Information Technology in Restaurants
Executive Summary
It is perceptible that in the contemporary hospitality industry, the economic and market conditions have caused a financial crisis. One of the factors that has promoted crisis include consumer behavior which has been changing significantly and incessantly (Dean, 2011). Some of the reasons why the consumer behavior and purchasing habits have been changing include increasing levels of unemployment, fear of the future and the deep recession. As a result, restaurant owners have been sourcing for effective strategies of building and regaining their customers. This is has resulted to implementation of information technology in the restaurants as an approach of enhancing customer services. According to research by National Restaurant Association, restaurant business depends mainly on returning customers which obligates restaurants to have effective way of building loyalty and trust (Huber, Hancer & George, 2010). Therefore, restaurants in the contemporary generation of developing technology are using information to gain competitive advantage to attract and retain their customers. However, it is undeniable that not most of the restaurants have implemented information technology in their operations (Huber, Hancer & George, 2010). These restaurants use traditional methods of reaching their target market which include convenient locations, telephone calls for orders and paper printed menus to display their products. This is the reason why restaurants are currently competing for locations, employees and information regarding their target customers. Most of the restaurants depend on research and development to obtain the desired data about the target market. This means that restaurants need an effective way of extracting data together with high level of services in order to be able to build trust of their customers and gain competitive advantage in the market (Dean, 2011). Therefore, this paper describes the previous approaches implemented by the restaurants and highlights the new findings regarding application of information technology by restaurants.
Introduction
To start with, it is noteworthy that the capability of the organization to utilize and take advantage of the environmental factors determines the sustainability of the business especially in the times of economic crisis. Therefore, organizations should have an effective structure of the behavior of their customers together with their purchasing habits. By implementing a customer-oriented strategy, the firm is able to define its strengths and opportunities for quality improvement (Dean, 2011). This makes data regarding the target customers of an organization to be an integral factor impacting the operation and performance of the business. To obtain customer information, most of the restaurants focus on social media channels such as Facebook, LinkedIn, Twitter and Google+ (Huber, Hancer & George, 2010). However, it is factual that it is hard to follow the patterns of the target customers using social media because collecting information from the immediate customers is hardly achievable. This defines the importance of information technology to an organization which is facilitating direct contact with the target potential customers. By the help of information technology, customers can access company’s services directly without going to the internet or using login details. This enhances customer services by increasing speed and accessibility thereby promoting competitiveness of the organization and customer retention (Huber, Hancer & George, 2010). Basically, information technology promotes product development, effective communication and processes improvement. On the other hand, the business minimizes some processes such as bookkeeping and online marketing among others. This means that information technology can be used as a cost reduction strategy because it acts as a platform for different processes in a firm. For the restaurants, digital technology optimizes the performance of the business by increasing processes efficiency through organizing, tracking and synchronizing business practices. Therefore, this paper will focus on comparing traditional strategies and information technology/digital technology implementation strategy in restaurants.
Previous Approaches
In order to gather information regarding the target consumers, restaurants in the contemporary hospitality industry tend to rely on strategic analysis approach (Huber, Hancer & George, 2010). Prior to strategic development, restaurants execute research and development approach in the process of understanding environmental factors that define development of the firm. In assessing the environmental factors, restaurants tend to overlook technological trends and embrace societal trends only. Under societal trends, restaurants focus on emerging attitudes, trending topics in the industry, new fads and demographic changes (Huber, Hancer & George, 2010). This is the reason why most of the restaurants currently are embracing social networking tremendously. Use of social media makes the main difference between the millennials and the baby boomers. Therefore, when the restaurant shifts from traditional strategies to use of social networking, it exhibits that the business has its target market segment from baby boomers to millennials (Huber, Hancer & George, 2010). As a result, the restaurant ends up losing the trust of early customers especially those within the baby boomers segment. Use of social media for strategic analysis especially on the performance of the business is ineffective particularly for a restaurant that serves a wider market segment (Huber, Hancer & George, 2010). For example, use of social media for comments on the services offered by the restaurant from the customers might not collect the desired information from all the customers. As a matter of fact, the information obtained will come from young customers who visit social media channels frequently.
