Restaurants in many parts of the U.S. may be celebrating the end of COVID-19 restrictions, but labor difficulties are still preventing them from enjoying the resulting higher sales they might otherwise expect.
In an interview with PYMNTS’ Karen Webster, Andrew Robbins, CEO of Software-as-a-Service (SaaS) customer experience management (CXM) solutions provider Paytronix, explained how these staffing challenges are dampening the effects of surging demand for dining out.
“[Restaurants are] still struggling. So, revenue’s up, dining is up, and it really could be a boom market for them if they could get the labor,” he said. “There are still people who are shutting down, not doing the full day that they would normally do and closing some nights, so they don’t overwork the team — so maybe close a Monday, Tuesday night, but work people longer hours Friday/Saturday. It’s still a real problem.”
Certainly, the customers are there, according to data from the November 2021 edition of PYMNTS and Paytronix’s “Digital Divide: Aggregators and High-Value Restaurant Customers” report. The study, conducted in the fall, found that 46% of restaurant customers are high-frequency diners (i.e., they buy food from restaurants at least once a week).
View the full report: Digital Divide: Aggregators and High-Value Restaurant Customers
The New Restaurant Payment Experience
Robbins said that to address these challenges, restaurants are turning to technology — for instance, adding kiosks to their stores to reduce the work needed to take orders.
“[Restaurants are] looking at anything they can do to help improve guest experiences, get rid of friction and also offload those experiences when they can, to save on labor,” he said.
In fact, nearly two-thirds of restaurants either have self-service kiosks or plan to invest in them in the future, according to PYMNTS’ 2022 Restaurant Friction Index, also created collaboration with Paytronix. The survey of more than 500 managers of quick-service and full-service restaurants found that 30% of restaurants have self-service kiosks and that 34% don’t have them yet, but plan to invest in them.
Additionally, the index also drew from a census-balanced survey of more than 2,100 U.S. consumers conducted in October to reveal that nearly 1 in 4 restaurant customers would be more inclined to patronize restaurants that offered self-service kiosks.
Even restaurants without kiosks are utilizing technology to cut payment-related labor costs. Robbins highlighted the rise of pay-at-the-table capabilities, of handheld point of sale (POS) devices that eliminate the need for a server to take the check away and come back, and of own-device payment capabilities that effectively turn customers cellphones into kiosks.
Virtual Restaurants 2.0
For many virtual restaurants, the model is that foods from a new brand are being prepared in the kitchen of existing restaurants that consumers in the area already know.
For instance, in a 2021 conversation with Webster, Robbins cited the example of the Italian table-service chain Bertucci’s running several virtual brands out of its kitchen. Additionally, major restaurant chains such as Dickey’s Barbecue Pit and Chili’s parent Brinker International have also been running virtual brands out of their existing kitchens.
Now, some restaurants are attempting something of a reversal of this model, where the kitchen prepares food from an existing chain with name recognition, licensing its brand.
Robbins highlighted the example of casual dining chain TGI Fridays, for which name recognition significantly exceeds availability.
“TGI Fridays had as something like 94% consumer awareness — consumers know the brand,” he said. “But something like only 20% of people can go to a TGI Fridays. That’s 74% that they’re missing on because of physical constraints.”
Similarly, Asian-inspired street food chain Wow Bao has hundreds of licensed locations where other chains can prepare their foods and sell them under Wow Bao’s name through aggregators.
Robbins noted that virtual licensing enables these brands to grow their reaches, boosting margins and even potentially testing areas for new consumer-facing locations.
Fewer Masks, More Tips
The largest challenge going forward remains the labor market, with these difficulties far exceeding even those posed by inflation, which has not yet significantly dampened demand on the consumer side.
“That’s not what [operators are] worried about right now,” he said. “It’s all about labor.” One benefit when it comes to labor availability, Robbins said, is the lifting of mask mandates in many parts of the country.
“Where they can, [restaurants are] lifting the mandate for multiple reasons,” he said. “One is is just sheer empathy for employees, two [is] retaining employees, [and three is] economics.”
He noted that while parts of the Northeast are just beginning to see these shifts from masking to removing face coverings, other parts of the country already saw mask wearing go from being the norm to becoming the exception a long time ago.
He added that keeping masks on in hot kitchens is “nearly impossible,” that masking for the full workday is a disincentive for many workers and perhaps most surprisingly, that servers’ tips increase by 33% when they are not wearing masks.
“I guess people like people and [seeing] the smile,” he said.