Over the course of the pandemic, digital restaurant orders soared over 145% — causing Quick Service Restaurants (QSRs) to swiftly adapt to meet the new expectations of customers. Only by implementing new digitized services have QSRs been able to navigate the mid-pandemic restaurant landscape while setting themselves up for future growth.
In this article, we examine the biggest challenges QSRs have had to overcome over the past 18 months and software solutions that have led to their success. Read now for insights on:
- Adapting to staffing shortfalls
- Meeting expectations for customer experience
- Future-proofing infrastructure
- Maintaining security for payments
Table of Contents
Content Summary
Challenge 1: Adapting to staffing shortfalls
Challenge 2: Meeting expectations for customer experience
Challenge 3: Future-proofing payment infrastructure
Challenge 4: Maintaining security for payments
Are you providing what your customers expect?
The past 18 months have challenged all industries, but few have had to adapt as completely as restaurants, particularly fast casual and quick service restaurants (QSRs). Thanks to quick pivots, they were pandemic winners, because they shifted to meet customers’ craving of their favorite foods and needing to obtain them through different channels as dining rooms closed.
Digital restaurant orders — already increasing before the pandemic — soared more than 145% from December 2019 to December 2020, according to research from NPD Group. This has led to an increased focus on digitizing payments to improve efficiencies by streamlining the entire process.
Restaurants are racing to optimize all their channels, with drive-thru, delivery and curbside pickup remaining popular even as indoor dining reopens. However, consumer expectations have also increased, and successful restaurateurs know they must innovate to meet new demands for convenience, as well as service and security.
“Customers have high expectations for fast, seamless experiences, which makes sense, given that ‘quick’ is right in the name of QSRs,” pointed out Benny Tadele, senior vice president for ACI Worldwide, which provides software that allows restaurants and retailers to securely accept, manage and process payments in real time.
That can take a toll on fast casual and QSRs faced with a constantly evolving landscape. Read on to find out more about the top four pain points these restaurants face and the strategy pivots they can make to help thrive in this new environment.
“Customers have high expectations for fast, seamless experiences, which makes sense, given that ‘quick’ is right in the name of QSRs.” – Benny Tadele, senior vice president, ACI Worldwide
Challenge 1: Adapting to staffing shortfalls
It’s no secret that most restaurants are understaffed; in fact, three-quarters of restaurant operators told the National Restaurant Association that employee recruitment and retention was their top challenge in 2021.
One smart solution to the staffing woes is to use technology to automate rote activities, thus redeploying workers to more high-value tasks where they can make a bigger difference. Restaurants are finding that customers don’t mind limited interaction in some phases of dining; for instance, 45% of consumers said they preferred to use their phone to view a menu, order and pay, rather than interact with servers during COVID-19, with nearly as many — 40% — saying they intend to continue doing so once the pandemic is over.
Other popular restaurant technologies gaining traction include kiosks and at-table or mobile ordering that allows diners to self-serve and use integrated electronic payments for further convenience. They’ve also seen increased adoption of mobile prepay, where the payment is in the queue before the patron even arrives. “QSRs are focusing on how they can make it easier for guests to order, pay and get their food as quickly as possible, which allows them to deliver value, along with speed,” Tadele said. “For instance, using a custom generated QR Code to pay can allow the server or cashier to multitask.”
The importance of adequate training is a cautionary note sounded by Clint Cady, director of payments at W. Capra Consulting Group. “Fast food attendants have moved from taking orders and serving patrons to troubleshooting at a kiosk or explaining how to use QR codes or an Android wallet. Brands have to emphasize training so that employees understand how the technology should work and can step in as needed.”
“QSRs are focusing on how they can make it easier for guests to order, pay and get their food as quickly as possible, which allows them to deliver value, along with speed. For instance, using a custom generated QR Code to pay can allow the server or cashier to multitask.” – Benny Tadele, senior vice president, ACI Worldwide
Challenge 2: Meeting expectations for customer experience
As diners look for faster and more effective service, fast casual and QSRs can streamline processes to improve efficiency in two key ways.
Touchless payments
Interest in contactless payments has surged for two reasons: While they were originally adopted to significantly speed up transactions, in today’s environment, they offer a safety benefit as well, noted Amit Chhabra, head of QSR/restaurant merchant subsegment at ACI Worldwide.