On the other hand, restaurants depend on social media for marketing and to create social awareness for their menus. Research indicates that more than 80% of the restaurants in United States spend considerable amount of their revenue on social media (The Social Savior, 2016). Furthermore, there are more than 900 million visits on online marketing by restaurants annually (The Social Savior, 2016). This case is based on the fact that restaurants believe strong presence on social media is the most efficient way of keeping close contact with the targeted market. As a result, the effectual social media strategy leverages the target customer base which increases the competitiveness of the restaurant in the market. Restaurants use social media platforms such as twitter, Facebook, Google+, LinkedIn, YouTube and Blogger to connect to their customers in the markets served (The Social Savior, 2016). Basically, social media is used by the restaurants to give up-to-date information to the customers regarding the products and services (The Social Savior, 2016). Therefore, the customers can make their decision and visit the restaurant for the selected products and services.
Table of Social Media Platforms Commonly Used By Restaurants
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Social Media Platform |
Use |
|
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Connecting people and acquaintances |
|
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Keeping track of what someone is doing through short texts |
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YouTube |
Uploading and sharing video clips |
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MySpace |
Person to person communication |
|
Blogger |
Reporting new and unrevealed trending issues |
|
|
A site for business professionals |
Alternatively, restaurants give their contacts on social media pages where after making a selection, the customer can make an order for door-to-door delivery (Huber, Hancer & George, 2010). Generally, this means that the customer should visit the specific social media platform, and then go to the restaurant’s page to get the desired information. This might be hard and exhausting for a person who is not familiar with using social media. Therefore, it is undeniable that processes involved in using social media can dishearten some customers thus deterring them from accessing information regarding restaurant’s special events and current products and services offered. Instead of minimizing business processes, it is perceptible that use of social media marketing gives rise to more processes. This is the reason why both the customers and the restaurant ought to benefit from the strategy implemented by the restaurant. As a result, information technology/digital technology minimizes business process and brings the restaurant and customers closer.
New Findings
It is factual that in the past two decades, restaurants feared about the cost implementing technology in their operations. However, in the last 10 years, restaurants have recognized the importance of information technology which is now regarded as one of the competitive advantage factors (Turban, 2005). However, technology has only been embraced by large restaurant chains which have shifted from traditional cash register to automated ordering and payment systems. One of the most important aspects of technology suitable for restaurants is Point of Sale system (POS) (Dean, 2011). The technology has been in the business for a long time; since 1980’s, but businesses such as restaurants have been reluctant to adopt. Initially, orders were handwritten and delivered by hand from the kitchen to the table. In the contemporary world, POS is programmed with the prices listed in the menu corresponding to the items ordered. It is undeniable that POS has a significant impact to the quality and speed of service offered. With the ability to track menu items, and graphic user interface, time is saved while making orders and delivering them. Currently, the POS systems have advanced to improved reporting platforms, input devices (such as smartphones and tablets) and kitchen display devices.
The producers of the systems have taken another step to advance the functions and services offered. For instance, Micros is a POS that focuses on table management. The system has the ability to track table turns, table availability, manage wait list and customer paging (Dean, 2011). It can be asserted that the tasks that were performed by the restaurant staff have been broken down to be shared by both the customers and the waiters. Information technology has advanced the customer self-service in restaurants. The technology helps customers make orders while sitting at their tables without calling the waiter physically (Turban, 2005). The vendors have also produced systems that management production. These systems perform tasks such as menu management, pricing formulation, production forecasts, inventory controls and purchasing management (Hasson, 2015). Basically, these systems focus on labor scheduling by integrating POS system and the desired activities. Furthermore, organizations can use information technology systems in decision-making and strategic planning. Through a single technology platform, a restaurant can manage all aspects of the venue which include reservations, guest lists and inventories among others (Turban, 2005). The technology software used cloud computing integrated with the aspects of the venue is able to collect and analyze the required data in monitoring business performance.
