The Future of Restaurants will be about more than serving food, Square report finds
Square’s annual Future of Restaurants Report has found that Australian restaurants are selling products outside their core services, turning to technology, and leaning on their communities to stay resilient
In a year of challenging economic conditions, Australian restaurants are reinventing themselves by bottling up sauces, selling cooking classes, or creating merch brands as a way to bring in revenue from multiple sources.
Alongside building new revenue streams, Square’s Future of Restaurants report has found that Australian restaurants are investing in technology to allow them to do more with less as operating costs soar and staff shortages continue to bite, while also looking to their local communities for support.
The report, commissioned by Square and created by YouGov, surveyed Australian restaurant owners, hospitality workers, and consumers, and gives us a glimpse into the current state and sentiment of the industry.
And while adaptability and resilience is on the menu for Australian restaurants, they also face additional challenges including customer retention (32%), operating costs (32%) and staff hiring, training and retention (31%). Though, in true Aussie innovative spirit, 97 percent of those surveyed believe tech will help their business navigate these hurdles.
More than just a dining service
As economic challenges persist, restaurateurs will continue to find new ways to build resilience.
Driven by consumer interest (45%), economic incentives (40%), and fierce competition (39%), restaurants are building new revenue streams by introducing new products and services outside of their core restaurant offering. One restaurant that’s designed and created a line of merchandise to supplement its core business is Sydney-based bagel shop, Lox in a Box.
“Merch is a way for me to express myself creatively,” says Candy Berger, co-owner of Lox in a Box. “We started with branded t-shirts for our staff and then customers wanted to buy them. So we did a run of shirts, the Lox In A Box hat, and sox in a box because we thought that was fun! It sold pretty well.”
Consumers are receptive to this new trend: of millennial customers, more than half (55%) say they’ve purchased items aside from food or drinks from restaurants in the past year, while around one in three (29%) say they specifically purchased merchandise over that same period.
Restaurants powered by technology
The era of pen and paper at restaurants is over, and restaurants will increasingly adopt technology to do more with less.
Despite the fact that 95 percent of restaurants say there are barriers - like financial outlay or transitionary period - to investing in software and automation technology, the benefits are clear. An analysis of data from Square and the Australian Business Registry has found that restaurants that used Square for Restaurants technology were around 3 times more likely to survive than the industry average.
Beyond building resilience, technology is helping restaurants to grow: half of restaurateurs who drive $1 million or more in revenue per year say that automation is helping them acquire more customers (34%) and streamline online ordering in-house and via delivery apps (24%).
“Working smarter, not harder, is a driving force for us,” says Mo Saad, co-owner of Fricken Chicken in Canberra. “Automation and technology have streamlined our operations, reduced wait times, increased productivity, and ensured more personalised customer interactions and overall satisfaction.”
“When we talk about restaurant reinvention, and technological adoption, we aren’t talking about robot chefs: we’re talking about using technology to unlock incremental yet meaningful gains,” said Colin Birney, Head of Business Development for Square in Australia. “For example, wait-staff sending orders to the kitchen directly from the side of the table may only save ten or so seconds a time, but as service continues and more tables are served, those efficiency gains stack up. Those efficiencies can lead to more tables being covered per employee, more customers served, and, ultimately, growth. Technology helps find both small and big wins.”
A focus on nurturing community
Communities played a huge role in helping restaurants stay afloat over the past few years.
A restaurant serves as many things to its customers – a place to socialise, work, escape, or relax. For regulars, it can become a special space that exists between their home and workplace – in fact, 21 percent of consumers say that an atmosphere that creates a sense of home is important to them when visiting a restaurant.
Building a sense of community is a key way restaurant owners are staying resilient amidst economic downturn, as 90 per cent say that community support has been somewhat helpful (38%) or instrumental (51%) in their success. Knowing customers’ names, orders, and details about their lives creates a personal connection, and pays off in the long run, with 58 percent of consumers stating they look for new restaurants or cafes through recommendations from their friends or family.
Earlier this year, Square partnered with OpenTable to give restaurant wait-staff the ability to better personalise service based on diners’ unique preferences to create exceptional experiences. One of the first restaurants in Australia to benefit from the Square and OpenTable integration was Byron Bay-based, vegan restaurant No Bones.
“Square and OpenTable are our best friends: having them talking to each other makes our life so much easier, but also has a huge positive impact on our diners” said Lili Woollacott, Manager at No Bones. “Dining experience is so important to us and having all our dining data in one place - no matter where it comes from - means that we get to delight anyone that eats with us. Whether that’s about knowing where they are in their dining journey and improving the flow of diners through the restaurant, or knowing particular customers preferences and creating bespoke experiences for them. It builds loyalty and keeps them coming back!”
This year will continue to hold a lot of change for the industry. By diversifying core offerings, adapting to customer and employee needs, leveraging technology to work smarter, and engaging with the community, restaurateurs can better prepare for future challenges while creating a more resilient and efficient business.