5 Foodservice systems

LEARNING GOAL

Know the role of foodservice systems

OBJECTIVES

1. Know the role of foodservice systems
2. Know the central role of the Point-of-Sale system in foodservice
3. Know how various other systems can add value to foodservice operations
4. Understand the opportunities and challenges offered by robots and artificial intelligence in foodservice

ROLE OF FOODSERVICE SYSTEMS

Foodservice systems are some of the most important ITs in hospitality. They are important because historically they have been extensively integrated within the foodservice operations at all levels. While foodservice operations are traditionally human oriented, it is impossible to imagine foodservice without any input or influence from IT. In addition, working in a foodservice business involves the utilization of at least several transaction or ordering systems that have become indispensable for the day-to-day operations. However, while IT has been extensively deployed in foodservice, today’s industry characteristics call for the utilization of IT even more.

Foodservice IT is designed to assist businesses in their effort to create value for consumers but also optimize operations. There are multiple types of IT that can be used in foodservice, and it is especially important to recognize that they vary based on the characteristics of the business. For example, the IT infrastructure for a small franchised fast-food business would be quite different than that of a large casual dining restaurant or a private club. However, certain technologies remain the same, or at least perform similar functions regardless of the type or size of business.

POINT OF SALE SYSTEMS (POS)

Point of sale systems represent software systems that allow retail organizations, including restaurants, to manage the selling process, including ordering and transaction completion. POS systems have been used traditionally in many retail environments but are especially used in restaurants. There are a variety of vendors that sell POS systems today, including legacy companies such as Micros and relatively newer market entrants such as Clover, Square, etc.

While POS systems are software, sometimes they are sold with dedicated hardware, which makes the distinction between hardware and software confusing. They can be installed on standalone computers or mobile devices, or on specifically-designed hardware. The specific hardware dedicated for POS systems for restaurants have a few characteristics that are important due to the nature of operations. First, they are designed to withstand a tough and dynamic working environment. The workplace is fast and therefore having durable hardware is critical. It is also especially important to have a touch-screen interface, therefore limiting the number and type of input devices. Also, it is important for these systems to be spill-resistant, as the restaurant industry is characterized by the service of beverages. Finally, it is important for POS systems to be able to connect to the Internet or other networked hardware.

In terms of functionality, POS should facilitate the completion of several critical tasks. However, while these legacy tasks are critical for every foodservice business, there are several types of tasks that are specific to POS:

Taking accurate orders and conveying the orders to the back-of-the-house

Obviously, the guest experience is the most important aspect of foodservice operations. It gravitates around ordering and fulfillment of orders. Regardless of the type of restaurant, the guest experience is responsible for the success or failure of a restaurant. The guest experience has changed in recent years, especially since the COVID-19 pandemic, and the development of online ordering technologies. Therefore, understanding how consumers order and what they expect from the restaurant is especially important, and POS systems should address this aspect. For example, the first important aspect is order accuracy. Consumers should be able to place an order in that order should be transmitted seamlessly to the production areas of the restaurant. However, if the order is placed online, the POS system must be connected with the ordering interface (a website, an online menu, or an app) which ensures that the order is transmitted accurately to the kitchen or other production areas of the restaurant. The second aspect is customization of orders. Many consumers have dietary preferences, allergies, or restrictions and having a system that can allow such modifications, especially during the time of ordering, for every menu item is critical in satisfying consumers’ needs.

Processing transactions

One of the most critical aspects of POS is the ability to facilitate transaction management. In other words, POS allow staff to sell menu items and keep organized records of the transaction. Moreover, the POS should process payments, including tipping. Another important aspect of processing transactions is the ability to modify pricing of various menu items quickly and efficiently. This allows foodservice businesses to manage their production efficiently and adapt to periods of high and low demand. Moreover, given that the type of payments used by consumers always evolve, POS should be equipped to accept multiple types of payment. In addition to the traditional card payments, which are legacy in the hospitality industry, POS should be equipped to accept mobile payments, EMV payments (or chip-embedded card payments) and be integrated with the payment systems from online or mobile ordering interfaces. Another important aspect of modern POS is that they should be able to accept payments offline even during the times of Internet outages. This way, the restaurant can continue operations without disruption.

