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Eric Dzwonczyk, MD and Adam Werner, MD, AlixPartners
For players in the U.S. restaurant industry, 2014 brought both encouraging and challenging developments, according to AlixPartners’ most recent survey, conducted in September. While macroeconomic fundamentals and consumer interest in dining out seem relatively stable, a tougher cost landscape has emerged—putting increased pressure on margins. As a result, many companies have put cost and margin management on the front burner in terms of their strategic priorities.“Savvy use of technology can help rein in costs as well as drive new growth” Savvy use of technology can help rein in costs as well as drive new growth—including the creative use of mobile devices for receiving customers’ orders or offering them discounts, social media for engaging consumers and driving positive word of mouth, loyalty programs for expanding share of stomach, and point-of-sale systems for supercharging efficiency. But technology is tricky: The increase in selling, general, and administrative expenses as a percentage of revenues that we saw in the four major segments of the U.S. restaurant industry can be attributed in part to stepped-up spending aimed at supporting growth, such as investments in point-of-sale technologies and mobility platforms. Likewise, many companies are investing in technologies such as loyalty programs and analytics as means of differentiating themselves more sharply from rivals in this intensely competitive industry. This report shines a spotlight on technology by assessing its promise and its impact on customer behavior, by analyzing trends in its usage among restaurant industry players, and by weighing its costs versus its benefits. In-Restaurant Tablets: Boosting Efficiency and Growth Some industry players have been experimenting with the use of in-restaurant tablet computers to drive new efficiency and growth. However, the full-service business models seem to be making greater use of tablets than the limited-service business models are. For instance, McDonald’s is testing kiosks whereby diners use tablets to customize their burgers. Buffalo Wild Wings has tabletop tablets with a sharp focus on entertainment. And at Chili’s, 60 percent of credit card users now pay by using tablets provided by the company at their table. In-restaurant tablets offer certain distinct benefits, such as enabling companies to upsell, to accelerate service speed and improve order accuracy, to provide entertainment, and to reduce wait-staff time that would otherwise be required when customers don’t place orders by using tablets.