Nearly 50% of people in a Wakefield Research survey conducted for Visa said they would not shop somewhere without this functionality, and these restaurants see the value, too, with 84% of merchants in an American Express survey saying contactless payments are safer for personal health, and 80% agreeing that it helps keep the area cleaner for their staff.
Simultaneously, contactless payments continue to fulfill the promise of quickening the pace of service, which has been a key focus for all restaurants as payment methods have evolved. Most restaurant operators remember the uproar sparked by the EMV rollout, which added three or four seconds to payment processing. QSRs continually invest in advances to shave time off the customer’s wait, and EMV ran counter to that goal, even though it helped protect payment security.
“Since EMV technology has not changed significantly, contactless payments provide an avenue for issuers and processors to innovate and offer a faster transaction-processing time,” Chhabra advised.
“[QR codes are] the new old thing. When they vanished, we considered them an archaic technology, but now they’ve reemerged to assist QSRs in providing excellent service.” – Benny Tadele, senior vice president, ACI Worldwide
QR codes
Due to pandemic-related conditions, the QR code has had a resurgence as it became the mode of choice for making selections in the absence of physical menus, yet it wasn’t long before QSRs and the public realized they offer benefits far beyond that. Tadele called QR codes “the new old thing. When they vanished, we considered them an archaic technology, but now they’ve reemerged to assist QSRs in providing excellent service.”
One strategy he recommended is putting a huge QR code on the wall so that diners can scan it while in line and use it to order and pay, fast-tracking the entire process. Custom order specific QR codes can also be displayed on the drive-thru order screen and scanned to complete payment while waiting in the drive-thru line so patrons can skip the payment window of the traditional drive-thru experience. Additionally, the resulting digital receipt from a QR code-based payment enables a launching pad for post-transaction consumer engagement between the restaurateur and consumer, which can serve to further drive brand loyalty.
“Marquee loyalty programs are using QR codes to increase adoption, store payment details, provide rewards points and even offer a personalized promotional item,” Cady said.
While QR codes enhance a consumer’s experience, they also provide benefits when QSRs link the data to a specific customer. “Loyalty programs have evolved from multiple tags weighing down your keychain or cards stuffed in your physical wallet. A QR code provides both simplicity and additional functionality to the consumer and captures richer, deeper data for the brand,” Chhabra pointed out. ACI’s functionality allows merchants to view aggregated reports with actionable, yet anonymous, data that lets them identify trends and react to opportunities.
Challenge 3: Future-proofing payment infrastructure
While new functionalities such as touchless payments and QR codes contribute to a better experience, as with any new technology, they require an investment from fast casual and QSRs. However, restaurants have to be nimble to take advantage of these new opportunities without delay. “The idea that a restaurant will take 12 to 18 months to get something to pilot doesn’t work anymore; by then, we’ve missed the boat,” said Zach Pastko, senior consultant at W. Capra Consulting Company. “They need to future-proof their overall technology platform, along with payment options, so they can easily roll it out over a large footprint. Forward-thinking C-level executives know they need a solution they can develop quickly or bring in right away and integrate easily.”
“Forward-thinking C-level executives know they need a solution they can develop quickly or bring in right away and integrate easily.” – Zach Pastko, senior consultant, W. Capra Consulting Company
That’s where ACI Worldwide offers a distinct advantage over competitors, Tadele said. Its biggest value proposition is its “agnosticism,” meaning that its solution integrates with any payment method, point of sale (POS) or terminal vendor and processor to bring consistency to the customer, no matter what channel they use. “The ACI Omni-Commerce payments orchestration engine ensures an optimal transaction path with a front-end integration for the payment, terminals and POS,” Tadele explained. That helps QSRs future-proof since they won’t have to change the architecture or rip out existing payment infrastructure when new options, such as the touchless card reader, are introduced. This is especially important for merchants with mixed environments that may have come from acquisitions or who plan to expand internationally.
Agnosticism is increasingly important as alternative payment methods become more widespread, whether it’s a digital wallet or an app such as WeChat Pay or Alipay, which are popular internationally. “The lines are being blurred between peer-to-peer (P2P) payment offerings, such as Venmo or PayPal, and traditional payment methods,” Chhabra revealed. “As a restaurateur, you don’t want to limit the way people want to pay, whether it’s cash, credit card, P2P apps or even a gift card.”
