Technology is advancing more rapidly now than it ever has in the past. For example, it took 2.4 million years for our ancestors to control fire but only 66 years from the very first flight to humans landing on the moon. Even if we compare the last 50 years; our grandparents had no Netflix, no mobile phones, nowhere near the advanced Artificial intelligence - that we have now. Times are changing, for private use and business use alike, and in the coming years, technology is going to have an even bigger seat at the table in the foodservice industry - just like every other industry.
Digitalization is revolutionizing the foodservice industry in many ways. It enhances efficiency, customer experiences and of course, profitability. Tools such as inventory management software and POS systems optimize processes and reduce errors. Online ordering by mobile app or computer and giving reviews transforms the customer experience and helps the foodservice business in personalizing each experience for every customer.
The growth in foodservice technology is also evidenced in research. For instance, one study shows that 52 per cent of restaurant operators plan to use back office technology (finance, payroll etc.) in 2024. According to a report by Statista, the global restaurant technology market is predicted to grow to 270 billion pounds by 2027 – i.e. the technological revolution is here to stay.
This article will be exploring:
Food ordering, menu planning, where to eat… Everything to do with food is going digital.
Smartphone access in particular is becoming an integral part of the customer experience. One in three consumers say that they check their phone when within five minutes of waking up and one in five check their phone 50 times a day. The role that the smartphone plays in people’s lives (particularly younger people) is bigger than ever. In the foodservice industry, this can be seen by this generation getting ideas and recommendations from social media influencers, vloggers, bloggers.
An aesthetically pleasing social media presence is becoming vital as food becomes “instagrammable” and, for a foodservice business, it is a smart marketing technique for promoting dishes and venues. Food has become a huge part of social media platforms such as Instagram, facebook and in recent years tiktok.
Businesses internet presence is just one click away and if the food is not mouth-wateringly delicious looking, consumers will pass over it for something else.
Information on health and nutrition is also easily accessible to consumers through the internet, therefore it is important to have food adhere to health standards. There are many hashtags on social media that allow the consumer to learn about different cuisines from around the world and, the most popular tags (and the most aesthetically pleasing) foods from restaurants appear first, therefore it is worth investing in presentation.
The accessibility of food has also changed. Food delivery services like JustEat and Deliveroo have a huge client base and the phrase “fast food” has become literal. Now, it is possible to choose the food from a range of different restaurants, choose the exact food you want, and get it delivered in as little as 25 minutes. This speed and convenience has increased in recent years and more and more restaurants are now offering the option for food delivery to cater to this huge demand.
There are many virtual restaurants now that allow delivery-only kitchens to serve a huge consumer base and garner high profits. Ambiance and experience are becoming less and less important as consumers are prioritizing convenience and speed.
Labour shortages have been forefront in the foodservice industry for years. The high turnover of staff means that at times, there may be longer wait times to be seated and more work for the staff - to compensate for the understaffing. Labour shortages have always been an issue for restaurants, but technology is increasingly being used to combat this problem.
1. POS System:
- These systems monitor the inventory and sales closely, and provide data insights to keep track of food waste.
2. Contactless payments in restaurants (ie. Using a bank card or a phone):
- These can reduce the need for physical interaction between customers and staff. It is also faster and more efficient. This system is so effective that some businesses no longer accept cash.
3. Automated payroll in restaurants:
- Allows them to reduce admin costs and restructure employee management. Whereas manually calculating payroll can be prone to human error and inaccuracy, using payroll software is a more adept and accurate way of calculating payroll. It is also less time consuming and less staff are needed to use the software. It is crucial for avoiding errors such as overpayments or underpayments.
4. Shift scheduling software:
- This is now available and readily used by many in the foodservice sector. It enables management to track employee availability and creating work schedules. Managers can also easily switch shifts to optimize labour costs.
Originating in the 1990s, food delivery has been around for a while. While just starting as an over-the-phone process, wherein a customer would phone their local pizza place, the introduction of the internet changed everything. Suddenly digital food delivery was an option.
Since the 2010s, the range of food being offered for delivery has expanded greatly. Platforms such as Deliveroo, Ubereats and JustEat made it easier than ever to dine in and eat your meal without leaving the comfort of your house. These delivery apps also made it easy to pay - offering different methods such as debit/credit cards, cash upon delivery and digital wallets.
