant. This makes sense, as restaurant operators want their technology to work, and work well. It should be so efficient that it acts as an extension of the restaurant, rather than a totally separate system. Customizability is the second most important factor for restaurateurs. That way, pizzerias, cafes, bakeries, full-service, and quick-service restaurants can customize their technology to fit their specific workflows. The most surprising item here is that “security” is so low on this list of priorities. However, when segmenting for “restaurant owners,” it is more important, which makes sense as they are most sensitive to security breaches.

stephen-zagor
Stephen Zagor
Dean of Culinary Business and Industry Studies
The Institute of Culinary Education 

“The tech future for restaurants can be summarized in two areas – guest contact and back of the house. In guest contact the newest tech involves mobile ordering and payments. The focus will continue to convert the smartphone into an all-purpose tech device. It will of course depend on the type of restaurant and style of service. Ultimately the surface value is speed and efficiency. However, not to be overlooked are the potential labor cost reductions that will coincide with the increased minimum wage inspired raises.

In the back of the house some highlights are new tech that will make food purchasing easier and more accurate; new software for recruiting staff and managing employee records; and bar technology to monitor consumption and aid inventory and costing of product.

The biggest question will always be, will the average small operator buy into these systems. Remember, there are a million restaurant outlets in the US, most being small individual operations. Point-of- sale technology, a common practice today, was around a long time before many food operators jumped in. As always the chains and bigger notable operators will jump on first."

Click here for more from Stephen Zagor on his restaurant experience 

How do you like to get updates about your tech?

updates-about-restaurant-technology

Key Findings

  • 69% of respondents prefer to get updates about their tech via email.
  • Only 6% of respondents prefer to get updates about their tech via the phone.
  • One person in “Other” wrote that they would like to receive updates through “notifications via the hardware itself.” 

Analysis

We asked this question because we wanted to know how restaurants prefer to have updates to their software and hardware communicated. While many restaurants said they would prefer to hear about updates “in person,” most answered with “email.” This is interesting data for point-of-sale vendors who are wondering how to communicate updates about the software. Email is the best form of communication, mostly because it’s universal and it can be easily forwarded to others. However, one person in “other” wrote in an answer that wasn’t considered; notifications within the hardware itself. This would be an even more streamlined way to learn about updates to your technology, that technology vendors should consider!

How often do you look at business reports/metrics?

restaurant-metrics-restaurant-reports

Key Findings

  • 46% of restaurant operators look at business reports and metrics every day.
  • Nightclub and bar operators look at business reports every week rather than every day, at 40%.
  • Mid-size restaurants (11-20 locations) look at business reports and metrics every month rather than every day, at 62%.

Analysis

Most restaurant operators look at their business reports every day, either through their technology or through their Excel spreadsheets. Almost half of the industry has a pulse on how their restaurant is operating every day, and interestingly enough,  restaurant operators with POS software are even more prone to check their reports every day, at 50%. Nightclub and bar operators may look at these reports less because of the nature of their business; they have even more uneven sales throughout the week, with Friday and Saturday bringing in most sales, and Sunday through Wednesday being typically lighter, or even closed. Mid-size restaurants as well do not look at business reports every day, but instead every month. This may be because they are tracking monthly goals rather than daily sales, and that it's more difficult to check in to multiple locations every single day. 

peter-christie
Peter Christie
Former President of the Mass. Restaurant Association
Restaurant Consultant

“The restaurant that doesn't have controls is the one that needs them most. The restaurant that has the most controls is the one that needs them least. Controls are a beautiful thing.

Restaurants should have a really valid inventory system. They should know their labor relative to their sales last night. They should be able to do some menu engineering and see what's sold and what hasn't sold. They should know their centerplate food costs so they can determine what their margins are.” 

Click here for more on restaurant systems and menu engineering from Peter Christie

How many technology vendors do you currently pay for?

restaurant-technology-vendors

Key Findings

  • 50% of restaurant operators are currently paying 2-5 technology vendors.
  • 57% of restaurants currently using POS software are paying for 2-5 technology vendors 

Analysis

Half of the restaurant industry is currently paying for 2-5 technology vendors. Let's take some time to let that sink in... That's a lot of money spent on a POS system, online ordering vendor, loyalty program, etc., that isn't all integrated into one system. Restaurants may want to evaluate the cost of these systems as well as their ROI in the coming year. Large restaurants, however, are mostly paying for one technology vendor, and for that reason seem to have more custom-built systems for their workflow. It should be interesting to see how this number changes next year. 

When are you planning to upgrade your restaurant technology?

restaurant-software-upgrade

Key Findings

  • 73% of restaurant operators are planning to upgrade their restaurant technology within the year.
  • Of the 27% who said they did not want to upgrade, reasons why were satisfied with current system (23%), just upgraded (20%), and cost (19%). 
  • 68% of restaurant operators currently using pen and paper and cash register systems are looking to update their technology within 6 months or a year.

 Analysis 

A large portion of restaurant owners are looking to upgrade their technology within the year. However, a similarly large portion are not looking to upgrade, for reasons such as cost and training. One person said that “to change systems would be like hiring an entirely new staff.” However, most restaurant operators not using restaurant technology currently are looking to upgrade. That means more restaurants using restaurant technology within the next year overall, which will be an interesting trend to watch within the coming year. 

What are the top features you would need in a POS upgrade? 

inventory-management

Key Findings

  • Inventory management, online ordering, and PCI compliance are the most important features to restaurateurs.
  • EMV integration is least important to restaurateurs.
  • For quick service restaurants, online ordering is the #1 most important feature.

Analysis

What is the #1 feature restaurants want and need? Inventory management. In this question, we asked restaurateurs to rank these top features from 1-10. Overwhelmingly, the consensus was that restaurants want to be able to engineer their menu based on their food cost percentage, variance, and other factors. They want to be able to know whether they're paying too much for an item that isn't very profitable, or whether they should order more hamburgers because they're so popular. Online ordering and PCI compliance, features focused on customer convenience and security respectively, were #2 and #3 in our poll. EMV compliance, however, ranked last, either because restaurant operators think their chances of fraud are low, or because they're simply not thinking about it yet. 

ron-ruggles
Ron Ruggless
 
Southwest Bureau Chief
Nation’s Restaurant News 

“I’m certainly no seer, but I expect some restaurant brand to come up with a use for beacon technology. I get notifications when I’m near a Starbucks now, but I expect some foodservice provider to crack the code and send me messages on my smartphone that are appealing enough that I’m willing to walk a few extra steps to take advantage of it.

And I bet not too far out, the technology will provide messages aimed directly at me from digital menu boards and even, in the case of some innovators like in-store music customizing apps, perhaps from the music systems.” 

Click here for more from Ron Ruggles on restaurant industry trends 

Final Analysis

Two main findings stand out: half of restaurateurs are currently paying for 2-5 technology systems, and more than half of restaurateurs need "advanced functionality" and "ease of use" in order to upgrade. 73% are planning to upgrade within the year.

Restaurant technology adoption is a growing trend among restaurateurs. As more and more embrace software and hardware in their restaurant, there will be more restaurant trends to track. 

That's why we'll be producing this report every year, tracking variance across restaurant operators' answers. Subscribe to our blog for future updates

In 2016, think about where your restaurant fits in. Are you considering new restaurant technology? If so, fill out the form below to learn about Toast.