Management of team members

Given the importance of human resources in the foodservice industry, POS systems should be equipped with ways to reflect the dynamics of the workforce. This creates an opportunity for businesses to properly reward the team members for their effort. However, traditional POS systems have focused on only understanding how people work. The most innovative contemporary POS systems create opportunities for foodservice team members to work seamlessly and efficiently. For example, if the POS system is designed with an easy-to-use conversational interface, the team member entering orders has an opportunity to enter orders fast and without errors. Moreover, the billing system should be able to integrate every fulfillment channel and allow team members to seamlessly input information pertaining to orders fulfilled in store, takeout, curbside pickup, or for pickup by delivery drivers. Most importantly, in restaurants that have dining room operations, having handheld terminals for POS increases the efficiency of the team members to seamlessly interact with the guests during service, but also use the technology to capture the guest orders and their modifications without error. The wireless terminals used in such situations allow team members to immediately send the order to the kitchen, therefore minimizing consumers’ waiting time. Finally, POS systems allow restaurants to set up logins for individual team members. This is especially important for auditing and performance evaluation.

Analytics, marketing, and reporting

POS data can be integrated with the marketing tools available through the POS, to respond to high-value consumers with incentives, rewards, and offers. POS systems permit managers to identify and reward the highly loyal consumers by focusing attention on them instead of the consumers who bring lower value to the company. One of the most important aspects of modern POS is the ability to provide reports. Reports are critical in understanding the dynamics of resources within the restaurant and the ability of the restaurant to operate efficiently.

Management of customer service

It is also especially important for restaurants to recognize that a lot of consumers are repeat consumers. Increasingly, the restaurant industry is realizing the benefits of offering loyalty programs, which have been more typical for hotels or airlines. Therefore, the POS systems allow restaurants to manage the seamless onboarding of consumers into the loyalty program and allow them to accrue and redeem benefits.

In addition to the main functions discussed above, the most innovative POS system could be capable of addressing some other important additional tasks.

• Dining room management integration. Dining room management has been one of the most important aspects of front-of-the-house operations. Integrating this aspect into the POS directly allows the restaurant to synchronize operations and optimize the way consumers are served directly on the POS system. One specific feature is building dynamic floor plans, which offers the possibility of managing servers’ sections easily and adapting to the inevitable changes in team member scheduling or periods of high demand.
• Advanced transactions. One important aspect of restaurant transactions is splitting a check. Modern POS systems allow restaurants to split checks in any proportion, thus giving flexibility to consumers in paying however they want, and therefore increasing their satisfaction.
• Advanced analytics. Reporting has always been a critical task in restaurant management. Modern POS systems allow for reports to be run by different areas of the restaurant or revenue centers. For example, a restaurant can run a report for the terrace, another report for the bar, and so on.
• Set up contactless service. One of the most important trends in contemporary restaurant management is the increasing demand for contactless service. Consumers expect to decide what to order and complete an order online, including payment, without any contact with the restaurant. Modern POS systems integrate this feature within their regular operations, offering flexibility. In addition, the connectivity between multiple types of terminals that are eventually converging towards the same software allows the restaurant to offer services in distinct locations seamlessly. For example, team members can complete payments curbside and can print receipts regardless of where the order is fulfilled (at the table or curbside).
• Enhanced security. Team member login is extremely important for security purposes. However, given that logging in is time consuming in the fast-paced restaurant environment, many errors could occur due to team members not logging out after completing each transaction. Modern POS systems solve this problem by allowing team members to authenticate using fingerprint sensors, which significantly reduces the amount of time necessary for logging in while increasing the security of the entire system.
• Cloud-based hosting and subscription models. The legacy POS systems were typically installed (hosted) on computers located on the premises of the restaurant. This type of setup poses several critical challenges for operations, such as maintaining security, updating and backing up the systems, and preventing physical damage. Modern POS systems are being hosted in the cloud, therefore addressing the main problems associated with on-premises hosting. In addition to being hosted in the cloud, modern POS systems are sold to restaurants as a service subscription, typically paid monthly. This kind of flexibility allows the restaurants to focus on the main restaurant operations instead of dealing with the IT problems, making the entire infrastructure of the restaurant nimbler and easier to scale. In a cloud-based system, the restaurant does not have to worry about updates, upgrades, security, because those tasks are being taken care of by the POS vendor. Moreover, the restaurant team members can access the cloud data anytime anywhere, allowing for opportunities to conduct analyses to address problems immediately.
• Integration with other systems. The infrastructure of the past was characterized by various standalone systems. It was challenging to make such systems communicate with one another. In contrast, the modern POS systems allow for seamless integration with other systems that are necessary in a restaurant. Many POS vendors create entire ecosystems of modular systems, which can be integrated seamlessly as part of the infrastructure of a restaurant. For example, systems can be integrated with the kitchen display system, which transmits orders seamlessly to the various areas of the kitchen. Integration is extremely important, as it allows for seamless communication among various areas of the foodservice operation and reduces communication errors, which are common between front- and back-of-the-house.