They offer loyalty programs and often different offers on take out. You can also rate and review helping others to make informed choices.
On many of these platforms there is real-time tracking. For instance, if ordering food on JustEat, once ordered, it tracks the food from making the order to its delivery. There is even a map that informs the customer of how close the delivery is to their house.
· Convenience: the obvious one. The customers don’t have to leave their home in order to get food from their favourite restaurants. This means, if they are just off work in the evening and don’t feel like making the trek in the rain, they can enjoy their food in the comfort of their own homes.
· There is a wider reach: food apps allow customers to order food that may not be in their immediate vicinity allowing them to try different foods.
· Customization: the food apps are detailed and can allow for different dietary preferences and specific ingredients/types of food and allergies. They usually also have a box for any additional comments before making their order.
· Environmental Impact: there is a focus on sustainability on food apps much as some other food services, they now offer eco-friendly packaging options and promote sustainable restaurants. This allows environmentally conscious customers feel more comfortable ordering.
1. Affiliating with food delivery apps gives them a broader reach
- Food delivery apps give restaurants visibility and promotion which is particularly useful for smaller restaurants looking to increase their custom. It is essentially advertising. Having an online presence makes it easier for customers to discover them.
2. An increase in sales:
- The online presence can lead to a huge increase in orders and sales and revenue from the restaurant. There can also be upselling by the apps – a promotion of certain foods or drinks. The apps sometimes do meal deals such as “1 medium pizza, one side and one drink for x amount of euro”. Joining a third party app can even increase your restaurant sales by up to 30 per cent.
- For smaller businesses, this can be revolutionizing, as they may not have the resources for their own marketing campaigns.
3. Saves on labour
- They often provide their own delivery driver which is useful in cutting back costs as you don’t have to hire and manage delivery staff. You can use this money to focus on what matters most; making delicious food. .
4. Access to data and analytics
- Food Delivery apps can highlight the products that are best sellers and customer preferences. The restaurant can then use this insight to promote certain products and revitalize their menus.
5. Real time order tracking
- Where the app provides live updates as to where your food is, (many times including a map), this means fewer customer queries and higher customer satisfaction.
Delivery, although already widespread, boomed during the Covid Pandemic. Third Party Delivery apps such as Ubereats and Doordash, more than doubled their business. No one could leave their homes… But they still wanted delicious food so they turned to their smartphone or computer. The top 4 food delivery apps brought in a combined revenue of 5.5 billion dollars.
A third party delivery platform is a company that partners with restaurants for an online marketplace that customers can easily navigate. The marketplace allows the customers to see menus from different restaurants nearby, choose the meals and ingredients (allowing for dietary preferences and allergies), place their orders and pay. The food is then delivered to their homes in a reasonable timeframe (varies depending on the restaurant and the time of day).
In Ireland and the U.K, Deliveroo and JustEat are the dominant marketplace platforms for food delivery.
In the US, a study showed that 111 million people use food delivery apps. Another study showed that 63 per cent of adults aged 18-29 have used a third party food delivery service. The global food delivery service, was sized at 2647 billion in 2023 and is predicted to reach more than 5400 billion by 2030.
A Point of Sale (or Point of Purchase) system is widely used in the hospitality business and retail to complete and manage sales transactions. It includes hardware (cash register) and software that allows businesses to track payments, process purchases and to manage inventory.
Essentially it is the system of collecting details of a sale when an item is scanned. It calculates the total due then facilitates payment. Nowadays, POS systems can allow for customers to pay contactless by scanning their credit card or make a phone payment and cash payments.
After receiving payment, the business or merchant usually issues a receipt for the transaction which documents the details of the transaction (ie. Product, time/date, price etc. )
Different tools may be used to calculate the payment owed such as weighing scales (example: fruits/vegetables), or barcode scanners. Usually, cash payments are also allowed. Cash payments can be made by inserting bills or coins in the machine when prompted. Card payments are usually swiped, inserted or tapped at the place of request. The POS system connects to the card holders bank where they check if there is enough funds to clear the transaction and confirms the transaction.
