Escaping the Restaurant ‘Tech Stack Treadmill’ - Part 2

Part II: How Forward-Thinking Brands Avoid the Treadmill Trap

As an enterprise restaurant leader, what does it take to jump off the ‘tech stack treadmill’ and create a restaurant tech foundation that’s strong, drives business performance, and gives your brand a sustainable competitive advantage?

The Escaping the Restaurant ‘Tech Stack Treadmill’ series explores this question (and more) in four parts. If you read Part I: What Is the Restaurant ‘Tech Stack Treadmill’ & Why Is Your Brand On It? you understand why so many restaurant brand leaders feel like they’re always one step behind or running in place when it comes to technology. You also see how we got to a point where even many top-tier enterprise restaurants struggle to build tech stacks that give them stability and long-term competitive advantage. (see. Eg. here )

Read: Part I : What Is the Restaurant ‘Tech Stack Treadmill’ & Why Is Your Brand Stuck On It?

Knowing that the restaurant industry is nothing if not resourceful, it’s still important to ask: what do the most forward-thinking enterprise brands do to avoid the dreaded ‘tech stack treadmill’ trap??

Our experience suggests that the brands most able to get ahead of the technology curve have two things in common: they understand the relationship between their tech stacks and their guests’ needs and they effectively align their brand and portfolio technology strategies.?

Understanding the Relationship Between Your Guests’ Demands & Your Tech Stack

At a basic level, one of the most important factors driving tech stack decisions should be a brand’s customers (after all, it’s tough to have happy team members, executives or investors without happy guests). Forward-thinking restaurant brands understand this and keep customers at the core of everything they do; giving their customers the choice and convenience of getting what they want, where and when they want it.?

Leaders must constantly align their tech stack strategy with changing consumer demands. In other words, if it can’t keep up with your guests, your tech stack has already failed.?

How can you assess whether your current tech stack is really set up to meet the needs of your guests and your business now and into the future? The Tech Stack + Guest Demands Matrix below places brands into one of four quadrants based on macro consumer demands and the state of their internal tech infrastructure. (Hint: some quadrants are better places to be than others.)

The Tech Stack + Guest Demands Matrix

Bottom left: At risk for disruption

• This is where you don’t want to be. The experiences your guests demand aren’t very sophisticated from a comparative perspective, but neither is your tech stack (all those years of not investing in technology are about to catch up with you). That makes it relatively easy for a new competitor to use better technology to deliver a more compelling experience to your guests at lower cost.?

Top left: Playing catch up

• This is ‘tech stack treadmill’ territory. Your guests demand increasingly complex digital and in-store experiences (online ordering, kiosks, loyalty etc.) but your tech stack lags far behind. Your guests’ unique demands make it harder for a competitor to swoop in immediately, but your executive team feels like it’s constantly putting out fires and making piecemeal technology investments.??

Top right: Positioned to win

• This is where iconic brands are built. Your guests have comparatively complex needs, so it’s a good thing your tech stack is more or less meeting those high expectations today. Given how quickly guest expectations can change however, the risk of falling behind is real. These brands typically focus on two things: making the regular tech investments required to stay ahead and looking for ways to build flexibility into their tech stacks to generate sustainable competitive advantage over time.?

Bottom right: Market leader?

• This is the brand promised land. Your tech stack has mastered your guests’ needs and in many ways you give them more than they actually need. Strategic investments in your tech stack over time and the fact that your guests’ needs are more than served help make it difficult (and expensive) for others to compete with you directly.?

To help avoid getting stuck in the ‘tech stack treadmill’ trap, forward-thinking brands are honest about which of the four Tech Stack + Guest Demands Matrix quadrants above they’re in and align their tech stack investments with the specific moves required to get where they want to go. This helps avoid indecision over which tech stack investments to make or, even worse, attempting to make a large number of disjointed technology purchases at the same time.?

Forward-thinking brands are realistic and targeted in their tech stack investments, seeking incremental gains instead of ‘silver bullet’ solutions. As we’ll see below, keeping discipline and direction at the center of your tech stack approach starts with taking a clear-eyed view of both your brand and portfolio-level technology strategies.?

Aligning Brand & Portfolio-Level Technology Strategies

Once you know which quadrant of the Tech Stack + Guest Demands Matrix your brand occupies today and where you want to go, it’s critical that both business and IT leaders align around a clear strategy to get there. For many enterprise restaurant brands, that means mapping out both brand and portfolio-level technology strategies.?

