According to estimates, nearly 20 percent of restaurants in India alone have shut down since the pandemic began sweeping the world almost two years ago. Almost half of the total workers have lost their jobs while nearly half of all small restaurants continue to struggle to pay their rent, let alone turn a profit. With the surging Omicron variant posing yet further disruptions to business as usual, and almost a quarter of Indians having stopped dining out altogether, the holiday cheer for the restaurant industry may be somewhat diminished.
That said, there are some bright spots that are cause for celebration. One of those bright spots is technology. In 2021, restaurant owners and operators improvised and innovated unlike ever before. They devised creative adaptations on menus, business hours, points of service, delivery options and takeout models. They also upgraded their technology capabilities, implementing guest-facing mobile apps and other advanced solutions, including next-generation restaurant management and POS systems.
Globally, restaurant management software market size value was 3.6 billion dollars in 2020. That number is expected to reach around 7 billion dollars in 2025. These stats by Grand View Research show that the industry is growing as more and more restaurants feel the need to invest in similar solutions. According to Toast’s annual Restaurant Success Report, 95 percent of restaurateurs acknowledge that the restaurant POS system improves their business efficiency and it also cut other operational costs increasing customer experiences all together.
How far have we come?
Historically the restaurant industry around the world has been somewhat slower to adopt the technology than other industries, however, restaurants are now stepping up when it comes to using tech to their advantage and are realizing the ROI. According to Ashish Tulsian, CEO & Co-founder, POSist Technologies, India has been quite ahead of many developed nations when it comes to embracing tech. Having said that, the entire ecosystem is stepping up when it comes to using technology such as online ordering, integrations with aggregators, and other third-party apps for managing orders to make the backend more efficient.
The pandemic has leveled the requirements when it comes to running a restaurant business and India is adjusting to it with the rest of the world.
“Post the COVID19 pandemic struck us in 2020, restaurants are fundamentally re imagining how they do business, digitally and through technology to keep their operation running smoothly, improve their bottom line, and continue serving their customers whose dining preferences have evolved. In 2021, we powered over 1,000 more restaurants globally with our platform which included restaurants of all formats, be it standalone, large chains, or cloud kitchens,” Tulsian commented.
Similarly, at SupplyNote, businesses have reported an increase of 70 percent in their profits by using supply chain management platform. Software like these are actually also transforming the industry into organised sector gradually because in next 5 years both organized and un-organised sector would equally contribute to the growth of the sector.
Automation is playing a larger role in the sector as it evolves. Right from smaller innovations like the waiter calling device (a small device kept on the table that allows customers to call for the water, bill or the server) to larger innovations like food service robot (which are still evolving and will take some time to ramp up), the restaurant industry is embracing automation.
“We see human staff still playing a large part in the industry since visiting a restaurant is an experience, and we envisage that these automations will free up staff time to interact with customers and ensure a great dining experience,” added Shaival Desai, Vice President of Growth at Petpooja that transformed its business from a food start-up to a brand providing tech-solutions to these food start-ups and restaurants.
How smaller cities are embracing the change
The competition within the F&B industry is increasing day by day, with more outlets starting up and new business models like cloud kitchen penetrating the industry. The competition between the businesses is cut-throat not just in metro cities but also in tier 1 and tier 2 as well as tier 3 towns. Food aggregators today control a major chunk of this market on B2C side. This means slimmer margins for businesses and given the pandemic times, it becomes a matter of survival for smaller businesses and outlets.
Kushang, Co-founder & CEO of SupplyNote feels that in these dire circumstances, the restaurant management software brings the ray of hope in the industry. They let the restaurants cut down the cost of operations by replacing human-labour with algorithms, hence allowing restaurants to operate with smaller staff. Also, they increase the efficiency of resource utilisation, cutting down the waste and increasing the profits.
Over the pandemic, the restaurant industry has gone from a high-margin, medium volume business to a lower-margin, high volume business. In low margin business, the only way to increase margins is increase operational efficiency that is a direct result of using the correct technology. For example, the food cost report can tell restaurants the real cost of the last dish sold, ensuring that the owner knows his/her food costs even though raw material costs keep fluctuating and can adjust prices depending on the food cost.
Restaurants in tier 2 cities have been seen embracing intelligent systems to assist with order management, reservations, preparation, delivery, and eventually, other customer interactions.
From the owner’s point of view
For Miten Shah, Co-Founder of The Studs Sports Bar & Grill, gone are the days when the restaurant managers used to toil till 4 AM in the midnight after the closure of the restaurant to reconcile the daily sales reports manually but with new technologies it has all changed the working schedules and styles. “The softwares today have become so advanced that on one click, the softwares are capable to draw the complete reports with the detailed bifurcations of food, beverages, drinks and more along with the time wise sale break up of breakfast, lunch and dinner as well,” he added.
Additionally, in the world of multiple payment systems such as UPI, Credit Cards, Debit Cards and Cash, even the most complicated collections on each table are easily sorted with the help of Restaurant Management Software.
“I don’t think that the restaurant industry would have been better benefitted in terms of ease of business operations than the modernisation and advancement of the best in class softwares. The Studs has multiple outlets spread across five states in India and is using the best softwares available in the industry for all its outlets,” Shah pointed.
Similarly, a small restaurant owner who is running the business in Gujarat commented, “We started using the SaaS platform from 2020, it has helped us in taking online orders without having to pay heft commissions to aggregators, ensuring that we can keep those margin for ourselves. The amount I pay for my outlet is priced at a recurring cost of INR 7500 per year.”
Why are few still reluctant for change?
There are still some small chains and old restaurants that believe in the manual systems of order taking. However, the reasons could be many such as resistance to investing high amounts into the software or it could also be the lacking of a proficient computer using staff/managers that could operate the software rightly.
“When we talk about the management of a restaurant we widely see that many restaurants still believe in using the traditional time tested method which has been used over time. Another reason what I believe is the lack of knowledge on how the software function. The perks are many ranging from stocking and inventory, guest allotment, precise kitchen order tickets, greater savings due to decreased labour cost. Having talked about the perks there are some drawbacks to it like software malfunction or failure which can lead to a total management failure, since the software is an internet-based system if there’s no access to the internet the software won’t work,” Sheeevardan Asopa, Co Founder, LMNO_Q added.
There is a whole area of study around ‘change management and how, sometimes, people are resistant to change. The older chains might view change through a critical lens. “However, investing in good restaurant management software is a must and the evaluation of new alternatives must always come from a neutral space. The detailed reporting, real-time updation and cloud computing all act as key data points of input towards your strategy creation,” Manu Gulati, Founder & Owner, Effingut said.
However, Gulati too mentioned few drawbacks that one could face. A potential pitfall for some suppliers is backward integration, these solutions need to be able to integrate with legacy software and have a clear option for offline computing to truly encourage restaurants in the industry to make the switch.
On the other side, tech will not be a solution for every industry challenge. There is an inextricable, human component within the food services category that, in some ways, may still be the most integral part of the customer journey and that should not be left unsaid. There will, however, be many gaps that technology can bridge.