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How the rise of third-party delivery, tight labor market forcing foodservice to evolve POS systems

Executives from Revel and Toast discuss how relying on third-party delivery companies is forcing fast casual brands to change their POS systems.

January 21, 2019 by Cherryh Cansler — Editor, FastCasual.com

Editor's note: An earlier version of this article ran on Fast Casual, a Food Truck Operator sister website.

The third-party delivery market was worth $7.1 billion by Q3 of 2018, according to Technomic, and that number will continue to grow as customers become more familiar with using them to place orders. The shift is forcing foodservice operators to change their POS systems and is triggering a digital consumer tsunami, said Erick Kobres CTO, Revel Systems, an iPad-based point-of-sale system based in San Francisco. 

"The tidal wave of alternate ordering processes will continue to bear down on merchants as consumers continue to drive digital channels (e.g., mobile ordering, voice ordering) to merchants and retailers alike," he said in an interview with FastCasual, predicting that large chains and will continue to keep pace with consumer demand to deliver anywhere, anytime.

That means independent and smaller operators will have to embrace technology to stay relevant, which is already leading to what Kobres called the "delivery apps dilemma."

"If you have a well-established digital strategy and digital marketing plan, third-party delivery apps can help increase your business," he said. "On the flip side, if you choose to outsource your marketing and branding to these third-party companies, you could potentially find yourself in a position where these companies will own your customers moving forward."

Another tricky aspect of the third-party ordering conundrum — and one that POS providers are trying to solve —  is how they require merchants to use their proprietary tablets for processing orders.

Aman Narang, co-founder and president of a POS provider, Toast, agreed and predicted that customers demanding delivery service will be one of the most disruptive trends in 2019.  

"One of the Top 3 delivery providers will announce a surge pricing model to better optimize yield and margin for restaurants," he said in an interview with FastCasual.

How labor issues will evolve POS systems

The rise of delivery isn't the only trend changing how foodservice operators do business this year, Narang said. A tight and competitive labor market is another area that is inspiring innovation. Over the past year, the restaurant industry has added 221,000 jobs, about 600 jobs per day, but there aren't enough workers to go around. The Bureau of Labor Statistics projected that the demand for cooks will grow 6 percent over the next 10 years, and the National Restaurant Association reported in 2017, that 37 percent of its members said labor recruitment was their top challenge — up from 15 percent two years ago. 

"Labor issues (both access to strong candidates and minimum wage) will continue to shape how technology/POS evolve," he said. "Self-service platforms like kiosks, mobile apps, Amazon Go, plus a mobile form factor for the POS device to help ease some of the pressures on labor will continue to grow fast. "

Voice is another trend that has the potential to make the ordering and checkout experience better, but it’s likely a few years out, said Narang, who expects to see at least one robotics/automation-driven restaurant startup announce a major expansion plan in the back half of 2019.

"Also, 2019 is finally the year that fast casual goes mainstream with a (less than) 20 percent cost of labor model versus 30-plus percent in full service," he said. "A lot of older chains that have not adapted (will) start to falter."

About Cherryh Cansler

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Cherryh Cansler is VP of Events for Networld Media Group and publisher of FastCasual.com. She has been covering the restaurant industry since 2012. Her byline has appeared in Forbes, The Kansas City Star and American Fitness magazine, among many others.

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