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FOH and “The Big Opportunity”

Our fingers are crossed that restaurant industry labor woes will eventually abate…

…but let’s discuss the potential application of technology as a cure for this unfortunate recurring malady.

To us, there may be no bigger opportunity than what’s currently happening in the front of house (FOH). While sleek-looking back of house (BOH) robots are grabbing most of the attention, we contend that FOH automation is much closer to reality. And because FOH represents roughly half of all retail jobs, it’s not exactly a de minimis part of a merchant’s operations.

For starters, customers are walking around with a FOH employee right in their pockets: a smartphone. Smartphone penetration is estimated to be 80% in the US and, largely due to COVID, more seniors than ever are comfortable with online ordering. A recent survey from CommerceHub shows that 49% of respondents over 50 who did not shop online said they
are likely to subscribe to a delivery service post-pandemic. So whether it’s a native app, progressive web app, QR code-to-menu interface, or all iterations in between, there’s no reason to avoid existing infrastructure as part of the customer convenience experience.

What’s important to note is that a customer making an order on their own device lowers the number of labor hours needed to fulfill the customer’s desire. Instead of a FOH employee, a customer can order from a piece of software that is always polite, always upsells, and can present visuals in a way an employee can’t. From our own data we see that the average ticket
from a mobile device is about 20% larger than an order keyed by an employee—and for self-service kiosks, the average order hike is closer to 30%!

Leveraging a consumer’s mobile device is a great opportunity in a lot of cases, but it doesn’t cover all of them. For the next FOH technology of interest, we turn to kiosks, which up until COVID seemed like a panacea for countless operations in the QSR and fast casual segments.

Kiosks, like ordering from a customer’s own device, bring a number of advantages. First, there’s the potential reduction in labor. While some brands will retain labor for additional services, most large brands will tell you they are absolutely considering labor savings as part of their kiosk installation decision-making Second, there’s the increase in the average
check. For a business that does $1M in revenue, industry analysts see an increase of about $40,000 in sales, along with a 25% rise in operating margin.

Clearly, the actions of the industry amid the pandemic support our point regarding digital ordering–including kiosks. It’s becoming clear that restaurants need to operate more like e-commerce brands with a digital-first model. The move to eCommerce was clearly difficult for many retailers, spelling bankruptcy for those that didn’t reinvent themselves fast
enough. The same can happen to restaurants, with COVID pulling forward the inevitable.

So where does the future of POS lie? We believe it’s in the ability to discern guest intelligence and augment business ROI through contactless ordering and self-serve kiosks. After all, both are well positioned to identify a vitally important facet for brands…namely, the identification of their guests.

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