From operational necessity to strategic imperatives, it’s time to pay more than lip-service to payment innovation. As the battle to rebuild custom commences, the quick-service restaurant industry is arming up with new commerce tools as a central part of their recovery strategy.
While limited-service venues continue to recover lost revenue from COVID-19 disruption, their leaders are facing increasingly tough decisions about their tech investment.
Before COVID, the industry was predominantly cash-based. Many brands were reluctant to invest in innovative payments and data-commerce ahead of the curve. This meant that they lagged behind other retail sectors in terms of integrating physical, digital, and mobile channels and updating their payment systems.
And they are not alone. A recent study from J.P. Morgan and FreedomPay revealed that almost two in three (63 percent) of U.S. retail and hospitality leaders are dealing with issues around tech-investment direction, and where best to allocate resources—from POS and ecommerce platforms to data analysis and mobile apps.
COVID put payments into the spotlight.
When COVID hit, the C-suite had to respond fast finding new ways to innovate services, business models, and supply chains, integrating digital and opening the door to automated and self-service options, drive-thru, grab and go and curbside pick-up.
Their attitudes to payment changed overnight. Those already using contactless and QR codes were able to offer embedded and touchless customer services. QR codes allowed them to provide contactless service in closed table environments. Customers that didn’t want to use QR codes, could use contactless and mobile wallets for payment and receipts ensuring there was no physical contact with any device in the “grab and go,” self-serve or limited-service environments.
Restaurant Leaders have broadened their thinking around pay-tech.
Restaurants, food and drink outlets now recognize the importance of fast-tracking data-driven innovation. They also realize that commerce investment is crucial to surviving disruption and keeping touch-points future-ready.
New payment methods and strategies have reshaped customer-interactions and created new expectations in terms of speed and convenience. They are also allowing restaurants to capture even more data at the sales point and to feed this back into the business to enrich CRM and loyalty applications.
E-payments systems that use encryption and tokens (to aid PCI compliance and increase transaction security), bring the added benefit of allowing restaurants to recognize and track individual customer journeys. They enable loyalty value to be transportable across brands, locations, channels and even between other synergistic restaurant partners.
With data-commerce, quick-service restaurant businesses can move away from simply asking customers to sign up to a static loyalty or referral program. Instead, they can load it with more targeted and personalized incentives. And use automated loyalty enhancing processes to help reduce churn and make customer journeys and promotions more targeted and compelling.
They can also tap into the power of mobile apps. Making it really easy for people to pay, these also provide geolocation information such as where and when they’re dining and allow push notifications and vicinity alerts.
Leaders want accelerated return and greater value.
Many restaurants struggled with cash flow during 2020/21 and saw their financial buffers depleted. They now need to recoup any new investments much faster than ever before. For the C-suite, that means having access to better data and ROI metrics to support their decision-making. Investment value is being determined to a greater extent from better risk management, better utilization of frozen or weakened budgets and ability to overcome implementation barriers.
Restaurants are also increasingly buying-in hardware and software as a service to accommodate new business models, payments and data-applications faster. This may have something to do with the need to operate business functions and maintain services remotely through decentralized and shared resources.
Today, investment focus is moving beyond what competitors are doing and sales and revenue return, to what the customer needs and making in-venue and stock operations more efficient. Consequently, food outlets are hungry for more sophisticated tools to help them track demand and get closer to their customers.
How pay-tech providers can help.
But they can’t do it all on their own. Technology vendors will also have to contribute to re-energizing restaurants by supporting more flexible relationships within a broader ecosystem to drive ROI faster than ever before. Especially as attitudes to risk change, and restaurant businesses seek specialized tech-support from new disruptors and challengers.
They will also have to work even harder to secure business buy-in and investment by providing more tangible ‘customer-experience’ improvements, more compelling business use cases, and deeper, richer consultative services including compliance.
As COVID restrictions relax and consumer demand increases, the winners will be those quick-service brands whose C-suite have looked beyond pay-tech as a means of acceptance and embraced it as a strategic tool to differentiate and fuel customer acquisition and growth.
Doug Smith is the executive director at JP Morgan.