Restaurants Integrating Technology to Boost Bottom Line

By Stephanie Chuang
|  Tuesday, Dec 24, 2013  |  Updated 12:16 AM PDT
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Restaurants are now using technology to help improve revenue. But how much of a difference is it making? Stephanie Chuang reports.

Restaurants are now using technology to help improve revenue. But how much of a difference is it making? Stephanie Chuang reports.

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As a graduate student at MIT, Raj Suri decided to drop out. But his first gig out of school in 2008? Working in a restaurant for the next year and a half.

Not for the paycheck, but for the research.

Suri’s idea was to put technology on the table of every restaurant in America in the form of a tablet, even before Apple’s iPad came out.

“I spent 16 hours a day in a restaurant,” Suri said. “I was watching people use the product. I’d build the prototype at the same time and I would give it to guests to use.”

The founder of Palo Alto start-up E La Carte said the focus was creating the Presto tablet.

“It has a 20-hour battery life so it lasts the entire day at the restaurant. It’s ruggedized for various spills and drops you see in restaurant environment. It has a built-in credit card reader, LED light at top,” Suri described.

And Suri has just put his biggest deal behind him. After Intel Capital decided to invest $13.5 million in the start-up, Applebee’s, the nation’s largest casual dining chain, announced it would roll out 100,000 of its tablets at thousands of restaurant locations nationwide by the end of 2014.

“There’s going to be a tablet on every restaurant table within the next three-to-five years,” added Suri. “We’re already seeing that kind of interest. It’s going to be very exciting for consumers and for people who go out and go to restaurants all the time, not having to order, not having to wait to pay, being able to play games at their table, being able to see pictures of the menu. That’s going to make their experience better.”

Greg Flynn is CEO, chairman and founder of the Flynn Restaurant Group, which owns about 450 Applebee’s and 150 Taco Bell stores.

“We’re not trying to eliminate that connection with the server or the leisurely pace of the meal if that’s what our guests want,” Flynn explained in the Fisherman’s Wharf Applebee’s restaurant. “[It] puts power in customers’ hands to get their order in at any time where it suits them, and to pay bill and leave whenever they want, simple as that.”

Suri said his company’s testing of the product in restaurants showed an average of getting customers in and out up to eight minutes faster, tips (with a default suggestion of 20 percent) rose between 15 to 20 percent, and customers wound up spending about 10 percent more on their meals.

“It allows you to upsell a little because it never forgets to suggest,” explained Flynn. “If I order a steak, it will suggest a glass of red wine with that.”

Craig Saxton founded Specialty’s Café and Bakery with his wife 25 years ago. He said the restaurant was an early adopter of technology, if not the earliest in the area, 10 years ago.

Now, Saxton said 25 percent of in-store transactions go through the iPads that are available at the front of most Specialty’s locations. The iPads feature the full menu, pictures of the food, and keeps track of past and customized orders. Customers told NBC Bay Area they felt a lot less rushed ordering on the iPads.

“So while we’re debating what to get and stuff, people can go and order,” said Jan Black of Mountain View.

Abninder Mundra works close by to the Santa Clara location. He said it’s all about saving time that he cannot afford to spare out of his work day.

“I’m able to get in and get to our next meeting as soon as possible.”

Specialty’s estimates customers who use the iPads to order end up taking twice as long as those who order at the register, but they also tend to spend an average of 50 percent more.

The biggest moneymaker, however, isn’t even the iPads – it’s the online ordering system.

“We’ll do between $50 to $60 million online,” said Saxton. “It’s a little more than 50 percent of our business company wide.”

The evolution is clear in how many orders the restaurant has taken online. Saxton said for the 10 million online orders in 10 years, the first million took seven years. The last million happened in the last five months. Saxton credits the technology that his team works on every day.

“We sit down with programmers and say, all right, well how can we improve this?” he said.

There have been some hiccups along the way with the system. When you place an order online, Specialty’s staff will make the meal and pack it up in a bag, which they then put on a rack. At first, up to 3 percent of those orders went missing.

“We used to have those racks right by the door," Saxton said. "Now they’re all situated to where we can see them much better, cameras on them, eyeballs on them.”

Saxton said the company will even try some new tricks to figure out who’s stealing.

“We do phony orders that will tell us if someone grabs it, there’s no way that could be your order, because it’s nobody’s order! We’ve come up with ways over the years to minimize that. And now our shrink rate on that is less than a quarter of a percent,” he said.

But there is one thing that the restaurateurs, entrepreneurs and customers who spoke to NBC Bay Area agree with: the bottom line in dining out is still the food. Saxton emphasized this will always be the point moving forward.

“Tech won’t replace everything, food is still food,” he said.

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