There could be many other features that modern POS systems have. Foodservice operations need to critically examine the type of operations and resources that they have, while being aware of the dynamics of their inventory, team members, and key performance indicators to determine what kind of system is appropriate for them.

OTHER FOODSERVICE SYSTEMS

Kitchen Display Systems (KDS)

The KDS is a system that allows kitchen team members to receive orders from the front-of-the-house and for them to communicate when an order is complete. KDS consists of software installed on one or multiple devices located in the kitchen or other back-of-the-house areas. The system is connected to the POS system, which originates the orders. The modern KDS feature touchscreen displays, which provide additional efficiency to the handling of orders by team members.

Given the dynamic environment of the kitchen, these systems are designed with efficiency in mind. For example, a double tap on the screen gives an order the status of fulfilled. Orders can be routed to various stations, such as dining-in or dining-out. Another important feature is using color coding to show modifications from the original menu items. This way the team members will have an easier time addressing the modifications without making errors. Some of the most innovative features include sending out text messages or in-app alerts to customers when their orders are ready, multiple language support, and so on.

Reservation Systems (RS)

RS are software designed to manage reservations for dining rooms in restaurants. Such systems, like POS systems, can come preinstalled on specific hardware. However, modern RS are cloud-based and are available on multiple platforms (e.g., mobile devices, desktop computers, etc.).

To best understand the value of RS, they can be discussed from two points of view, grouping the features dedicated to consumers versus team members in a restaurant.

Features dedicated to consumers:

• Frictionless booking: RS allow consumers to make direct reservations for dining rooms, while permitting the management to see the existing reservations and manage the dining room properly.
• Mobile booking: An important feature is the ability provided to consumers to book on mobile devices.
• Exclusive experiences: in situations like ticketed events or upper-scale restaurants, reservation systems can take into account the ticket fees, no-shows, and allow the dining room management to facilitate the delivery of special events, such as chef demonstrations, etc.
• Integration with other platforms: popular platforms such as Yelp or OpenTable have integration with review platforms. This allows the consumers looking for reviews to have the convenience of making a reservation as soon as they are convinced that they have found a restaurant with helpful reviews. This level of integration may translate into additional fees for the restaurant. This is because review platforms have already done the job of customer acquisition, therefore exposing the restaurant brand to many potential consumers.

Features dedicated to restaurants:

• Effective dining room management: RS allows front-of-the-house team members to manage the dining room efficiently. They can do so by managing the allocation of consumers to various tables, the allocation of sections to servers, and the wait list (for popular restaurants).
• Integration with POS: while most RS connect as standalone systems, there is great benefit in integrating the RS with the POS. This way, the system does what it is designed to do, which is to extend the operations of the POS and give the team members an opportunity to efficiently manage the dining room.
• Cross-platform integration: Most reservation systems can take reservations from multiple types of devices commands such as smartphones, tablets, or desktop computers.
• Competitive pricing: the pricing for RS are tied to specific tiered subscription models. Generic more expensive subscriptions include branding, customizable guest messaging, and analytics.

Inventory Management Systems (IMS)

There has been a great level of development in the area of IMS. This is because restaurants operate with low profit margins and optimizing inventory management has a critical impact on operations. In addition, effectively managing inventory allows businesses to obtain a balance between the cost of managing the inventory and the ability to produce all the items on the menu should the consumers request them. Proper inventory management helps businesses avoid situations where they are unable to prepare a certain menu item due to inventory shortages or situations when items stay in storage for too long.

Because of the importance of inventory in foodservice, taking inventory and accounting for all items in the inventory has always been a tedious task. Fortunately, the IMS available today allow for management of inventory without much effort but with substantial accuracy. Contemporary IMS have several characteristics that make their use effective.

