Investor opinion: Why your restaurant mobile app will fail (and how to avoid it)
In our blog on Geektimes, we write a lot about various technologies used in the restaurant business, and also talk about our own project - the restaurant automation system Jowi . In particular, we talked about the difficulties encountered in developing the product.
It is important to note here that the restaurant industry is generally a difficult field for the activities of IT companies, and most of the technological start-ups emerging in this field are dying quite quickly.
Restaurant Specialist Investor Brian Menell Writes for Techcrunch Column, in which he explained why such obvious technologies as mobile applications are slowly taking root in institutions, and most of their developers remain with their noses. We present to your attention a squeeze of the main thoughts from this material, as well as tips based on our experience.
What is the problem
This story has been repeated many times in different parts of the United States, and indeed the world as a whole. A group of people who are well versed in new technologies goes to dinner at a restaurant and wonders why mobile technologies have not affected the restaurant industry in any way.
“Why can't I just press a button on my phone to order another bottle of beer?” They usually ask. “It’s a pity that we cannot just split and pay the bill in a mobile application without waiting for the waiter,” others say. Then they decide to take the opportunity to start their business, and, as a result, come to me.
Allow me to conduct an express course for you and save your time and money. There are many good reasons why apps are still not very popular. First of all, not all restaurant owners are committed to new technologies. As a rule, these hospitable people just enjoy preparing and serving delicious food. If you decide to show the presentation of your application to a restaurateur while she is cooking, you may lose your finger.
Payment terminals
Any mobile technology should be compatible with the system of payment terminals in a restaurant. Many people mistakenly believe that if they manage to interest the largest restaurant software companies such as MICROS (now Oracle) and Aloha (now NCR) in their new application, the latter, in turn, will sell it to thousands of their customers.
The truth is that such companies will not get huge profits from your wonderful application and will not share their APIs with you. In reality, everything happens exactly the opposite. Third-party applications are the main reason for contacting software developers for technical support. Indeed, when problems arise in the application, restaurants do not call the creators of the application - they call the software developer. Your mobile app development companies are the cost center for them.
But if you still managed to get through these obstacles and you are ready to launch your application in a restaurant, there are many new challenges ahead that I will discuss in this article. Today, there are several main categories of mobile applications, in each of which you may encounter certain problems.
Order placement
Ambitious entrepreneurs, having heard stories about companies like Seamless / GrubHub, receiving 20 percent from each placed order, believe that they can go the same way and get easy money. Beginners are trying to lure restaurants from these large companies by selling securities at a fixed price of $ 99.
But money does not always play a decisive role. Companies such as Seamless have a strong reputation and have a coveted place on their customers' phones. They are not so easy to displace. Together, Seamless and GrubHub raised about $ 135 million at the pre-IPO stage. It took them 10 years to achieve what they have now. And, even if you have miraculously succeeded in this area, patent holders will zealously protect their intellectual property.
Order payment
You can hardly find the owner of the restaurant or the general manager who considers that his institution can not do without a mobile application for payment. All customers have debit cards, and payment by them takes a split second. They are simple and easy to use. The only thing the restaurants are not happy with is the commission.
If you enter the card data into the terminal system in order to pay the bill, you will have to ensure payment protection in accordance with PCI (payment card industry data security standard) requirements, which entails large expenses. You are unlikely to find a restaurateur who pays you for your mobile application. Starbucks is probably the most popular mobile app in the world, but according to the survey, people use it only to earn bonuses in the loyalty program. This area is also protected by existing patents.
Loyalty
It would seem that there is nothing easier than creating a popular application to increase customer loyalty. But as it turned out, it is incredibly difficult. I personally tried all kinds of mobile applications, and their only advantage over a regular cardboard card is that I do not have to carry this card with me. For restaurants that use the application, I am no different from any other client. Applications do not give the restaurant any information about me. And judging by the fact that I receive offers from them about laser hair removal by e-mail, they don’t know anything about me.
Social networks
This category of applications is simply not in demand, because I can talk about my delicious dinner on Facebook, and I do not need a separate application for this. For restaurants, it is also not of interest, therefore, it is difficult to succeed in this area. Foodspotting used the only possible successful business model back in 2013.
Booking and waiting list
Even OpenTable employees will probably admit that their technology is a bit outdated. After all, their service has been over 10 years old. But who cares? The thought firmly entrenched in my head that with the help of this mobile application I am guaranteed to find a table at the right time.
In this category, it is necessary to take into account everything related to the operation of the restaurant. An important role in your business is given to the administrator at the counter, and this is a low-paying position with a high rate of turnover. The costs of marketing products are high, and the prices consumers are willing to pay are low. Plus, the most famous NoshList waitlist management application is already running for free.
Technology glut
In the largest US cities, such as New York and San Francisco (as well as in the capital cities of some other countries), where the restaurant business is especially developed, managers are constantly bombarded with presentations of new mobile applications. All these phone calls with offers put them into a stupor. Some of these technologies are guaranteed to save more than $ 500 per month, but even this benefit does not attract restaurants, because saving is not what they need.
Secret of success
In this industry, it is very difficult to start from scratch and succeed. Many start-ups find it difficult to develop in two directions at once: on the one hand, they need to sell their product to restaurants, and on the other, persuade consumers to choose their mobile application.
In order to achieve success, it is desirable to already have one component of the equation: either an extensive client base, or thousands of commercial relationships. Otherwise, you need a unique approach that will allow you to overcome all the obstacles of this industry.
What a unique approach can be: the Jowi experience
First of all, to create a software product that is in demand among restaurateurs, you need to understand what they need. For example, our product - a restaurant automation system - was born gradually. At first, we were engaged in simple custom development, and at some point in the middle of the zero years there were more and more such orders.
So we realized that such systems are in demand, and began to develop Jowi (a detailed history of the project is presented in our blog on Spark) At the same time, in order not to lose the vision of what customers really need, and not to start clogging the system with useless features, before any release of new functionality, we test it on a small restaurant chain that belongs to one of the company's partners. This allows us to maintain focus and do only what restaurateurs really need.
The second important tip, which is also applicable to the development of systems in other areas of business, is that sometimes you do not need to chase a beautiful interface .
As for the restaurant business, this is where the second problem arises in full growth - beauty distracts users greatly. And the users of the system are not geeks at all, but waiters, accountants and room managers, who in ordinary life may not be at all advanced users of IT systems.
Therefore, from the very beginning we focused on usability and worked closely with users to achieve it - often in the process we had to give up beautiful solutions that we liked ourselves, but made working with the system less convenient.
Summing up, we can say that, as in any other specific industry, success in the creation of restaurant technology can only be achieved by understanding the specifics of the institutions. Very often, what they think a startup needs, they just need, restaurant owners consider a useless thing. Therefore, the main thing is to find out what they really need.