Is Your Technology Budget Too Low?
Your customer base is increasingly becoming more and more digital savvy. Digital natives grew up using all types of technology – from video games, social networks, and apps to online homework portals, streaming services, and ordering a late night pizza on GrubHub.
Accessibility and convenience are paramount to these shoppers. Conditioned by mobile and high-tech, they are more likely to research products online, place orders from their phone, and use self-service kiosks. To take a bite out of their $44 billion in buying power, it’s essential you provide seamless, intuitive, and advanced technology in place in order to attract and retain customers.
So, how much of your budget should you allocate to technology?
Across restaurant sectors, professionals agree that a budget between 4-6% is crucial in order to stay relevant and competitive in the market. How is this percentage determined? In a 2016 Restaurant Technology Study, they researched the restaurants that were considered “better than competitors” in terms of three criteria, “effectiveness of technology infrastructure”, “ROI on technology investments”, and “technology innovation.” This represented around a third of the study’s respondents.
The two key differentiators between restaurant innovators and those on par or behind their competition, is that (1) they invest more of their revenue on technology (~4%) and (2) they spend less of their IT budget on system maintenance. This highlights that it pays to invest in new technology both in terms of being a competitive player in the market and saving on the cost of outdated technology.
The reality is that the average restaurant technology budget is just 2.5% of their revenue. And many establishments are lagging behind consumer trends and demands, as well as their competition. Those that are lagging are also far more likely to allocate a ton of their money towards maintenance, a shocking 60% of their IT budget! By investing in legacy systems, and not innovation, restaurants in this category are losing out on market share and costing their business money.
While technology is currently a tiny fraction of the whole budget, restaurants understand the importance of prioritizing innovation and engaging with digital natives. A study by Revel Systems and the Forrester Group showed that a staggering 93% of respondents agreed that it is important to intertwine digital technologies to enhance the customer experience.
Nearly 60% of respondents of the 2017 Restaurant Technology Study by Hospitality Technology reported that they intend to boost their IT budget from 1-5%, with casual dining the most likely to increase their budgets. The top three technology priorities, in order of importance, are (1) digital customer engagement, (2) business/customer analytics, and (3) payment/ data security.
Want a piece of the $44 billion that digital natives are spending annually? From tracking rich customer and business data to offering a seamless digital and in-store experience to your customers – you can give your business the competitive edge. And because more, and more restaurants and retailers alike are increasing their IT budget, the time is now to invest in a robust business management platform.