Digital driving revolution in hospitality: what SMEs need to know

Hospitality had very much been a physical industry until COVID-19 came along. The pandemic pushed restaurants, bars and cafes into the digital age as demand for online orders for home delivery, QR code usage for in-restaurant ordering, and contactless payments via mobile phones accelerated dramatically.

New order

Digital channels for ordering have become a major part of most food businesses. Across McDonald’s major markets for instance, digital sales now account for around 30% of turnover, up 60% on a year ago, while at US-based Panera 49% of sales are digital-related. Many others including Taco Bell, Wingstop and Chipotle are doing exactly the same both overseas and in the UK.

Although these are all QSR (Quick Service Restaurant) brands there is no escaping the impact digital is having on all hospitality businesses because the direction of travel of consumers is obvious. It is worrying therefore that a survey conducted by Vita Mojo last year found that 80% of companies did not have a set budget for digitalisation, and 63% of operators felt they had not yet invested sufficiently in digitalisation for their business.

Like retailers, the leaders of hospitality companies have traditionally been focused on things like finding sites, dealing with fit-outs, and sourcing extractor fans but how much expertise do many of them have with the intricacies of SEO, data insights, social media, CRM and marketing strategies with Google and Meta? Companies must also try and avoid operating their various channels in silos, which is incredibly damaging. All people within an organisation need to be fully engaged with the digital elements. 

Kiosk is king

Hospitality business owners and executives are again following retailers like pioneer Argos in adopting the digital capabilities of kiosks. QSR and fast casual dining brands are going to really leverage the value from kiosks in the years ahead as they enjoy myriad benefits from the devices, which consumers clearly enjoy using.

In the US the chain BurgerFi found each of its kiosks captured on average 133 orders per day, which equated to around three out of every four transactions. It’s a similar scenario at Shake Shack and LEON in the UK where more than 75% of sales come from kiosks, and the digital channels, where the technology is available.

As well as the customer service appeal the other key driver of kiosk adoption by restaurants is economic benefits. The Vita Mojo survey found 61% of people would spend more via kiosks, with this rising to 80% for Gen Z and 90% for Millennials. This has also been the case at LEON – where the introduction of the devices throughout its estate has been transformational – with average order values increasing 12-15%. 

Keeping customers ‘appy

With mobile phone usage for payments on the increase, the obvious next step for hospitality companies has been to link payments to digital loyalty programmes. The most immersive way for businesses to deliver these services is through their own apps that will enable them to build out an ecosystem. 

One award-winning operator that has fully leveraged its app is hotel business Mollie’s.  Its Motel Diner App is the primary interface with guests. The app enables online check-in, a digital room key, 24-hour online chat, and control of the 50-inch Smart TVs in its rooms. It also allows guests to pre-book EV charging bays and cast Netflix or Spotify from their phone to their room’s TV. 

This guest-focused solution delivers on Mollie’s objectives of driving customer retention through an outstanding guest experience while automating operations as much as possible and optimising costs and labour. It has delivered myriad benefits to the business including a 40% reduction in operational costs, 120% increase in booking conversion rates, saved over five hours a week on customer service, driven a higher average spend per guest, and fuelled a 459% increase in app downloads.

Real virtual and artificial solutions

The more cutting edge digital activity in the hospitality sector involves virtual reality (VR) and artificial intelligence (AI) technology. The early implementations of AI involve chatbots that are being used as customer service solutions for taking hotel bookings and within food businesses they are taking orders over the phone and at drive-thrus where there have been problems with the accuracy of orders taken. The AI technology has proven to be much better than a human server at the drive-thru order window where errors are a major issue for customers.

VR is currently being used by a modest number of businesses as a tool for 3D virtual tours that can help with sales and marketing. Research carried out by The Caterer magazine and spatial data specialist Matterport – that uses digital twin technology to digitally scan the interiors of properties and create 3D tours among many other applications – has found 17% of hospitality companies presently use 3D virtual tours.  This statistic is enhanced by the finding that as many as 25% of businesses are interested in adopting the technology in the future.

Beyond 3D virtual tours the technology can also be used for the likes of training, evaluating spaces for corporate events, and remotely inspecting buildings for potential construction work or even prospecting for acquisitions.

Final thoughts

When this type of technology develops further and the pricing levels reduce significantly then it will no doubt be widely adopted across all types of businesses. But for now there are many affordable and impactful digital solutions that can be embraced by even the smallest of hospitality operators.

Glynn Davis

Glynn Davis is a business journalist specialising in the retail and food and drink sectors. As well as writing for publications including Retail Week, Ecommerce Age, Propel, Caterer and Retail Bulletin, he’s also the founder and editor of Retail Insider and Beer Insider.