Hospitality businesses have historically been largely run as single channel, restaurant-based operations, but the accelerated adoption of digital by customers during Covid-19 has pushed the sector into developing a multi-channel model akin to that found in the retail industry.
Joel Robinson, digital and technology director at Azzurri Group – which operates the Zizzi, Ask Italian and Coco di Mama chains – says: “There are parallels with retail, which is probably 10 years ahead of hospitality. Digital was massively accelerated by Covid-19, with the landscape having changed staggeringly.”
For Azzurri Group, this meant a move from having fewer than 10 channels across its brands to now having around 20. This has included the digitisation of existing channels such as in-store and take-away involving the adding of Order & Pay at table and kiosks; new channels including partnering with the key delivery players Just Eat, Deliveroo and Uber Eats; the creation of virtual brands that are run from existing kitchens; click and collect; and the introduction of product ranges into the retail channel including Coco di Mama baguettes in convenience stores and Zizzi pasta in Sainsbury’s and Tesco.
The strategy of Robinson is to take a different approach for each channel and brand based on deciding what is the best customer experience to deliver and then working backwards to build the technology.
“Sometimes you can optimise for IT [taking an all-in-one solution], but that’s not the best thing to do. As a tech product it makes life easy for you, but it’s not the right thing to do for the customer,” he says.
Instead, the company has taken the best-of-breed route with the creation of two tech stacks – one for casual dining and the other for its QSR (quick service restaurant) brands – working with various players such as AND Digital, for its Order & Pay at Table solution; Orderswift, for click and collect for Ask Italian and Zizzi; and a new partnership with Vita Mojo, for click and collect and planning out the introduction of kiosks for Coca di Mama.
Kim Teo, co-founder of Mr Yum, is also an advocate of the best-of-breed approach as she says all-in-one solutions will invariably be only 80% as good. The problem for many hospitality companies is that “lots of choices made during Covid-19 were hasty” and undertaken out of necessity to keep businesses trading. Technology providers came knocking with online solutions and suggested solutions such as doing cheap delivery, with the result that companies tried all sorts of things, helped by the fact they had the resources to do it as their restaurants were closed.
Nick Liddle, commercial director at Vita Mojo, agrees that companies made mistakes during Covid-19, with short-term decisions being made. “People cobbled things together and created a Frankenstein-like mess that requires lots of manual work. It can be as simple as dealing with a menu across channels. One operator had two people just working on menus with six lots of changes required whenever the menu was altered,” says Liddle.
This is prompting progressive operators to make the necessary changes, according to Teo, who says: “Those brands now looking to grow are looking at their tech stack, and this is because what they have built is disjointed with lots of manual downloading and uploading of data between the various systems.”
The complexity is obvious, with Teo highlighting the myriad of data now coming into hospitality businesses from the likes of social media feeds, web channels, customer reviews, point of sale (PoS), QR code ordering, customer relationship management (CRM) systems, and so on.
With this amount of data flowing around between the different applications, the choice between best-of-breed and all-in-one solutions often comes down to the integration issues involved knitting the different applications together.
For Mr Yum, there is a recognition that its technology partners have to dedicate resources to the task, which incentivises them to engage. It commits around 20% of its teams’ time to dealing with integrations.
Before Covid-19, Teo says the industry was held back by electronic point of sale (EPoS) partners, but this has been changing in recent years: “Three years ago, it was hamstrung by PoS providers. If they did not want to do any integration work, then the tech provider had to do a lot of it. If you do not automate the data flows [through integrated systems], then it is a manual effort. EPoS’ were more closed networks, but Covid has accelerated things [to change].”
Application programming interfaces (APIs) have helped dramatically with the integration headache – they lie at the heart of Shopify, for instance, where specialist applications can be purchased and integrated into hospitality firms’ tech infrastructure via APIs.
The disjoined nature of systems is recognised by JP Then, founder of Crosstown Doughnuts and delivery platform Slerp, who says many hospitality companies are looking to avoid this fate by selecting the right technology to deliver them an integrated infrastructure.
“It should all be part of the same tech stack with everything integrated,” he says, adding that there has been a fundamental change to the stack. Whereas the EPoS has traditionally been the “motherboard” of hospitality businesses, it is the ability to order online that is now the motherboard as restaurant operators’ focus shifts away from on-premise being the primary pillar of their operations.
This is based on the continued growth of sales through the various digital channels. Nick Liddle, commercial director at Vita Mojo, says that established operators have to accept that things will not be returning to the pre-pandemic normal, with delivery and online sales returning to the old volumes.
He says companies now have to decide on what the right channels are for their business and who they should work with that best represents their brand. “Those businesses that will be successful recognise that it’s a big project with multiple stakeholders across the various teams. It needs buy-in at C-suite level,” says Liddle.
Vita Mojo has built a full operating system for restaurants around ordering across the channels and is working with the likes of Leon, Tossed and Nando’s. For Leon, it provides the infrastructure for its click and collect, kiosks and app that are integrated into a third-party PoS system.
It’s all well and good having a great relationship with your customers, but if there’s not a stable infrastructure behind it and you lose connectivity, you’re set up to fail
Joel Robinson, Azzurri Group
Kiosks in particular have been a highly successful digital channel. Liddle says that he is surprise that more restaurant operators are not adding Kiosks into their mix based on the high level of adoption of the devices by consumers, as well as the economic benefits they provide by enabling a reduction in staffing levels or a redeployment of personnel. However, he expects this to change with more IT investment among the mid-range brands as they come under increased financial pressure to reduce costs and drive more covers.
What has been part of the problem in slowing things down, according to Teo, is the age of the decision-makers in many businesses. “The guests and the servers will love it, but the decision-makers are not always young and it can take some time convincing them that these solutions enable great service in hospitality,” she says.
This was not the case at Azzurri Group, as Robinson says that the company was anticipating the need for greater adoption of digital capabilities during the run up to Covid-19. This included bringing in Robinson to a newly created role three years ago.
He offers a word of warning about where technology investment should be directed within hospitality companies. “What’s often overlooked is investment in the network infrastructure to handle the level of digitisation. It’s our biggest investment because we now have many orders coming via the internet,” says Robinson.
“It’s all well and good having a great relationship with your customers, but if there’s not a stable infrastructure behind it and you lose connectivity, you’re set up to fail. There are far too many cheap and cheerful systems out there from the days when an internet connection was just a nice thing to have.”
Interestingly, the size of the business does not determine the success of IT implementations and the development of a multi-channel model within the hospitality sector, with JP Then saying that some of the best performing customers of Slerp are of varying sizes.
“It’s a mix – from the savvy SMEs that have got a community (of customers) behind them, to larger enterprises that typically move more slowly. For larger organisations, it’s more about change management than IT project management involving legacy systems and training up people,” he says.
The next frontier for hospitality businesses is to harness the customer data that is now flowing increasingly rapidly across a growing number of channels to create a single customer view – and possibly feed this into a loyalty programme. But this is a tough task and something that retailers have been grappling with for many years and most have failed to yet solve the problem. There’s clearly still time for the hospitality industry to catch up with its retail neighbour.
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