At the brand level, we have seen that enterprise restaurants generally measure success using a few key metrics. In many cases, the most important metric for corporate leaders, franchisees and investors is growth in same store sales (SSS) (the incremental growth in number of transactions multiplied by growth in check size, averaged over one location during a specific period of time).?

From what we’ve seem, the biggest levers of opportunity across the landscape today for growing transactions and check size at the brand level are:

• Growing digital sales in line with digital transformation investments taking place across the restaurant industry?
• Increasing throughput across all channels given capacity constraints (more orders within the same or less time/footprint)
• Optimizing labor to drive higher output for the same or lower cost

Want to understand whether you have the right tech stack in place from a brand perspective? Ask yourself whether the tech tools and integrations you’re using today are impacting your ability to capitalize on the opportunities above.?

Enterprise brands’ needs don’t stop with driving Same Store Sales and an effective tech stack must contribute to a wide range of brand-level goals as well.?

Brand-level tech stack goals:

• Create better in-store and digital customer experiences while expanding a brand’s ability to meet customers where they are
• Drive incremental sales through new channels and higher throughput, with a stronger competitive advantage?
• Scale and adjust quickly through new integrations
• Drive time and labor savings centralized and scalable systems
• Lower back-end or internal costs by eliminating manual workarounds?
• Make system changes easier to manage at the corporate and franchisee levels
• Maintain the ability to innovate rapidly as new technologies and integrations become available

For most enterprise restaurants however, taking a brand-level perspective on your tech stack isn’t enough. If your brand is backed by a multi-brand holding company or PE investors, assessing your tech stack likely means going one level higher.?

From a portfolio perspective, based on our internal data roughly half of all enterprise restaurant brands in the U.S. today are either private equity-backed or belong to a parent company that operates multiple brands. In these situations, a leadership team’s success often comes down to increasing the value of their brand while finding economies of scale or conglomerate efficiencies across their investors’/owners’ larger portfolio. For these brands, an effective tech stack should help achieve brand-level and portfolio-wide goals at the same time (while minimizing areas where these goals may be at-odds.)

Portfolio-level tech-stack goals:

• Drive consolidation and simplification - implement one core platform to drive synergies across brands
• Improve ability to aggregate data across brands for portfolio-level decisions?
• Generate cost savings and efficiencies with one team and single point of maintenance across portfolio?
• Build deep relationships with a small group of vendors and partners to more effectively influence product roadmaps and critical features

The effectiveness of a brand’s tech stack depends in-part on its ownership structure, and other potentially confounding factors. A collection of tech tools that works well enough at the brand level but fails to deliver data and reporting, cost-savings, and simplification at the portfolio level may eventually lead to management friction and worse performance. Tools that work great for portfolio-level executives but fail to deliver on a brand’s specific guest experience or location-level management needs will likely also cause trouble over time. Ultimately, forward-thinking enterprise leaders must understand where their brand and portfolio-level tech strategies align, where they don’t, and where gaps between the two need to be closed.

In Part III of the Escaping the Restaurant ‘Tech Stack Treadmill’ series, we’ll dive into how to build the tech stack of the future along with a framework that you can leverage for your brand.

Tanvir Bhangoo:

Tanvir Bhangoo is VP of Enterprise Solutions at Toast where he leads consulting and solutions engineering teams that help enterprise brands make the right strategic and tech stack decisions for their businesses. Prior to Toast, Tanvir led technology and digital teams at multiple leading restaurant brands including as VP of Technology at Freshii and Director at Restaurant Brands International (Burger King, Popeyes, Tim Hortons).?

About Toast

Toast [NYSE: TOST] is a cloud-based? digital technology platform purpose-built for restaurants of all sizes. Toast provides a single platform of software as a service (SaaS) products and financial technology solutions that give restaurants everything they need to run their business across point of sale, operations, digital ordering and delivery, marketing and loyalty, and team management. Delphi by Toast provides state-of-the-art drive-thru and digital menu board solutions to leading QSR brands at tens of thousands of sites globally. By serving as the restaurant operating system across dine-in, drive-thru, takeout, and delivery channels, Toast helps restaurants streamline operations, increase revenue, and deliver amazing guest experiences.

This information is provided for general informational purposes only. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation. Individual results will vary.?

Interested in sharing your thoughts or learning more??

Drop us a note at:?

[email protected] / Tanvir Bhangoo, VP Enterprise Solutions

[email protected] / Kelly Esten, SVP & GM Enterprise?

For more information, visit www.toasttab.com .