The COVID-19 pandemic has forced consumers to stay home and restaurants to shut down in-house dining services worldwide. But not every restaurant is prepared to move its operations to takeaway or online orders, which will be necessary to keep generating revenue during the era of social distancing. Luckily, there are a handful of fintechs with industry-specific solutions that can make this shift easier for restaurants.
Not every restaurant will survive the pandemic
In these unprecedented times, restaurants have been forced to step up their efforts to stay in business, relying on delivery or takeaway services to stay afloat. Those that can’t do so successfully are likely to shutter their doors for good.
But not all restaurants are created equal. Big food chains will undoubtedly suffer profit losses, employee layoffs, and even store closures, but will ultimately weather the havoc that coronavirus wreaks. Similarly, quick service restaurants (QSRs) that rely heavily on drive-thru and takeout are likely to come out of the pandemic relatively unscathed. For example, McDonald’s drive-thru orders already encompass 70% of the chain’s total business, and drive-thru is still being widely offered in many parts of the U.S.
Local and independently-owned restaurants are another story. The sad truth is that a significant number of restaurants that have been forced to shut down won’t be reopened. According to the New York Times, “restaurant analysts and operators have been quoting an estimate that 75% of the independent restaurants that have been closed won’t make it.”
Further, the National Restaurant Association has estimated that the U.S. restaurant industry alone could lose a whopping $225 billion in the next three months and lay off between 5 and7 million of the industry’s 15.6 million employees.
To have a fighting chance, restaurants need to make changes
In response to mandated closures, many restaurants are substituting their typical in-house dining to takeout and delivery services, relying on food delivery apps like Postmates and UberEats; both of these have eliminated commission fees for certain small businesses in light of COVID-19. But the transition to takeout or delivery-only business models isn’t as simple as signing up for one of these apps, even without a commission fee.
Partnering up with delivery apps requires software and point-of-sale system integration, which can take time and effort that struggling businesses don’t have. Further, as the coronavirus worsens in the United States, Americans are becoming wary of inviting an outside delivery person who could be sick to their house. On the restaurant side, companies are reluctant to potentially endanger the health of their own workers by having them make deliveries.
Fintechs are enabling restaurants to offer digital dining services
Fintechs’ involvement in the restaurant industry is not new, but is more relevant than ever because their features can help struggling restaurants establish and improve digital services. Here are just a few fintechs in the space, and how their tools enable restaurants to fight against profit losses stemming from COVID-19:
1. Paymentsense’s BiteBack tool
Paymentsense, a United Kingdom based fintech, recently launched a free business tool called BiteBack. BiteBack enables businesses to operate as takeaway restaurants and alleviate the financial need for sit-in diners. After filling out a simple form with restaurant details and menu items, independent restaurant owners are provided with a free web page generated by Paymentsense that lets customers place orders.
Free promotional materials are also available, including restaurant window posters and social media insights. More advanced options, including personalized gift vouchers, eco-friendly takeaway packaging, and menu fliers, can be purchased for a small fee. After ordering online, customers visit the premises, pay for their order, and pick up their food.
2. Clover’s POS systems
The fintech Clover, which was acquired by what is now Fiserv in 2012, is known for its cloud-based point of sale (POS) systems. Many of Clovers products were designed specifically for traditional restaurants and QSRs. Restaurants that download the Clover POS system can take orders and process payments in real time, whether the order is placed inside a restaurant, for takeout, or for delivery. The system also accepts mobile and contactless payments, helping to mitigate contamination concerns and catering to new consumer preferences.
The contactless feature is important, as it has long-lasting implications for restaurants that implement it. RTi Research, which recently released a report on customer perceptions of COVID-19, found that 30% of consumers have started using contactless payment methods since COVID-19 began, and 70% of those new to contactless payments plan to keep using them after the pandemic dies down.
Commenting on the report, Pete Reville, Mercator Advisory Group’s Director of Primary Research Services, noted that “it is safe to say that contactless will see a net gain as we come out of the crisis.”
Clover’s POS system is also connected with a number of Clover restaurant management apps offering valuable services. For example, the OrderOut app integrates online orders directly into a restaurant’s Clover POS system. This means that orders from Postmates, UberEats, Grubhub or another delivery service will be transmitted directly to the app, eliminating the need to manually input orders while enabling restaurants to process larger volumes of delivery or takeout orders.
3. Square for Restaurants and loyalty program enablement
Square’s POS platform catered toward the restaurant industry, simply named Square for Restaurants, allows restaurants to streamline their operations and manage orders. The POS is compatible with food delivery services like DoorDash and Postmates, with orders from those apps being directly uploaded to a restaurant’s POS system.
It also allows restaurants to build customer loyalty programs straight from their POS device. Repeat business will be crucial to independent restaurants during this time, and restaurants that use Square Loyalty have seen a 40% increase in customer visit frequency.
Restaurants across the globe are struggling to stay in business due to widespread closures and revenue loss caused by the unprecedented coronavirus epidemic. There are fintechs offering industry-specific services and platforms that can give restaurants their best shot at making it through the crisis without going out of business.