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Restaurants’ Unique Path To Back-Office Tech Adoption

The restaurant industry is a notoriously difficult market to crack, not least of all because of narrow margins, among other factors. With that in mind, you may think restaurants would be slow to adopt new technology, but in today’s market, it’s quite the opposite.

Kristi Turner, chief marketing officer of Compeat, a company that provides back-office management software for the restaurant industry, says it’s actually quite rare that restaurants today would not be using some type of restaurant management software (RMS).

“I think restaurants are definitely adopting new technology to run their business[es],” she recently told PYMNTS. “It is actually very rare today to find a restaurant that has not adopted some form of restaurant management software, especially for the back office.”

That’s because the unique characteristics of the restaurant sector that make it such a difficult market — like low margins, high employee turnover and complex inventory and supply chain needs — make the restaurant industry a prime space for RMS technologies to make a positive impact on the bottom line. And back-office software, Turner said, has proven time and time again that it offers an ROI (return on investment) well worth the cost of implementation.

“It’s everything for a restaurant,” the executive said. “If you look at the way restaurants are run, it’s a tight-margin business. There are two huge costs for restaurants: food and labor. And staying tight on managing your food and labor costs is essential.”

The industry is tasked with forecasting inventory needs and predicting scheduling requirements, and technology can help achieve both of these efficiently. Over the years, software providers have developed an array of solutions that restaurants might find helpful, from talent management software to inventory management tools. But more recently, Turner explained, restaurants have emphasized the importance not only of adopting these business tech tools, but ensuring that they are all integrated with each other.

“What we’ve found at Compeat is that it’s not actually good enough just to capture your inventory and food costs and use scheduling apps,” she said. “It’s most important that those are all integrated within accounting software that’s designed for restaurants.”

She added that when these systems can’t communicate with each other, then “balancing the books is a nightmare.”

Another reason why restaurants and other SMBs have embraced this type of back-office business technology is because, unlike many other industries, oftentimes managers are on the go. That characteristic has led to restaurants demanding digital back-office tools — ones that are supported with mobile access, too.

“You have different users within a restaurant,” Turner noted. “You have your corporate executives, who are overseeing multiple locations and tend to look more like a business user, using mainly desktop.”

“But then you have the managers that run the restaurants. And by the nature of their job, they’re mobile,” the executive continued. “They’re in the back, checking on food; they’re in the front, checking on customers. They don’t even have an office. They’re constantly running from one aspect of the restaurant to the other, and enabling them to access solutions from a mobile device is essential.”

Even for restaurant employees, whose schedules are rarely regular, the demand is high for mobile access to scheduling solutions.

This embrace of technology among restaurants is impressive, considering many businesses, especially SMBs, struggle with adopting tools that may help their businesses. Unique needs among restaurants push them to integrate these solutions, which, Turner said, have proven to make a positive impact on the bottom line.

But just as with other industries, low margins and other hurdles do, certainly, impact the restaurant sector’s ability to embrace technologies. Interestingly, Turner explained, the restaurant industry was actually a late adopter of technologies; it’s only in recent years that back-office software has become commonplace. That challenge of tech adoption remains today, especially when it comes to next-gen solutions like artificial intelligence and sophisticated forecasting.

“The next level of adoption, I think, will take time,” Turner said. “With margins tight and with the resources necessary for implementation and for training, considering employee turnover, a restaurant’s ability to adopt that next level of technology may take some time.”

This sector isn’t alone: A recent report from small business accounting software company Sage, for example, found that the majority of SMBs say they have yet to adopt digital technologies, instead favoring their legacy systems and processes. The PYMNTS.com SMB Technology Adoption Index revealed news of a similar trend, with a small minority of companies reporting that they are willing to take the leap and embrace innovative technologies.

According to Capital One and the NAPCP in another recent report, key barriers to adoption of innovative tech includes a lack of information to make an informed cost-benefit analysis, a lack of leadership within the enterprise to initiate implementation and a lack of overall knowledge of the latest tools available.

According to Compeat’s Turner, the restaurant industry reflects some of these concerns.

“Restaurants want artificial intelligence, they want better and more accurate forecasting, but for that next-level tech, is the ROI there?” she said. “It is absolutely proven for the current restaurant management system — the ROI is there, there’s no question.”

“As technology continues to innovate — which we all know is constant in the tech world — there is always the next-greatest thing, the next level of product,” she continued. “But as we look at more innovative technology, will restaurants adopt it right away, or will they wait a year or two to see what the actual ROI is and to examine proven case studies? I think that’s normal for every business.”



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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