POS systems in hotels and restaurants can have different features also such as allowing customers to split the items between them (by payment machine) or by splitting a bill and paying via different methods
Modern POS systems used in restaurants also allow servers to input customer orders into a computer, that automatically sends the orders to the kitchen. This lessens the workload on the servers and speeds up the service. It also minimizes human error.
Advanced POS can also offer real time sales tracking and CRM (customer relationship management) to make restaurant management make data-driven decisions.
Inventory management is being aware of the amount of inventory (stock and supplies) that will be needed for your business to run smoothly in a certain time period. It’s important when managing perishable items for your kitchen. It is important to have enough inventory for a time period, but also to not have too much inventory for a time period (this could eat into profitability).
POS system can track inventory in real-time. Example: in hotels, a POS system can help you keep track of stock levels of office supplies and cleaning services and even food and beverages. It can ensure that your stock never goes below a certain level without the owner or management being aware, alerts can even be set for when stock gets too low. There is a reporting function of POS which keeps track of how frequently orders are placed and how often you should order supplies.
By tracking the inventory closely with a POS system, it can reduce theft - especially in hotels. It can alert the manager to any inconsistencies in stock compared with similar hotels. They can then take steps to prevent and control the situation.
Because the POS system manages the supply chain, this means that you do not have to hire someone to do this. You can appoint a manager or other employee to oversee it as it will not be as time consuming.
POS can also help you build a better relationship with your customers; the data can give you insights into their personal preferences allowing for more personalization for their experience and it also builds better marketing plans.
They can also keep track of when employees clock in and out and they can even be used for scheduling. An example of this: is temp companies. They require an employee to use a “timesheet” to clock their hours every week. This is then signed off by a manager and sent to the temp agency. It is fast, accurate and efficient.
There are many types of POS systems – here are a few that are more relevant to the foodservice industry:
1. In store POS systems
- These are permanent machines in stores that track sales, purchases, inventory… Some of these are at checkout counters and can be in the form of a tablet attached to a stand. They have a barcode scanner and a payment machine that takes credit cards. (e.g cash register)
- Most common in cafes and dine in restaurants typically the least expensive option
2. Kiosk POS system
- Self-service payment; customers can pay themselves via touchscreen kiosks. Reduces wait time and reduces staff.
- Most common in: self service dining and restaurants tackling labour shortages
3. Cloud-based POS systems
- This type of system may not have all the features some of the others do, but it stores data in the cloud meaning it is accessible from anywhere. It consists of front end hardware such as a tablet, a mobile phone or some other internet device.
- This system is very convenient in the sense that you can use it anywhere at anytime. It is also cost effective as it doesn’t require training to use and is cheaper than some of the hardware.
- Most common in: restaurant
AI and automation are revolutionizing the foodservice industry. From chatbots handling customer queries to kitchen robots preparing meals, automation is enhancing efficiency and consistency. AI-driven predictive analytics also help restaurants anticipate demand, optimize inventory, and reduce waste.
It’s estimated that 80 per cent of restaurant interactions will soon be machine handled. In 2020, the global AI market for restaurants was valued at 112.2 million dollars. The market is expected to swell to 1.3 billion dollars by 2028. In a 2021 survey, 50 per cent of restaurants planned to use an AI enabled automation.
Chatbots and virtual assistants are commonplace on websites now; they handle reservations and personalized service. Social platforms are using AI for their algorithms which target advertising based on user behaviors.
Content creation tools such as ChatGPT are a game changer when it comes to marketing. These processors can generate everything from article ideas to content plans and are useful as a starting point for content aligned with your brand voice. The only caveat is that Google is becoming more aware of AI written articles and are now cracking down on AI content. Still, if even only used as a guideline whilst adding human creativity, it remains useful. In fact, almost all business owners (97 per cent) believe that ChatGPT will help their business.
AI can cut costs:
- It can be used to automate simple tasks (using POS or taking reservations) This saves cost on labour and overall.
- Reducing human error: when guests order with Artificial intelligence, it is more accurate and leaves less room for error
- Using AI can mean that your employees are free to do other tasks, like focusing on guests.
- The data that AI can gather can help personalize a guest experience and allow you to identify the types of customers and which types of food they love.
