Innovation in Food: RestaurantTech

by Adam on September 24, 2013

As part of a semi-recurring series on this blog, I’ve been looking at a variety of verticals within the foodtech space to evaluate potential business opportunity, and explore both pros and cons of new business models. We’re looking today at the restauranttech space, which technically doesn’t exist, but it’s the best way to describe the broadness of digital platforms and new technologies that are trying to revolutionize the restaurant and dining space.

There are a number of players in the arena working on a variety of problems and inefficiencies facing restaurant owners. Most popular among these are new hardware and software options for browsing, ordering and paying remotely in a restaurant, all without the help of a server. E La Carte, Checkmate, TabbedOut, and others are all good examples of this. Then, there are systems for tracking loyalty and repeat customer use, such as PunchCard, as well as restaurant marketing and delivery services, such as Seamless Grubhub, Eat24, Caviar and more.

While the players and their platforms are too numerous, such that a true enumeration of all of the pros and cons of each would be too cumbersome, I’m looking at this instead from the restaurant owner’s perspective, exploring what kinds of barriers exist and how best to evaluate new technologies.

Opportunities

  • The most obvious is that new restaurant platforms promise to increase efficiency, drive higher table turns and check sizes, all at either neutral or reduced cost to restauranteurs. These platforms, especially those in-restaurant, can also power additional functionality like four-color photography, reordering capability and more.
  • Many of these platforms, especially those that are in-restaurant, allow for a great deal of tracking and analysis around what consumers order, how often they dine-in, and how large their check sizes are. This kind of information, which previously was unavailable to restauranteurs, could be invaluable to gaining a better understanding of their market.
  • Especially with software-based app solutions, restaurants have a direct connection to consumers to engage in couponing, location-specific offers, and more.
  • On the delivery front, there is the potential to expand a restaurant’s consumer base to those that might not find out about them other than through takeout delivery or online ordering.

Challenges

  • With rare exceptions, most service arrangements with restauranttech startups are non-exclusive, such that oftentimes restaurants will work with more than one provider (many, many more, in some cases, especially around delivery and online ordering). That means that the space is incredibly crowded, and also that new service providers may have a hard time breaking into the market.
  • Related to the point above, with the proliferation of new platforms out there, restaurant owners are highly skeptical about taking on new providers. In most cases, the cost outlay to begin new working relationships is relatively low, but until any avenues are proven to be big winners (or can at least prove out the business model), restaurants are going to continue to want some assurance of success before embarking on new relationships.
  • By and large, the restauranttech space is divided into hardware and software providers. My sense is that software providers who either tie into existing POS systems, or that rely on consumers’ smart phones for engagement will excel over hardware providers. This is primarily because hardware tends to be more costly to produce and requires some type of licensing arrangement between the provider and the restaurant, which many owners are hesitant to engage in. On the other hand though, software providers have to work closely with restaurants to be sure direct marketing is in place that gets consumers using new applications and other solutions.

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