• Tracking inventory: IMS must have the ability to read or track all the items that are received and have features that allow team members to know when any inventory item enters or leaves inventory. Some modern IMS have mobile app extensions, allowing restaurant staff to use smartphones to scan inventory items during physical counts.
• Purchasing and receiving management: Most systems are recognizing several types of inventory management strategies (e.g., FIFO, LIFO), and according to those strategies, the systems could be set up to automatically reorder items from vendors when the levels of inventory decrease below a specific pre-established level. For example, IMS can monitor supplies and send alerts and re-ordering suggestions from a dashboard. Other systems have functions that allow the inventory levels to synchronize with the restaurant’s sales in real time, thus offering great analytics and flexibility.
• Integration with POS and accounting software: such integrations are important as they provide a global view of the entire operation of a foodservice business.
• EDI (electronic data interchange) functions: Some IMS have integrated connectivity with the supplies, making it easier to re-order supplies directly from the software’s dashboard. Some IMS even allow the systems to automatically reorder supplies.
• Analytics and reporting: In addition, newer inventory management systems produce various analytic reports regarding the levels of distinct items in the inventory and allow decision-makers to purchase based on the strategies of the business. For example, certain IMS have features that automatically calculate maximum food costs for specific recipes and send alerts when the costs exceed a pre-defined threshold.

From a purchasing/service point of view, restaurants should select their IMS based on criteria such as vendor support, size of the installation fees, compatibility, and level of integration with the existing hardware and other systems, ability to work without an Internet connection (for example in a walk-in freezer), duration of the service contract and customer service contracts (24/7, etc.) Among the most popular IMS, one can find MarketMan, YellowDog, xtraCHEF by Toast, Upserve by Lightspeed, Orca, CrunchTime, Revel Systems, etc.

Electronic Menus (EM)

Electronic menus have developed extensively due to the advances in smart mobile computing devices, touch screen technology and networking, self-service ordering systems, including electronic menus (EM) and kiosks. Their popularity also increased due to irregular operations during the COVID-19 pandemic, as the restaurants and consumers reduced direct contact. They assume that consumers can be persuaded to purchase specific products by information alone, even in the absence of interactions with staff. One of the most important aspects of EM is the fact that they allow consumers to take their time to order. This way, consumers are not feeling rushed to make a quick decision, which may result in increased satisfaction. During this process, consumers can be aided by persuasive information presented effectively on the screen of the system.

There are a variety of advantages resulting from the deployment of EM in foodservice. It is easy to make changes to the layout of the menu, change prices, descriptions of menu items if the menu is displayed electronically. In addition, the restaurant can present the menu items with information that can be persuasive, such as the origins of ingredients, methods of preparation, reviews and ratings, the number of items sold during a specific day, and so on. From a technology adoption viewpoint, EM can be particularly useful. They can incorporate information that would otherwise be difficult to incorporate in traditional menus.

EM can also include rich media. For example, they can incorporate high-resolution photos and videos. Most importantly, EM are connected to the Internet, allowing consumers to browse additional information that can be pertinent to their decision to order. EM have generally been well received by consumers. They are aesthetically pleasing, as they are designed based on principles of attractive graphic design. Today’s EM can be feasibly designed and published by restaurants by using templates offered by web design environments such as Wix.

ROBOTS AND ARTIFICIAL INTELLIGENCE (AI) IN FOODSERVICE

Robots

There have been many innovations in restaurants in recent years, but none of them is as spectacular as the incorporation of robots and AI. Much of the development of robots and AI in the foodservice industry has been influenced by some of the industry’s permanent challenges, such as high staff turnover, repetitive tasks, low pay, and irregular work schedules. Given such challenges, the foodservice industry had a difficult time finding and retaining sufficient staff. These problems have been exacerbated by the COVID-19 pandemic and the workforce dynamics post-pandemic. Therefore, it is expected to see a substantial deployment of robots and AI in restaurants.

Robots represent machines that are designed to do complex series of actions automatically, especially when programmed by a computer. Robots have been deployed in various industries, such as automobile, manufacturing, and microelectronics, given their ability to complete tasks with consistency, speed, and without error. However, when most people think about robots, they envision human-looking robots, who can engage in conversations and interact like a normal human being. Most robots are not necessarily like that, but are designed to incorporate some features that are necessary for them to complete the task. Robots can range in terms of their intelligence (ability to make complex decisions) from basic robots, which are designed to complete a specific simple task, to very sophisticated, AI-based robots, which are designed to learn and make decisions on their own guided by computers.

