The COVID-19 pandemic drives digital revolution in the restaurant industry


The pandemic has ushered in a digital revolution, driving consumers to rapidly adopt new virtual behaviours and dramatically increase their use of online channels, and the restaurant industry has been no exception. Like many other pandemic-driven trends, COVID-19 accelerated an existing movement towards digital ordering. Research from Toronto-based NDP Group indicates digital ordering doubled in 2020 and grew by another 30 per cent in 2021, according to industry analyst Vince Sgabellone. “[Digital ordering] went from representing five per cent of all restaurant orders to about 15 per cent,” he says.

This significant growth can in part be attributed to the widespread appeal of digital ordering, says Ryan Rickard, senior manager, Human Capital Consulting and National Restaurant Sector Leader for Deloitte. “The adoption cut across demographics that we would have assumed, prior to the pandemic, weren’t interested or comfortable ordering using the online route,” she says, noting the need for social distancing motivated consumers of all ages to experiment with using digital platforms and apps for ordering.

“The early adopters were the tech-savvy consumers and they tend to be the youngest consumers,” explains Sgabellone, “but every cohort has jumped onto the digital revolution now.” He adds that although younger demographics still dominate the digital food-ordering space, consumers 45 years and older are its fastest-growing cohort.

He says while the NPD Group’s forecasting team predicts there may be a dip in digital ordering as diners feel more comfortable returning to in-person dining in the coming months, the overall trend towards digital ordering is here to stay.

“[Consumers] have started to like it,” says Rickard of digital ordering. “The convenience and getting used to that seamless [ordering experience] is very much a factor.”

Sgabellone says convenience is the driver behind the digital ordering of coffee and breakfast items, which are over-represented compared to other meals.

Jacob Mancini, AVP, Restaurants & Breweries at CWB Franchise Finance, says operators need only look to some of the major restaurant brands to see digital platforms represent the way of the future for consumers.

For example, according to its 2020 annual report, Restaurant Brands International Inc. (RBI), the parent company of Tim Hortons and Burger King, invested significantly in building its e-commerce platforms. “You’re seeing a lot of brands make investment decisions based on technology,” says Mancini. “They see the value.”

Pushing Perks
Many big players are focused on improving loyalty-program perks for app users and adding new digital dimensions to their brands. Tim Hortons recently announced that for its 2022 Roll-Up-To-Win campaign, customers will reveal their prizes via the Tim Hortons app or the campaign website; while Starbucks Canada recently launched a new loyalty partnership with Aeroplan, which will allow customers to earn points for both brands via its app; and McDonald’s Canada rolled out a new loyalty program in November 2021 for its app users.

A report from Euromonitor suggests that 31 per cent of global digital consumers do not believe the loyalty rewards they earn are valuable, predicting that loyalty programs will evolve from simple points to more personalized experiences.

Samir Zabaneh, CEO of Toronto-based TouchBistro, agrees that personalization and convenience are both essential to attracting the new generation of digital consumers. “I [as a consumer] want to be remembered,” he says, explaining the importance of digital-ordering systems that can save key customer information, such as their most recent food order, while also protecting their personal data. “I want what I ordered to be on file so it makes my future interaction with the restaurant easier,” he says.

Zabaneh notes that this “customer memory” is a feature that third-party delivery apps offer, which restaurants need to match if they want to convert digital diners to their own ordering platforms and save on paying fees to third-party providers.

“Some generations are more fluent in third-party apps and like the variety, but that shouldn’t hold restaurants back from investing in their own platform,” says Deloitte’s Rickard. “I think the differentiating factor is how usable is whatever platform you’re using? How frictionless is that experience that you’re creating?”

Sgabellone stresses that whether operators opt to invest in their own digital platforms or join the platforms of third-party providers, it’s important to consider how their brand is perceived by consumers in either space. “Do you want to offer your full menu for delivery and takeout on your digital platform? Maybe or maybe not depending on what your menu is like. Make those decisions so that you are well-represented,” he says, adding restaurants need to think about the fundamentals of their digital platforms, such as how easy it is to navigate their online menus.

“In a traditional restaurant, physical storefronts are essential to raise brand awareness and provide a hospitality experience to customers,” says Adam Armeland, co-founder and CEO of Kitchen Hub, a virtual food hall that allows diners to place a single takeout order for items from multiple restaurants.

“The biggest challenge, and opportunity, that Kitchen Hub and our restaurant partners face is figuring out how to provide the same hospitality that the consumer has come to know and love in the restaurant’s brick-and-mortar location,” continues Armeland.

Mancini suggests that operators need to move beyond the old-school belief that hospitality and digital ordering are mutually exclusive in order to appeal to online consumers. “Whatever sort of service you provide in a real-life space, provide in the virtual world as well,” says Sgabellone. “What makes you unique? What makes you effective in your physical restaurant? Figure out how to translate that into the digital space.”

While mastering the art of digital hospitality is not without its challenges, Rickard says there are also reasons for operators to feel optimistic about connecting with customers through these new mediums.

“It allows you to know yourself better and know your user better because of that rich data that comes through engagement on these channels. Extending the experience past your brick-and-mortar outlets and having somebody be able to get a sense of your restaurant online allows you to create more of a following,” she says. “It’s an opportunity for restaurants to double down on. It’s an exciting opportunity to come out of a fairly unfortunate couple of years.”

By Jessica Huras

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