McDonald's, a fast-food giant, has been at the forefront of integrating AI to improve efficiency, enhance customer experience, and boost sales. In order to cater to its colossal customer base, it has done the following:
Results & Impact:
Conclusion:
McDonald’s successful AI integration showcases how the food service industry can leverage automation, predictive analytics, and personalization to enhance operations. AI is being used more and more and this case study will likely persuade more restaurants to follow Mcdonald’s example which will lead to the food service industry being a more efficient, data driven and customer focused industry.
Kitchens – the cornerstone of catering - have a huge impact on the environment. Food waste, energy consumption and other areas mean there are many opportunities for sustainability improvements. Smart kitchen technology plays a significant role in the sustainability of kitchens. It allows the kitchens to be more efficient whilst also being environmentally friendly.
There are energy-saving refrigerators and ovens that lessen energy consumption and there are intelligent sensors on devices that can minimize unnecessary energy consumption.
Low energy appliances, water-saving faucets and sinks and LED lighting can also increase sustainability.
Smart technology can become an important part of kitchen design, changing the way we cook and interact while reducing the ecological carbon footprint. The smart appliances now have features that minimize food waste such as: a smart fridge that has real time inventory management. There are built in cameras in the fridge that are connected to a smartphone app so that you can see how much stock you have. These refrigerators can also send sell by dates to your smartphone via app preventing food wastage.
Smart Appliances can also help homeowners keep track of off-peak electricity rates saving them money whilst also reducing their carbon footprint.
Despite its benefits, digitalization comes with challenges. The high cost of implementing new technology, cybersecurity risks, and the need for staff training can be barriers to adoption. Additionally, some customers still prefer traditional dining experiences, requiring a balance between digital and human interactions.
Cyber attacks are becoming a worrying issue in this digital revolution. Security is an issue in the foodservice industry. AI and Internet of things are connected and therefore are more at risk from hackers. Problems on one device can even spread to more connected devices and the whole network may be at risk.
In preparation for security implications, businesses should adopt secure technologies to reduce software vulnerabilities and employees should also be trained in prevention.
Data privacy may also become an issue. Personalized services rely on the storage and tracking of customer preferences and behaviour through digital technologies.
Customers are increasingly aware of their data privacy. As such, a transparent, strict and clear privacy policy, clarifying what data can be collected and shared, as well as who can own the data, is necessary.
Using digital technologies isn’t cheap. For small businesses, the cost may be significant, however digital technologies are so useful on the whole, that the investment would very likely pay off.
It is, however, essential for business’ to think about and prioritize the digital technologies that would most benefit their business.
There are some digital technologies on the cheaper side such as: digital menus which can be tested before the business commits to a larger investment in technology.
The actual cost of digital technology in the food service industry varies depending on business size and technology adoption. Basic POS systems range from 50-500 euros per month while self service kiosks can cost thousands each. Third party online ordering platforms can charge between 15 per cent to 30 per cent per order. Then there’s AI-powered tools, cybersecurity etc. that can range from 5000 euros annually for small business and up to 100,000 for very large business.
There is no doubt that it is an expensive venture, but it does enhance efficiency, improves experiences and boosts profitability to a large extent. Usually the digitalization of a company is beneficial on the whole and worth investing in be it for a business on the smaller side or on the larger side.
Technology is revolutionizing the foodservice industry improving efficiency, customer experience and overall profitability. From POS systems to automated kitchen solutions, businesses are leveraging innovative tools to streamline operations and meet customers demands. The initial investment in digitalization may be steep, but the pay offs – such as improved service speed, cost savings – make it worthwhile. As technology continues to evolve, embracing digital transformation will be essential for foodservice businesses to stay competitive and thrive in an increasingly digital world. By optimizing operations and delighting customers, digitalization is reshaping the industry!
Ciaran Kilbride is the CEO and Founder of Caterboss, Ireland's leading supplier of catering equipment. With years of experience in the food and hospitality industry, Ciaran established Caterboss in 2017 to provide high-quality, reliable equipment tailored to the needs of professional caterers. His commitment to innovation and customer service has helped Caterboss grow into a trusted name, known for anticipating industry trends and consistently meeting the needs of its clients.
