When the global pandemic took hold a year-plus ago, fast-casual restaurants found themselves at a distinct disadvantage to quick-service chains that already had significant infrastructure in place for both pickup and delivery. Suddenly, the demand for pickup and delivery increased almost overnight. In general, the restaurants that pivoted quickly to off-premises dining and had a strong online or app presence did well because they were able to build up customer trust and reliability in those early months of the pandemic. Cognizant data indicates that pre-pandemic, about 5–9 percent of orders at fast-casual dining restaurants were pickup/delivery, and today they are hovering around 30–50 percent. Those who quickly adopted curbside as a solution, adjusted their in-premise fixed costs and saw profit margins soar, too.
If there were any doubts about digitization being essential to future success, the pandemic put those to rest. Industry experts agree the way people interact with restaurants is going to be forever changed. According to the National Restaurant Association, takeout and delivery are now critical revenue streams for food services businesses. These revenue streams are expected to account for 80 percent of industry growth by 2025.
There are four key ingredients in the post-pandemic era that will play an essential role in the success of restaurants that have been traditionally dine-in establishments.
Ingredient 1: Flexible suppliers with robust delivery models
The onset of COVID-19 created a huge shift in demand for food, disrupting the supply chain as we know it. Specifically, restaurants saw a 70–80 percent decrease in demand while grocery demand spiked by 40–50 percent. As things gradually opened up over time and restaurants figured out creative ways to serve their customers, we saw a plateau. Another factor was the constant threat of new shutdowns when cases would spike. As a foodservice establishment, it became imperative to have suppliers whose systems were capable of balancing the changing needs of grocery stores and restaurants to minimize waste while ensuring they were still able to fulfill customer orders.
In instances like this, automation and analytics are essential for things like predicting demand (think bulk versus retail packaging) and optimizing delivery routes. In fact, a large beverage distribution company worked with an IT operations consultant to do exactly this to last summer. By implementing a digital system based on intelligent process automation, which incorporates the use of robotics, they were able to adjust their fulfillment to respond to real-time changes, while minimizing impact to their operating costs. This flexibility proved invaluable and serves as a lifeline to continue delivering the experience customers want in a time when loyalties are being tested—and every customer counts even more than ever before.
Ingredient 2: Intuitive online ordering
While some fast casual chains had already rolled out apps or online ordering platforms, they were not pressure-tested prior to the pandemic. When it became apparent that we were in a “new normal” relative to eating out, we saw a scramble among these establishments to roll out online ordering. This didn’t always go smoothly. One dining chain updated their online platform too quickly, only to realize that they hadn’t included enough customization or correctly priced out available options. Working with a digital operations partner, they were able to find the right balance and implement the ability to make real-time changes to menus and pricing. Going forward, fast casual restaurants will have two locations: their virtual one and their physical one. And they will play equally important roles—especially when it comes to customer satisfaction and loyalty.
Ingredient 3: Personalization
It might seem contradictory that contactless service and personalization go hand-in-hand, but in fact, this is the case. When consumers found themselves suddenly isolated from places of social gathering, it was comforting to be able to see their local restaurants open and welcoming them back, even if from a distance. Engagement through offers, social media and loyalty programs were important before, and they will play an even more important role in the future of dining out. The key is that all these pieces must work together across a connected digital ecosystem to provide a holistic view of the customer. Using data and analytics, one pizza restaurant set up a centralized order management function which captured important data across the ordering journey and then develop intelligent, automated offers and upsells based on that information. The results? A 10–15 percent increase in average check size.
Ingredient 4: Embrace Digital
Data has a role to play that extends well beyond personalization. Implementing the right systems offers the opportunity to create a competitive advantage as customer preferences and behaviors continue evolving as we enter the recovery phase of the pandemic.
One fast casual chain used its customer analytics to correctly predict trends and the next big product innovation. Using these real-time analytics, they are able to stay informed about how products and offers are performing and make adjustments to further increase the bottom line. This smart automation allows a business to stay ahead of the curve and one step ahead of the competition.
Another fast casual restaurant optimized their finance and accounting processes by developing bots (digital workers) to eliminate the manual work and improve the cash flow. They were able to pay their operators/ vendors faster, capture volume discounts while reducing their cost on F&A functions.
End-to-end digitization is the secret sauce that makes the ingredients work together. It helps future-proof a business and make it more agile because up-to-the-minute information is at management’s fingertips—making operations highly efficient and built on a flexible infrastructure that scales. In a tight margin business, finding these efficiencies can mean the difference between surviving and thriving.
Companies who embrace all of these ingredients will have the infrastructure to not only pivot and innovate in the future, but they’ll also be able to stay current and connected to a dynamic customer base who values businesses that understand their needs. The winners are finding new ways to do what successful food service establishments have always done throughout history: create fabulous experiences their customers can depend on, over and over again.
Sandeep Bhasin is Cognizant’s North America Head of Digital Business Operations for Retail, Consumer goods, Travel and Hospitality. This practice provides services to a number of Fortune 500 companies, managing millions of customer service interactions and billions in sales transactions every month. Sandeep has deep experience in enabling platforms and leveraging partnerships along with operations to drive efficiencies both in a B2B and B2C environment. He also has extensive experience setting up centralized operations, deploying innovative technology solutions (Automation/AI/ML/ Analytics) and leading complex customer experience transformation programs across industry segments.