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The Restaurant of the Future

White Paper

Today the restaurant industry is one marked by change. The

tools used to answer the billion-dollar question, “Where will

I eat today?” are changing about as fast as ordering food

from the drive-thru. Today’s quick service and casual dining

customers are looking more like dining mavericks, forgoing

the established norms of trusting advertising, promotions,

and impulse buying. Instead, they are relying on online

reviews (both by family/friends and complete strangers),

word of mouth, social media, and amenities like free WiFi.

According to Nielsen’s Global Online Consumer Survey, 90

percent of online consumers trust recommendations from

people they know and 70 percent trust opinions of complete

strangers. The study also found that a highly-rated product

will increase the likelihood of purchasing for 55 percent of

consumers.1 According to a February 2010 EXPO survey

of US Moms who use the Internet, consumer reviews are

trusted nearly 12 times more than descriptions that come

from the companies themselves.2 Technology enables

today’s dining customers to make their decisions based on

what others within their self-defined “network” tell them

about a particular restaurant or menu item.

According the National Restaurant Association, nearly 4

in 10 consumers say they’d be likely to use an electronic

ordering system and menus on tablet computers at

tableservice restaurants. About half said they would use

at-table electronic payment options and a restaurant’s

smartphone app to view menus and make reservations.3

Smart phones enable consumers to quickly research and

make decisions about where to eat, giving new meaning to

the popular term in the QSR industry “impulse buying.”

Additionally, a majority of Americans now access the

Internet wirelessly. According the Pew Internet and

American Life Project’s Mobile Access 2010 report, 59

percent of American adults now go online wirelessly

using either a laptop or cell phone, an increase over the

51 percent of Americans who did so at a similar point in

2009. Among the coveted 18-29 demographic, 84 percent

go online wirelessly. The changing dynamic in how dining

customers gather data and what they expect to experience

when they go to a given eating establishment, means quick

service and casual dining restaurants must utilize modern

technology to stay competitive and attract dollars.

The Restaurant Response

Some restaurants have already begun to reach out to their

customers using the same methods that their customers are

1 eConsultancy, “Online consumers trust real people, not companies,” July 8, 2009

2 eMarketer, February 2010

3 www.restaurant.org/News-Research/News/Technology-is-top-trend-for-restaurants-

in-2012

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using to find them. For example, the Pew study referenced

above found 85 percent of all 18-29 year olds use text

messaging. Subway and Burger King have recently launched

pilots of nationwide text-to-order programs—offering

rewards to customers who use texting to order.

4Food, a new QSR in New York City, is turning the quick

dining experience into a full-fledged social network and

online game. Customers can place their custom burger

order online and by mobile device and then pick it up.

Once at the restaurant, a dynamic digital menu displays

a leader board which tracks the most ordered burger or

meal creation. Individual customers can broadcast their

creations via Facebook and Twitter, and each time someone

orders their creation, the customer receives a 25 cent credit

towards their next order. And of course, the restaurant offers

all the amenities to keep their customers connected—free

WiFi and dozens of power outlets.

Restaurants are also reaching their employees in new ways.

Given the combination of mobile devices among young

people who are the typical workers in the restaurant industry

and high turnover rates, quick service and casual dining

restaurants have a big incentive to deliver high-quality

digital training that employees can take with them.

The examples above illustrate what once was considered

a simple “order out” is becoming an entertainment

destination and promotional experience that is driving

greater customer interest, loyalty, and most of all, spending.

The enabling force behind these changes is technology. In

a sector where competition is fierce, turnover among staff

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is high, and consumer tastes are often fickle, enterprising

restaurateurs are finding differentiation, employee retention,

and customer loyalty through innovative uses of networking

and application technologies. In fact, much of the future

innovation in the restaurant business will be found in a

store’s effective use of its network and the technologies

that enable business applications—not in the kitchen. At

Hughes, we’re working with many of the leading names in

the restaurant industry enabling them to use their network

as brand-building tools.

To be sure, quick service and casual dining restaurants

always have to worry about the meals they are serving. But

the future of the restaurant, and its ability to survive and

thrive amidst white-hot competition and tough economic

times, lies in the intelligent use and management of

technology and how it directly impacts the customer

experience.

Here are just a few technological items we see as being

standard fare in the new world of the quick service and

casual dining restaurants:

• Digital menu boards for better demographic targeting

– Menu boards will be digital and will change based on

the time of the day and the targeted demographic. For

example, during the morning hours, the boards could

highlight commuter breakfast options. Late morning

menus could shift to items of interest to stay-at-home

parents or retirees; mid-afternoon to items more

appealing to after-school teenagers. Dynamic menu

boards will anticipate traffic and optimize each selling

moment for improved margins on sales and customer

service. Or, in the example of 4Food above, menu

boards can be used to track popular items as part of the

effort to reach social network-minded customers.