ACI offers a mature API-driven platform, which allows restaurants to add new components to the tech stack easily. “As brands in the United States begin to ask how to integrate apps like WeChat Pay or cryptocurrencies, we are a step ahead,” Chhabra disclosed. “ACI checks all the boxes with features and functionality, reporting requirements for clients, and security and mission critical reliability at our core.”
“ACI checks all the boxes with features and functionality, reporting requirements for clients, and security and mission critical reliability at our core.” – Amit Chhabra, head of QSR/restaurant merchant subsegment, ACI Worldwide
Challenge 4: Maintaining security for payments
A breach that compromises the trust of your consumer base is any restaurateur’s worst nightmare. It also comes at a significant cost — an average of $3.61 million per breach, according to the IBM Cost of a Data Breach Report 2021. The damage often continues to pile up, with the report finding that it takes an average of 287 days to identify and contain a data breach.
Restaurants are far from immune; of the 125 reported incidents in 2019, payments data is the most sought after information (69%), followed by personal information (44%). Additionally, POS represents 61% of data breaches. Security must be the backbone of any payments system provider to control costs and protect a brand’s hard-won reputation.
Just as restaurants have a responsibility for food safety, they must ensure their customers’ data is secure, warned Chhabra. “Because any negative incident can spread like wildfire on social media, there’s no room for failure. You have to be flawless in execution with your food production, your service and your data security.”
Fast casual and QSRs can further reduce payment-processing risk with two important technologies, both of which are familiar and foundational to most brands and where ACI Worldwide leads.
“Because any negative incident can spread like wildfire on social media, there’s no room for failure. You have to be flawless in execution with your food production, your service and your data security.” – Amit Chhabra, head of QSR/restaurant merchant subsegment, ACI Worldwide
Point-to-Point Encryption (P2PE)
While restaurateurs understand the importance of making sure the integrity of their system is up to standards, the challenge comes when convenience overrides security. Rather than subject consumers to grueling protocols, point-to-point encryption (P2PE) can ensure that customers’ card data is not exposed to malware or is otherwise left vulnerable within a merchant’s system during or after the transaction approval process. “With P2PE, cardholder data won’t be exposed within their POS and network or during transmission for approval. It is encrypted until it has reached a PCI DSS safe harbor like the ACI data center,” Tadele explained.
“Nearly every one of our clients uses P2PE and tokenization to ensure private details never enter their network.” – Clint Cady, director of payments, W. Capra Consulting Group
Tokenization
The second technology innovation to balance security and convenience is tokenization, which protects consumer data, while preserving convenience in the omnichannel experience since consumers don’t have to re-create their identity and credentials. “The conundrum is that consumers say, ‘I want to have the same experience in all channels, but I don’t want you to keep asking me for my data, so I want you to track me but not expose my data,’” emphasized Tadele.
That’s where tokenization can tie it all together since the merchant has a representation of the consumer’s credentials but not payment card data or personally identifiable information. And that’s key, Cady added. “It turns out that bad guys don’t just want payment details; in fact, often it’s actually more valuable to them to get personal information. So, while tokenization is important to the restaurant to know who the consumer is so you can give them the latest offers, it’s even more vital as a means to protect personal data.”
To that end, security has become table stakes, he said. “Nearly every one of our clients uses P2PE and tokenization to ensure private details never enter their network.”
The true benefits of tokens happen when they are shared across previously siloed systems. Data mining using tokens across these disparate systems reveals a wide array of optimization and performance data the restaurateur can leverage, leading to an increased understanding of customer journeys — and ultimately, better customer experiences.
Are you providing what your customers expect?
As QSRs continue to invest in technology to transform their operations, they have to remember that it’s all for one reason, Cady insisted. “It’s about your customer. You have to create a road map with the end goal in mind of what they want and expect now but also what they will want in the future.”
And that means enlisting the right partner, Chhabra said. “At ACI Worldwide, our systems ensure secure payment processing at scale and enable market-leading consumer journeys within a variety of POS, terminal and processor configurations. We’ve never been breached or lost any consumer data. QSRs are just one of the industries we protect; our systems manage entire bank networks, and you need rock-solid systems in place to instill that level of confidence. That’s the technology and security know-how we bring our restaurant clients, and there’s nobody else who does that.”
Are you ready to see how ACI Worldwide can future-proof and secure your payment infrastructure? Find out more at ACI Worldwide.
“It’s about your customer. You have to create a road map with the end goal in mind of what they want and expect now but also what they will want in the future.” – Clint Cady, director of payments, W. Capra Consulting Group