Amex: Independent restaurants adapt digitally

Although the restaurant industry has come a long way since the early months of the pandemic, many challenges remain. Additionally, the ripple effects of the events of 2020 have resulted in a range of other issues, including labor difficulties, supply chain shortages, inflation, and more.

Earlier this month, American Express announced the launch of the second installment of its Backing Historic Small Restaurants grant program, offering $1 million in grants to help preserve historic small restaurants across the country. Under this program, the society will award 25 grants of $40,000 to these institutions, with the funds distributed by the National Trust for Historic Preservation.

Read more: Amex donates $1 million to save historic restaurants

“The impacts of the pandemic continue to be a major issue facing many independent restaurants,” Colleen Taylor, president of American Merchant Services at American Express, told PYMNTS in an interview. “From new waves and variations threatening in-person business to supply chain issues, restaurant owners still face many challenges.”

Even with all the creativity restaurants have shown, the onslaught of challenges continues to keep them from staying ahead.

“Restaurants have done an incredible job of pivoting with the pandemic,” Katherine Malone-France, preservation manager for the National Trust for Historic Preservation, told PYMNTS. “We have seen this with grantees over the past few years, where grant funds have helped not only to work on their historic buildings, but also to create outdoor spaces, improve outdoor spaces and things like that … but the pandemic forces these small businesses to pivot, then pivot again, then pivot again.

The in-person experience

PYMNTS’ 2021 Restaurant Readiness Index, created in collaboration with Paytronix, which was inspired by a spring 2021 survey of more than 500 quick-service restaurant (QSR) and full-service restaurant (FSR) managers in the United States, found that independent FSRs generate 13 % of their sales from outdoor dining customers. This share of total sales exceeded that contributed by third-party aggregator orders, mobile advance sales, phone delivery orders and online delivery orders.

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The chain has proven so vital to the success of independent FSRs that many are advocating for COVID measures allowing more outdoor dining options to remain in effect even after contagion concerns ease.

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Certainly, consumers appreciate small independent restaurants partly for the in-person environment and the on-site experience.

“People are ordering online, but restaurants and their community also deeply value their physical spaces,” Malone-France said.

Indeed, not only did outdoor seating account for a significant share of orders, but at the time of the Index’s survey, between April and May 2021, on-site indoor orders already accounted for 27% of sales, a part higher than that included by the canal. for any other type of restaurant.

Independents go digital

“When [restaurants] were forced to close their doors to in-person businesses, many of them quickly developed new strategies to serve their communities without wasting time,” Taylor said.

In fact, the vast majority of independent FSRs now offer digital ordering, according to PYMNTS’ 2022 Restaurant Friction Index data also created in conjunction with Paytronix. The study, which builds on the results of a September survey of more than 500 QSR and FSR managers, found that 86% of independent FSRs now offer online ordering and online pickup options. store.

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Additionally, the study found that 76% of independent FSRs offer delivery options, 64% offer the option to pay with digital wallets, and 26% offer the option to order online and pay in store.

Of course, the race continues.

As Taylor put it, “restaurateurs must be tech-savvy and be prepared to leverage technology as consumer behaviors continue to change.”

Give people what they want

As some large restaurant chains reduce their on-site operations, unveiling smaller footprint models focused on drive-thru and/or digital orders, the road to success for independent restaurants looks different. Many consumers continue to crave the in-person service these restaurants provide and they have an emotional attachment to the restaurants.

More details: Brands are turning to offsite formats to increase profit margins

“Independent restaurants are resilient,” Taylor said. “Some of the historic establishments we work with have served their communities for decades.”

Additionally, Malone-France noted that the influx of consumer subsidy program nominations speaks to the strong affinity people feel for these restaurants and the continued desire for the dining experiences they offer.

“We had a tremendous response to this grant program last year, with over 3,600 applications, and the majority of those were from people in their communities,” she said. “[These restaurants] are simply sewn into the fabric of people’s lives.

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NEW PYMNTS DATA: 57% OF CONSUMERS PREFER ADVANCED IDENTITY VERIFICATION AFTER TRIING IT

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Amanda P. Whitten