Robots are deployed in foodservice in two types of settings: kitchen and front-of-the-house. In the kitchen, robots perform repetitive tasks, generally related to food preparation. For example, there are robots that place ingredients on pizzas, or robots that mix ingredients for Poke bowl dishes or stir fry. These robots can complete repetitive and boring tasks fast and without making errors, which increases efficiency and optimizes the kitchen workflow.

Obviously, the most spectacular application of robots in restaurants is in the front-of-the-house. There could be two roles for robots in the front-of-the-house. There could be basic robots that are only used to carry dirty dishes from the table to the kitchen. These robots are programmed to optimize the routes from each table to the kitchen and then perform this task with speed and accuracy greater than that of a person. Second, there are robots that assist in order placement and delivery at the table. For example, a robot can interact with the consumer either through speech recognition software or through a screen interface, and eventually can carry the menu items to the table when they are ready. There are a few innovative restaurants that have deployed such robots, and beyond the initial media hype, this concept may eventually become viable given the large scale of the restaurant industry.

AI

AI refers to computer systems that can complete tasks that normally require human intelligence, such as visual perception, speech recognition, decision making, etc. AI has been one of the latest technologies to be added to the hospitality industry IT infrastructure. This is because this technology has recently undergone substantial development. The most common applications of AI in foodservice are their incorporation into robots or other systems that allow  consumers to interact more seamlessly with the restaurant and facilitate decision making. For example, some of the applications of AI include speech recognition in dictation software, pattern recognition in biometric systems such as fingerprint verification for restaurant staff to clock-in and out, chatbots used for websites, and intelligent software used to place inventory orders from suppliers.

Opportunities of using robots and AI in restaurants

Efficiency/resource optimization. The use of these technologies can improve the efficiency of the restaurant by shortening front-of-the house routes, spreading the cost over a longer span of operations, and eventually creating an optimized environment for operations. In addition, using robots and AI can take advantage of entire robotic ecosystems that can ultimately optimize resource utilization in restaurants and create opportunities for restaurants to use staff for robot/AI management tasks, which are less boring and paid better.

Fewer errors. Given the intense human labor aspect of the foodservice industry, error prevention and management represent significant aspects of the foodservice business. Especially given the public aspect of consumption that is amplified by the social media, foodservice errors may have a strong impact on operations. Because restaurants involve tasks that are repetitive, boring, and prone to error, the reduction and elimination of errors from operations is an important benefit. Robots and AI technologies are designed for completing tasks with consistency and speed, which eventually reduce the errors that naturally result from human operations.

Consistency. One of the most important problems of the restaurant industry is consistency. Consistency leads to higher customer satisfaction and is difficult to achieve in normal operating conditions. This is because it is difficult for humans to make things consistently the same, given their personal preferences, workflow, skill levels, and other environmental factors. Efforts for increasing consistency have been seen in the hospitality industry for a long time, with companies like Marriott or Hilton trying to standardize operations. However, robots and AI can complete tasks with extreme consistency, which could ultimately translate into higher customer satisfaction.

Challenges of robots and AI

Cost. At the time of this writing, robots and AI technology are not yet mainstream technologies in hospitality. While simple robots and several popular AI systems are now available, most of the systems are still expensive for the general foodservice business. Therefore, the incorporation of these systems in restaurant operations must be done according to the resources and strategies of the company and may be easier if deployed by businesses that have large scale operations or low overhead cost structures.

Balance with hospitality tasks. Hospitality as we know it is designed around human-to-human interactions. Many customers go to restaurants to socialize or interact with other people. It is difficult to change customers’ mindset, especially when they are expecting to interact with another human being. Moreover, hospitality experts recognize that every interaction between consumers and staff could be an opportunity to engage, with important positive outcomes for both the consumer and the restaurant. However, robots and AI represent a departure from this model, and it will be interesting to see the type of blend between human tasks and robots and AI tasks that would result in elevated levels of customer satisfaction. For example, research has to date shown that consumers tend to see robots as fun to interact with.

Impact on employment. This is the most important aspect of deployment of robots and AI systems in restaurants. It is true that the incorporation of robots, especially in front-of-the-house settings, impacts employment. Currently, the hospitality industry is facing labor shortage challenges, and robots and AI could be a solution to this problem. In addition, while robots could displace some of the low paid, boring, high turnover jobs, they could provide opportunities for other jobs that are better paid and involve the skills necessary to program, maintain, and utilize robots in restaurants.