How Payments And Rewards Power Restaurant Innovation

restaurant technology

In the digital age of hospitality technology, restaurants have a trove of tools to help serve customers in their stores. Innovations run the gamut from promo codes to coupons and quick-response (QR) scans in addition to other features such as delivery tracking. Overall, merchants in the $1 trillion accommodation and food services market see digital innovation as key for staying competitive in the space.

Nearly 60 percent of players in the industry say innovation is critical to their survival, according to the PYMNTS Retail Innovation Readiness Index. Despite that acknowledgement, though, merchants in the space earned an average index score of 32.1 on a 100-point scale in the index, which indicates that “they have a long way to go in terms of improving their readiness.” But those who earn high marks for digital innovation harnessed the power of in-store payment methods as well as in-store features like rewards and coupons.

From Chipotle Mexican Grill to Valyant AI, restaurants and solution providers are enabling innovation at physical points of sale and in the digital world. These are some of the ways that these companies — among others in the hospitality space — are bringing diners new ways to order, pay and experience their venues with the help of technology:

Almost eight in 10 merchants — or 77.4 percent — innovated to remain competitive. Chipotle Mexican Grill, in one case, plans to open up to 155 new restaurants this year as part of a push to solve what CEO Brian Niccol has called the “No. 1 reason consumers eat elsewhere,” which is lack of convenient access to Chipotle locations. By comparison, the quick-service chain opened 137 new restaurants last year. In addition, Niccol also said the chain has installed digital “make-lines” in 1,000 of its stores and with all stores scheduled to have them by year’s end. The company has also installed digital pickup lines in 1,000 locations, with the full rollout said to happen by mid-2019.

Three quarters — or 75 percent — of merchants innovated to increase sales. And solution providers are creating new ways for customers to place orders that could drive revenue: Valyant AI CEO and Founder Rob Carpenter, for instance, developed a proprietary conversational artificial intelligence (AI) platform that focuses on the drive-thru. With the convenience provided by the solution, Carpenter claims he has seen a 25 to 50 percent reduction in wait times for diners. Carpenter also pointed out a benefit for the entrepreneurs who own a restaurant: They can generate more revenue by serving more customers. Carpenter also said the technology integrates with a restaurant’s existing point of sale (POS) system and that it understands all the information that it needs to make an order.

More than six in 10 merchants — or 62.2 percent — innovated to improve consumer loyalty. And quick-service restaurants (QSRs) are making changes to their rewards programs: Dunkin’, for instance, is revamping its own program with an experimental multi-tender system. Through the pilot program, DD Perks diners can earn points at over 1,000 stores regardless of how they pay. In the past, members of the chain’s DD Perks program could only earn points by making a payment with a gift card enrolled in the offering. Diners can now earn points even if they pay with credit, debit or cash at pilot locations with the multi-tender program. To earn points, customers can scan a new physical loyalty card or their DD Perks® loyalty ID quick-response (QR) code in a mobile app at participating restaurants.

Over 45 percent — or 45.6 percent — of merchants innovated to meet consumer demand for new payment methods. And digital payment companies are working with QSRs to bring more options into their stores: AlipayHK, in one case, has teamed up with McDonald’s to offer payment on the McDonald’s app on smartphones. In another case, Apple announced in January that Taco Bell was among the merchants that now support Apple Pay. Jennifer Bailey, Apple’s vice president of internet services, said in a press release announcing the new partnerships, “Whether customers are buying everyday household items, groceries, snacks for a road trip or grabbing a quick meal, Apple Pay is the easiest way to pay in stores, while also being secure and faster than using a credit or debit card at the register.”

Forty-seven percent of merchants innovated meet consumer demand for in-store shopping. Some QSRs are expanding their footprints in other countries: Domino’s, in one case, recently opened its 10,000th global location in Shenzhen, China’s Luohu District. The new 1,300 square-foot restaurant has an open-concept “pizza theater design” that lets diners observe the pizza-making, per an announcement. It also has indoor seating for diners along with a flat-screen television that shows order status “from the moment the order is placed to when it is out of the oven.” Frank Krasovec, chairman of Domino’s master China franchisee Dash Brands Ltd., said in the announcement, “Not only are we excited to open the 200th Domino’s location in mainland China, but we are thrilled that it marks the brand’s 10,000th store outside of the U.S.”

From Domino’s to Valyant, restaurants and technology providers are suggesting that innovation is alive and well in the $1 trillion food and accommodation industry. And, as there is no one-size-fits-all approach in the space, innovative firms have the opportunity to meet the many needs of merchants as they reach new digital frontiers.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.