Despite the growth in delivery, restaurant aggregators still struggle to make a profit, and more restaurant-friendly delivery options are emerging. This includes the growth of ghost kitchens: restaurant spaces designed solely to produce food for delivery. At the same time, complaints about high fees for third-party delivery services remain.
- TIP: Get closer to customers and eliminate third-party aggregator fees by offering an “on us” experience.
- TIP: Help to reduce fraud and payment acceptance costs by promoting “order online, pay in person” practices.
Changes in consumer payment preferences
In addition to an increase in online, mobile, and contactless payments fueled by the pandemic, our study revealed that generational preferences are also driving a major shift in how consumers pay, whether dining in person or getting take-out.
Consumers between age 21-50 frequently pay for meals with a debit card, while older patrons choose credit. And not surprising, while 30% of people age 21-35 report paying via a digital wallet such as Apple Pay, this method was used by less than 10% of people older than 51.
Younger consumers also expressed an interest in the ability to pay for food via money transfer apps like Zelle and Venmo.
More than two-thirds (68%) of all participants reported having a pay-at-the-table experience when dining at a full-service restaurant. The desire for contactless interactions – coupled with staff shortages – led many restaurants to adopt QR codes for access to menus as well as for collecting payments. Over an 18-month period, use of QR codes increased 750%, and industry experts predict they are here to stay.
Interestingly, about half of participants – primarily those age 21-50 – either somewhat or strongly agree that they would be willing to pay a small surcharge for the convenience of using a credit card to pay for a food order directly from a restaurant. This allows operators to offset the costs of credit card fees and allows patrons to avoid the fees by switching to debit or cash. While less than 5% of small businesses in the U.S. that accept credit card payments implement a surcharge, that number has increased compared to five years ago, when about 2% were doing so.
- TIP: Expand payment options to align with generational preferences, especially digital options desired by Millennials and GenZ.
- TIP: Try surcharging, especially if average tickets are less than $25. Chances are that most customers won’t mind paying a small fee. The savings can really add up.
A steady rebound emerged in mid-2021
While restaurants have had a tough time throughout the pandemic, as of July 2021, sales had risen for the seventh consecutive month. That month’s total was $6 billion, or 9.1%, above the February 2020 pre-pandemic figure of $66.2 billion. That growth is expected to continue. The National Restaurant Association predicts, “Restaurant sales will likely continue to be supported by healthy household balance sheets and consumers’ elevated pent-up demand for socialization and experiences.”
The pandemic has had a lingering effect on in-person dining, with half of respondents stating that they feel safer ordering food for consumption in their homes due to concerns with being in crowded spaces for long periods of time. And with so many more people staying close to home for work and school, an increasing number are cooking in more often than they did pre-pandemic, which could have a lasting impact on dining out.
More than six in ten (61%) survey respondents stated they are members of at least one loyalty program. Patrons overwhelmingly (78%) stated that they prefer a personalized experience and like to be rewarded with free food, though discounts are also popular.
- TIP: Offer take-away family meals or prepared meal kits as easy and affordable alternatives to cooking at home.
- TIP: Promote your loyalty program to encourage repeat business and reward patrons regardless of how they order: in person, online, or through a mobile app.
It’s clear that these new habits are here to stay. Restaurant owners should take the lessons learned during the pandemic to help drive innovation and build loyalty, while controlling costs.
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