• Easy-to-use touch screen ordering and transactions at

the table – Table-based ordering and transactions will

be as common as self-service gasoline. Every table

will be equipped with touch screen digital ordering

devices. Customers will order food and complete credit

card transactions at the same place they eat their

meal. While the restaurant saves money from a staffing

perspective, customers are happier as orders will be

more accurate and tipping (if applicable) will not

require extra time crunching numbers. Consumers can

also learn about the specials of the day right as they

arrive at the table—saving time re-educating staff each

day about menu changes.

• The table as an information and entertainment

center – Digital devices at each table will also provide

information about ingredients, diet, and nutrition—

something that is likely to soon be a legal requirement

in all 50 states. These devices will not only be a way

for customers to learn more about the food they are

eating (and the brand they are buying it from), but also

be used to entertain them with games and contests.

Brian McKinley, vice president of marketing for DMX,

a branding company, envisions a jukebox-like music

and video player at tables with the ability to buy a

song or video right on mobile devices. Anil Selby,

vice-president of Nth Degree Technologies, says that

in 20 years the technology will exist to put television

screens on paper—opening a wide range of possibilities

for quick service and casual dining restaurants to

reach their customers at the drive-thru and in stores.4

On the flip side, restaurants will use information

about entertainment choices to learn more about their

customers and what they like to order at various times

of the day—and how much or little they like the items

sold to them.

• Integrated digital training platforms – The customer

experience depends on well-trained employees.

Restaurants will meet the challenge of high employee

turnover with video training and education systems

delivered through classroom, in-store, or mobile

channels. To this end, information will be delivered

to employees in ways that are easy to retain. Many

restaurants will also have digital training rooms where

employees can learn via text, video, and audio the

latest on everything from food preparation, personnel

management, and the regulatory requirements.

4 QSR Magazine, “What the Future Holds for Quick-Service Restaurants,” July 2009

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• Intelligent drive-thru – Restaurants will link mobile

devices to the drive-thru window. By establishing a

link between the store and the customer’s mobile

device, restaurants will communicate with customers

about promotions, sales, featured menu options, and

loyalty programs. At the actual drive-thru, customers

will swipe loyalty cards or scan a bar code from their

phones allowing restaurants to track customers,

incentivize, and reward brand loyalty. According to

Jay Ward, communications manager for Ford, drive-

thru lanes of the future will also move much faster

as a result of automotive upgrades combined with

mobile applications. Quick service and casual dining

restaurants will need and eventually turn to technology

that can process orders over this new, fast, and exciting

channel.

• Automated inventory management – Managing inventory

is a headache. It is particularly challenging if retailers

are managing multiple stores in multiple locations with

something as perishable as food—time is literally of the

essence. In the future, all QSRs will have automated

inventory racks so management always knows when and

what to order.

• Transaction-based video to reduce shrinkage and sales

irregularities – Video monitoring for security will be

based on activity. For example, video capture would

occur when there is a ‘no sale’ transaction at a register

or when certain inventory is accessed. By making video

capture based on activity, management will not have to

weed through hours of tapes to try to determine what

happened with inventory or at the cash register. This

will not only reduce shrinkage, but save valuable time

for management and store employees that can be better

spent on reaching customers.

• Multiple data streams running through multiple

networks can be both secure and shared – All the data

running through multiple data streams and networks

needs to be secure. Payment Card Industry (PCI)

compliance requires a high level of security for each

transaction and to guard against both wired and wireless

threats. Information also needs to flow securely and

efficiently with built-in redundancy. Self-configuring

VPNs and firewalls using intelligent routers will make

the whole process (and headache) of becoming and

remaining PCI compliant easier.

At Hughes, we’re working with many leading restaurant

brands to build restaurants with features and amenities

like the ones described above. That’s why we’ve introduced

HughesON™, a comprehensive set of managed solutions

designed to meet the unique needs of distributed

enterprises such as quick service and casual dining

restaurants. From high-capacity access and high-availability

solutions, to digital signage and training solutions,

HughesON enables enterprises to cost-effectively delight

customers, engage employees and streamline business

operations. We strongly believe that these efforts will

transform the restaurant from a simple dine-out experience

to one that can rapidly adapt to customers’ preferences and

entice them to remain loyal customers. As these companies

move their brands and stores into “restaurants of the

future,” Hughes will leverage decades of experience serving

the industry to deliver innovative technology and networking

solutions.

5 QSR Magazine, “What the Future Holds for Quick-Service Restaurants,” July 2009