How Technology Helps Hospitality Businesses to Combat Economic Uncertainty

Digital adoption has been an important lifeline for hospitality businesses and it's clear there are greater efficiencies to be realized with new technology

FREMONT, CA: Technology appears to be a fundamental instrument in combating macroeconomic situations as restaurateurs around the world struggle with high inflation rates, personnel shortages, and general economic uncertainty. A majority of businesses use POS or restaurant management software to streamline shifts, including new or expanded online ordering systems or the use of new technology to automate tasks. Hospitality operators must be able to do more with less. 

Digital adoption has been a vital lifeline for the hospitality industry, and new technology will lead to improved efficiencies. Technology is a priceless tool for enhancing the effectiveness of hospitality brands and many business performance metrics, from improved energy efficiency to a more smooth and more automated client experience.

While customer service will always be a people-centered endeavor for some sectors of the industry, other sectors stand to gain from operational automation. Brands that cater to younger travelers, for instance, have embraced automated check-in/out technologies for keyless entry while boosting the customer experience for generations who grew up with the internet. By having more touchpoints to capture consumer preferences and anticipate their needs, moving procedures to digital solutions can also help businesses personalize the visitor experience.

Rising food and supply costs are now the biggest challenges. More than half (61 percent) of restaurateurs use this strategy as a way to combat inflation, although it is intimidating to raise menu prices (for fear of losing clients). Californian restaurants were hesitant to raise their pricing but ultimately concluded that it was essential. There is a perception that customers are extremely price-sensitive, and businesses have been anxious about raising their prices. In some ways, inflation has provided the chance to finally implement required price modifications and transition to new price points. While it appears that employing new employees (23 percent) and staff retention (11 percent), together with inflation, are the top two concerns, sustainability is an emerging factor that cannot be disregarded. Nearly half (47 percent) believe promoting environmentally friendly practices will increase clientele.

57 percent of the respondents concurred that adopting new technologies over the last two years was essential to the survival of their company. To make sure they are spending money wisely and squandering less, 42 percent of operators upgraded their food costing and inventory methods. The number of days and/or hours of operation are being restricted by nearly one-third of business owners (30 percent), particularly during slower months. This is done to save costs brought on by inflation and to avoid employee burnout while working with an understaffed workforce. To avoid paying third-party costs, nearly a quarter (21 percent) brought online ordering in-house. 40 percent of restaurant owners reported that they had already implemented inventory techniques to increase productivity and decrease food waste, while 60 percent of restaurateurs believed that inventory data (stock levels, waste) is crucial to them. 43 percent of restaurant owners employ fewer employees. 39 percent of businesses are expanding their vegan menus to increase sustainability, and 37 percent have adopted a food waste policy.

The use of new POS or management software to streamline employee shifts was cited as the technology that boosted business the most by 12 percent of respondents from the industry this year, up from seven percent. Due to the resurgence of in-house dining, beverage sales—both alcoholic and nonalcoholic—saw the highest increase. Breakfast, small plates, and dessert have all grown in popularity in 2022. With the return of in-house dining, returning restaurants appear to be expanding their menus after cutting them back previously. Consumer purchasing patterns appear to be being significantly impacted by inflation, pushing them to reconsider and tighten their budgets. Although eating out is a well-established habit and patronizing neighborhood eateries is still important to consumers, 50 percent of those polled said they would visit those establishments less frequently due to financial constraints. Home delivery, which is likewise used less by 48 percent of respondents, is the same.

While some concepts can naturally profit from these trends, business owners creating new hospitality goods or repositioning ones already on the market should think about incorporating various offer types to best meet the shifting needs of consumers. Analyze data and booking patterns of long-term visitors to understand their demands to maximize the guest mix. Then, broaden your offers to include amenities and services that long-term visitors value. Consider flexible price alternatives as well. To generate offers and package discounts, partner with nearby businesses like co-working spaces, tourist attractions, and sightseeing destinations.

Developing new trends, fuelled by remote work and a workforce that is more globally distributed, enables hospitality organizations to tailor their offerings, draw in customers who stay longer on average, and fill in the gaps during times of low demand from other segments. In addition, take advantage of technology when it comes to operations. This can help businesses cut expenses by improving power consumption control and streamlining processes, which can free up staff time and allow them to focus on providing better customer service.

It is challenging to find a universal strategy that will help hospitality businesses manage the current environment, but innovation in one of those three areas could have a decent chance of producing a profitable return on investment. It is challenging to foresee what the future holds in the fast-paced macroenvironment, so executives should closely monitor trends to successfully navigate.