To perform an accurate assessment of their budget allocations, it’s important for professionals in the restaurant industry to have a firm grasp on spending trends. Hospitality Technology’s 2014 Restaurant Technology Study recently released a study that examined restaurant spending by speaking to restaurant owners and managers across all restaurant segments.
The good news? Point of sale (POS) and back-office systems are still king – they won’t be replaced by do-it-yourself tablet systems anytime soon. The consensus of the study was that although IT budgets are increasing, restaurants are “still more comfortable being business innovators than technology innovators” as Hospitality Technology put it.
Here are some key findings about restaurant POS spending in 2014:
1. IT spending increased over the last year.
The study found that restaurants of all types, including quick service, casual and fine dining, plan to raise their IT budgets this year. The study’s respondents also reported that they expect to continue to increase their IT budgets through 2016. Some of them were heavy hitters – spending 10 percent or more of their annual revenue on technology. The report stated that although this group was small, it could be growing.
2. Restaurants are still facing challenges regarding IT spending.
However, although most restaurants are increasing their IT budgets and some are spending more on technology, they are still facing a few challenges. Respondents said their biggest challenge is that budgets are insufficient to meet growing demands for technology, especially allocating their IT budgets for research and development (R&D) and innovation.
3. Restaurants are still spending much of their budgets on operational expenditures.
Upon learning that IT budgets are increasing, one might guess that it’s to experiment with one of the many innovations on the market today. That isn’t the case. The study shows that the majority (63 percent) of respondents’ IT spending is reserved for operational expenditures like licensing, storage, hardware maintenance, subscription fees for software-as-a-service (SaaS) and cloud computing. Thirty-three percent is spent on point of sale (POS) and back-office solutions.
4. Restaurants aren’t spending as much as they would like on innovation.
The study explained that restaurants are stuck spending too much on overhead costs, which account for more than half of their current budgets. In a comparison of their ideal budget distributions and their current budget distributions, many said they would like to spend less on maintaining their current technology and more on new technology. If they could choose, their ideal budget allocation would be half maintenance and half roll-outs and R&D.
5. Restaurants are still primarily concerned with business efficiency.
In the past, restaurants have used technology as a response, or a means to solve their existing operations. The study suggests that this is still the case, rather than implementing new technology to meet consumer demands, for example. Respondents said their most common drivers for implementing restaurant technology were business efficiency (68 percent), with employee productivity and customer engagement/loyalty coming in second and third. This sentiment is also evident in the fact that restaurants are still spending much of their budget on POS, back-office systems and overhead costs.
6. Why customer engagement tools are worth the risk
Although restaurants face these challenges when implementing new and innovative technology, it is worth it for them to consider that there are many cost-effective customer engagement tools that won’t pose a threat to their IT budget. POS may still be king, but that doesn’t mean restaurants can’t enhance their POS capabilities by integrating technology like mobile POS and self-service kiosks – these technologies can actually bring in more revenue by streamlining service and improving customer satisfaction.
Not to mention, the inability or refusal to do these could result in loss of revenue. According to Parature research, points out that poor customer service caused businesses to lose an estimated $83 million last year. Similar research from Technomic found that customers want new technology integrated into their restaurant experiences, especially if it will speed up service.
When it comes time to allocate your IT budget, what will be “worth it” to you?
