The Fear and Promise of Mobile Technology

The opportunities are impossible to miss. But what will it take?

April 2019 Danny Klein

Mobile technology first took over our lives. Now, it’s becoming one of the most disruptive business opportunities to hit the hospitality space in recent memory. In the case of restaurants, it’s shifted everything from point of sale to inventory management to training, customer loyalty, audits, and much more. It’s a window into the day-to-day running of a restaurant multi-unit operators couldn’t have dreamed of before. It’s also streamlining operations and helping managers connect and direct employees with real-time results.

Oracle released a study Tuesday aimed at measuring the impact of widespread adoption of mobile technologies in the restaurant space. They surveyed 279 leaders within the F&B industry about their brand’s use of mobile technology, their relationship to mobile innovation, and their readiness to continue to embrace the outlet while facing a constant threat of disruption.

“The rise of mobile ordering and on-demand food delivery services are completely changing the restaurant and guest experience,” said Simon de Montfort Walker, senior vice president and general manager for Oracle Food and Beverage, in a statement. “In order to remain relevant to a rapidly evolving audience, restaurants must act quickly to modernize their mobile strategy and offerings. Today, the experience a customer has ordering online or from a kiosk can be just as essential as if they were ordering in the store.”

Here’s an overview of what they found:

84 percent of respondents saw business improvements when they launched a branded mobile app.
93 percent believe their mobile investment promotes loyalty and drives repeat business.
89 percent believe their mobile strategy will drive sales growth.
84 percent believe it reduces their labor costs.
96 percent believe mobile will save time and money on back-end functions.
35 percent are confident in their ability to prepare for a mobile tomorrow while meeting the demands of their customers today.

Oracle

Obviously, the cliff drop on the final question jumps out. Restaurants are driven by anxiety over the future. A fear of failure, so to speak. Yet, clearly, they understand and recognize the value of mobile technology. But asking a restaurateur to worry about next week when they’re trying to survive the next hour is tough. This is more likely a concern of independents and smaller operators who don’t have corporate staff dedicated to digital initiatives. The independent restaurateur has a plate full of problems without tossing future mobile planning into the mix. True to the notion, 45 percent of Oracle’s respondents identified as full-service operators. Fast casual and quick service represented 24 percent and 23 percent of responses, respectively. (Theme park, stadium, and other providers rounded out the responses with 8percent, while 71 percent of respondents were director level or higher, with 45 percent answering from companies that generate more than $500 million in annual revenue).

Why it matters

Increasing customer expectations are putting added stress on operators. Mobile abilities, meanwhile, offer immediate guest benefits such as seamless payments, easy ordering and delivery, faster service, and visibility to the process every step of the way.

Restaurants can reach new customers, access new options for off-premises, and offer low-pressure opportunities for upselling.

Oracle’s data found that restaurants feel weighed down by the threat of disruption from more consumer-centric competitors and were concerned they weren’t investing enough to keep pace.

The company asked respondents to rate their strategy against 22 factors of mobile maturity, measuring their impact across both their current ability to deliver outstanding guest experiences and their preparedness for the future.

What it showed: 35 percent were confident in both their ability to prepare for a mobile tomorrow while meeting the demands of their customers today. That’s 65 percent of restaurants that aren’t sure what’s coming next.

13 percent said their team is ready for tomorrow, but still struggle with their current ability to deliver outstanding guest experiences
25 percent represented “mobile laggards,” or reported the least mobile maturity, expressing doubt in both their ability to delivery today and their plan for the future.
27 percent said they are “plateaued.” They’re confident in their current approach but aren’t ready for tomorrow necessarily.

Oracle

Disrupt and divide

Restaurants, understandably, expressed concern over competitors’ digital efforts. It’s difficult to keep up when there’s no finish line in sight.

62 percent of respondents said they had doubts over their ability to keep up, with 18 percent in strong agreement that they were not investing quickly enough to keep pace with the speed of mobile technology change.
59 percent agreed that their company faces the threat of disruption from more mobile-enabled competitors.

These fears surfaced despite some strong scores on organization readiness questions, Oracle said, which indicates that restaurant owners are optimistic that investment in mobile will increase sales and save them time and money. They see the benefits and feel intense pressure to invest in the right mobile technology to remain on the front foot.

Reasons to invest

Oracle asked, on a scale of 1 to 6 (6 being the most agreement), why restaurants are bullish on investing in mobile.

Cost reduction: Expanding mobile capabilities for managing inventory in restaurants will save the company time and money. Average score: 5.05

Repeat business: Guest-facing mobile applications promote loyalty to the brand and drive repeat business. Average score: 4.95.

Brand loyalty: Restaurants expect their future investment in additional mobile capabilities will improve guest experience and increase customer loyalty. Average score: 4.93.

On the note of using mobile inventory management and using guest-facing mobile applications to promote brand loyalty and drive repeat business, Oracle said this shift could signal a change in approach. Instead of targeting granular improvements in speed of service or ticket averages individually, executives are taking a more holistic view. These large-scale improvements have the potential to make larger shifts in the bottom line than the point-of-service efficiency models seen before.

One example: 96 percent agreed that expanded mobile inventory management would drive time and money savings, and 40 percent strongly agreed with the sentiment.

Oracle

Some other numbers:

95 percent agree that future investments in mobile will improve guest experience and loyalty.
89 percent saw big opportunities for growth in ticket averages from mobile through better cross-selling and upselling. In-app recommendations can be key.
82 percent agree that delivery services, like DoorDash, UberEats, Postmates, and Grubhub, will help grow their business. Third-party delivery platforms help operators expand but restaurants may risk losing their brand identify and customers to these companies if they become too reliant on them.

Per Oracle: “The industry-wide embrace of these third-party delivery partners raises a few questions. One wonders if food and beverage executives are ignoring unexpected risks, like shrinking profit margins, shifting customer loyalty, or even decreased speed of service for consumers who are choosing to dine in.”

In sum

Restaurants have the chance to apply mobile innovation to basic problems of supply and demand. That’s the big picture. How can brands become inventory efficient, attract new customers, serve them more efficiently, and keep them coming back?

Mobile solutions, if they’re not already, will likely be a cornerstone of F&B operations for brands of all sizes, in all markets. It can help operators satisfy guests as well as improve back-office management.

Integrated mobile inventory management is a key indicator of mobile maturity, Oracle said. Integrating guest service and inventory management on the same device allows restaurants to streamline processes, integrate front- and back-of-the-house functions, and boost the return on investment of their mobile utilization.

As always, let customer experience guide the strategy. The fear that restaurants are being outpaced by competitors can be alleviated by allowing guests, through loyalty and dine-in business, to direct mobile initiatives. Use mobile and technology to enhance customer service, not replace an essential human element. In the case of delivery, investment in mobile should be there to support delivery experience, not the other way around.

Cautiously embrace partnerships with mobile-first startups, Oracle said. The aggregator relationships can provide exposure to new customers, but there remains potential risk in shrinking profit margins and shifting customer allegiances. Hold on to that brand value at all costs.