Technology and revenue

Author: Carmen Mallo.

Restaurants aren't different from any other business when it comes to the competitiveness of their market. If so, restaurants find it harder to sustain a long life of profits and steadiness. A restaurant's life is rocky and offers many challenges as it relies on customer preferences and behaviours, high costs, and complex working conditions.

As we enter 2022, the state of the restaurant market is still uncertain and remains fiercely competitive. Periods of disruption often create the perfect setting for invention and improvement. With the pandemic obstructing the hospitality industry's vision for the future, that time appears to have arrived for some companies.

Nevertheless, it is pretty easy to read everywhere; restaurants need to transform, adapt and become stronger. But that is hard as it requires a complete change in the organisation's mindset and new tools to help with it.

Technology

What do we mean by technology?

QR codes, fast payment, a more ingenious reservation system, an integrated POS, a highly-responsive website with the most optimal search engine, Wifi, a perfect partnership with third parties, a loyalty program, a forecasting tool. It is also a CRM that reads demand and triggers campaigns automatically, a device that orders the right amount of food, drinks and equipment for you, an automated rota system that read future needs and plans the rota for you and so on.

This technology is fantastic if you know how to integrate it with the people in your company, the demand and the suppliers. Having the latest technology will not guarantee success if it is not used correctly. On the other hand, it will rapidly add up to your monthly fees and increase your financial responsibilities for no reason.

Resolving this involves dedicating some time to check what each piece brings to your organisation.

QR codes

Most restaurants have this option available for users; however, a customer will not stop going to your restaurant if you do not offer QR code services as long as your menus are clean, updated and easy to read.

QR codes are designed to make the experience seamless and facilitate the user experience. If your Wifi is not fast and the QR codes are not working as intended, get rid of them until you enable a better experience.

Fast payment

Companies like Sunday currently offer a faster payment experience by using QR codes. Again, this can help your restaurant turn tables faster and reduce the payment time. On the other hand, it can create a cold environment and add more stress to your staff, that need to check if the payment went through constantly.

Reservation systems

Yes, they were and are fundamental for your restaurant- They help you forecast better, prepare for service and learn about your guests.

A reservation system integrated with a POS is the most potent data source a restaurant can have. 

Nowadays, investing in an integrated reservation system should become a priority for every restaurant. Some reservations systems come with marketing tools integrated that could be a solid option to have everything in one platform.

Website

Yes. Your website is your presentation letter. Prioritise this above any other marketing activities. Your website is your CV, your brand, your image, where the customer journey mostly begins. Have easy access to your website everywhere, show the most up-to-date content and invest in your SEO.

CRM

A CRM is designed to pull all the commercial information from different data sources and present it back to you in a readable, insightful and actionable way. Marketers mostly use it to understand customer behaviours and send targeted ads. If it does not deliver on this, do not go for it.

Ask yourself the questions: Who in my organisation will be using this data? Is it accurate and actionable information? Your restaurant does not need a fancy CRM to create more harm than benefits. 

Instead, use your resources to hire a proper data analyst that can read and aggregate the data for you.

Wifi

Good Wifi is a must. There is not much to say about this. Shop around for different providers and what integrations they offer.

Third parties

Choosing the right platforms to sell your tables is one of the most important jobs any restaurant needs to consider carefully.  

You can only sell your restaurant if you are advertised in the proper channels, at the right time and for the right price.

The ideal scenario for every restaurant is to get their tables booked via their website with no fee associated. Unfortunately, this is far from reality. Marketplaces are popular as they facilitate the customer to compare different options and often offer rewards when you book via them.

Instead of cutting them down, negotiate better pricing and continue improving your visibility organically. 

Loyalty programme

This is a tricky one. A loyalty programme is designed to reward users for their loyalty and regularly bring them back to the business.

Creating a loyalty scheme is a big step as it can fail and damage your brand reputation quickly.

"A rewards program can accelerate the loyalty life cycle. But only if it is planned and implemented as part of a larger loyalty-management strategy. The goal must be to develop a system through which customers are continually educated about the rewards of loyalty and motivated to earn them. Achieving sustainable commitment, measured in years, requires a sustainable strategic approach."

Before creating a loyalty programme is essential to understand the whys.

These whys have to be fully embraced by the entire organisation.

hbr.org/1995/05/do-rewards-really-create-loyalty

For example:

We are building a loyalty programme to reward our regulars and increase their visits five times more a year. 

Or

We are building a loyalty programme to retain undecisive customers that only visit us three times a year.

Do not build a loyalty programme if you do not understand your customer base or if your level of regulars is too low.

You can start engaging with your regulars and rewarding them differently without being part of a scheme. Then you can evaluate the response before jumping ahead.

Forecast

Forecast accuracy is difficult to achieve, but it can help your restaurant save money and plan accordingly. Forecasting properly relies on understanding the market demand, weather, events, and competition to predict what will happen.

A deep understanding of your reservation patterns is vital to forecast appropriately. Your reservation system can help you with that.

Why do restaurants need revenue managers?

Revenue management is not an abstract concept at all. It is a field occupied by thousands of professionals who spend their time generating significant revenues for their organisations.

They are in tune with the market trends, demand levels and inventory, so they know what to sell, at what price and when.

There is less advantage in looking at historical data to predict the near future. If you have worked in your current place for long enough, you have learnt that reservations patterns have changed from shorter to long to medium booking windows. Your online traffic through OTAs have most likely increased, and your reservations can jump from complete to empty in less than 24 hours. The history of your restaurant is relevant to learning how things worked before Covid, now how they are now. 

Post-Covid challenges are a current concern for the hospitality industry. While the main focus is on VAT, inflation and labour, many restaurants find it difficult to adapt to new demand patterns, technological changes, and market aggressivity. And it is the ability to navigate all of this from a holistic commercial angle will make some restaurants come out stronger.

Your strategy needs to match current circumstances, and if it is not evolving to a rapidly shifting market, you will get left behind. 

Revenue managers can help with that, not because they are superheroes but because they have the experience to connect the dots and deliver higher revenues. They can suggest marketing to work towards a different objective; they can offer a more aligned pricing strategy. Also, they can price the event spaces to generate more, run a forecast and advise on the best channel mix your restaurant need to get to maximise their revenues.

These tasks are often treated with no connection purpose and isolated. 

The marketing team might be creating campaigns when demand is high, and the books are full. The reservation team might push for more reservations when the restaurant does not have staff to meet their objective. The sales team are underselling the event spaces to meet the budget. The restaurant team is blocking tables as they think walk-ins will make more money.

Restaurants require strategic minds with a globalised purpose.

Maybe it is time to quit some of your not needed technology and hire a revenue manager instead:)