Information technology enables a restaurant to have a computer application that brings customers and staff closer without using the internet. Using the app, it is possible for the restaurants staff to inform the customers about special events, offers, discounts and other promotional strategies. Through this close contact, it is possible for a restaurant to obtain market data directly from the customers from direct feedback and purchasing habit from the application. It is exhibited that though the cost of implementing the technology might be high, some of the restaurants spend more money on advertising in general. POS systems integrate different platforms and functions in a single channel which lowers the general cost of business processes (Dean, 2011). This means that a restaurant can use one computer application for promotional services, tracking reservations, offer order services and gathering market data. For example, restaurant chains such as MacDonald’s spend approximately $900 million in advertising alone. The cost can be unattainable by small restaurants which mean that the only alternative can be adopting information technology systems in their business processes. According to research, small restaurants with less than $5 million revenues spend more than 7% of their revenues in marketing. On the other hand, restaurants which generate more than $300 million revenues spend roughly 3% of their sales on marketing. Generally, this means that the only effective way of lowering marketing costs and getting the same desired results is by implementing information technology. However, though restaurants have exhibited considerable improvements in endorsing digital technology, it is recommendable that they implement effective ways of implementing and managing the appropriate infrastructure that will utilize the technology effectively and for the benefit of the business by minimizing cost (Dean, 2011). It is noteworthy that frequent updating is required while using the new technology in order to continue benefiting from the systems. Currently, there are different platforms for different restaurants which mean that small restaurants do not have to compete with large restaurant chains in investing in the same technology systems.
Unlike social media marketing, use of information technology brings customers closer to the firm together with improving the quality of services thus promoting customers satisfaction. It is factual that social media does not seem to improve the quality of services offered by the restaurants such as accessing the services without the internet. However, the restaurant ought to understand the nature of its customers which will help in perfecting their experience. Strategic implementation of technological factors will enable the restaurant predict the behavior of the customers, gauge their experience, and build the competitive advantage. It is factual that competitiveness of the restaurant determines its success in the market. Therefore, in this industry, competitiveness can be gained through market evaluation, understanding both internal and external factors, and integrating technology in strategic implementation.
Conclusion
Generally, the ability of the business to analyze and utilize environmental factors determines the sustainability and competitive advantage in the market. For restaurants, they tend to focus on societal factors and overlook technological factors. The reason for this is that they fear about the expenses of implementing information technology in their business operations. As a result, restaurants depend basically on social media for connection with their customers because it is more effective and can reach a wider customer base. However, it appears that social media and use of internet basically targets the market segment dominated by the millennials who are familiar with social media issues. Thus, it means that restaurants need a strategy that is applicable and less complicated for everyone in the target market segment. Therefore, information technology offers a platform that helps customers make orders from everywhere without using the internet. On the other hand, it benefits the business by minimizing processes such as bookkeeping and inventory management. Additionally, digital technology offers computer applications that offer several platforms such as promotion, management, and record keeping in one system. Thus, it is undeniable that information technology can be used as an approach of cost reduction in restaurants.
References
Dean, A.K. (2011). Technology’s Effect on Hotels and Restaurants: Building a Strategic Competitive Advantage. Journal of Applied Business and Economics, 12 (1), 72-80.
The Social Savior, (2016). Social Media Strategy & Management for Restaurants, Cafes, and Bars. Retrieved from https://www.thesocialsavior.com/au/social-media-for-restaurants-cafes-bars/
Hasson, B. (2015). Digital Technology for Nightclubs. Nightclub & Bar. Retrieved from http://www.nightclub.com/product-watch/technology/digital-technology-nightclubs
Turban, E. (2005). Introduction to information technology. Hoboken, NJ: J. Wiley.
Huber, M. M., Hancer, M., & George, R. T. (2010). A Comparative Examination of Information Technology Usage in the Restaurant Industry. Journal Of Foodservice Business Research, 13(3), 268-281.
Appendices
Restaurants Sales Increase After Implementing Information Technology
