Cloud POS: Trending Now at Fast Casuals & QSRs

KEY AREASOF FOCUS:• Fast Casual’s

Rapid Growth

• Visibility Beyond the Four Walls

• Online & Mobile Ordering

• Emerging Payment Methods

• Loyalty

• Security

• Data & API

© 2016 Technomic Inc.

As restaurant chains continue to prioritize innovation, the successful implementation of eff ective technology is more crucial than ever. The point-of-sale (POS) system is the frontline for restaurant operators to explore new avenues with technology, a catalyst for turning trends into sales.

Cloud POS systems represent a signifi cant growth channel and can put restaurant operators in an advantageous position to capitalize on consumer needs and competitive opportunities.

To highlight these opportunities, cloud POS provider ParTech, Inc. partnered with foodservice researcher Technomic to illuminate relevant, impactful restaurant trends and best practices, while providing actionable, executive-level takeaways geared toward operators in the fast-casual and quick-service segments.

This resulting study brings together PAR’s leadership and expertise in restaurant and retail hardware, soft ware and service, with Technomic’s proprietary restaurant data, research and industry insights.

Trending Now at Fast Casuals & QSRs ParTech, Inc.8383 Seneca Turnpike

New Hartford, NY 13413www.partech.com

Fast Casual’s Rapid GrowthThe restaurant industry’s dynamic and ever-evolving nature creates myriad opportunities and challenges for operators.

One of the most transformative developments over the past decade has been the rapid-fi re emergence of fast casual. A disruptor to the two more-established restaurant segments, fast casual fi lls a gap that existed between the convenience and lower price points of quick service and the higher quality of food, service and ambiance at casual dining.

Over time, restaurant companies identifi ed the sweet spot in that gap — keeping price points comparably low, while heightening the quality of menu ingredients and elevating restaurant designs, ambiance and service.

Consumers responded by rewarding fast casuals with increased traffi c and spend. And with its particular relevance among younger consumers, fast casual is only poised to continue its rise.

Today, fast casuals have matured to the point where they are truly driving growth of the entire industry. While quick service represents the lion’s share of the restaurant business in terms of both units and overall sales, the sheer growth pace of fast casuals is staggering: Technomic’s most recent sales data shows that fast casuals grew sales roughly 12% in 2015 — nearly triple the 4.4% growth rate of traditional QSRs.

One of the fast-casual segment’s leading categories is pizza — a category that Technomic expects to grow at a compounded annual growth rate of 35% through 2020, mostly on the strength of unit expansion.

© 2016 Technomic Inc. 2

40% of consumers visit fast casuals once a week or more o ﬞen

Younger consumers

are driving the segment

forward 31% of older consumers

59% of younger consumers

Fast Casual Leads Growth

11.5%14.5%

Fast Casual

4.4% 4.1%

Quick Service

1-Yr Sales Growth(2015)

5-Yr Sales CAGR(2010—2015)

example: example:

Projected Growth Outlook for Fast-Casual Categories

CAGR 2015–2020

Pizza 35.0%

Specialty 18.0%

Chicken 13.0%

Sandwich 12.5%

Burger 12.0%

Asian/Noodle 10.0%

Mexican 9.0%

Bakery Cafe 6.5%

VS.

© 2016 Technomic Inc. 3

MOD Pizza ranks #1 among Technomic’s fastest-growing fast casuals, delivering a whopping 220% jump in year-over-year sales according to the most recent data. The emerging chain specializes in customizable specialty pizzas made with the guest’s choice of unlimited toppings for one low price.

Menu specialization — the move toward downsized, focused menus doing one thing and doing it well — is a restaurant macro trend at play at fast casuals. This trend allows specialty menus and ethnic foods to shine. As seen in the projected growth chart, specialty and ethnic fast casuals hold strong potential.

BIBIBOP is an Asian grill chain that off ers a take on healthy, balanced and fully customizable Korean-style bowls, salads and wraps. The chain posted an impressive 113% uptick in year-over-year sales through 2015.

Another growing chain in the fast-casual ethnic realm is Pancheros Mexican Grill. Specializing in “beּמ er” burritos made with housemade, fresh-pressed tortillas, Pancheros has made unit expansion a central focus of its growth plan.

These trendseּמ ing chains share a characteristic beyond their growth trajectory — they all employ cloud POS systems from PAR.

As unit expansion continues to fuel the growth of the fast-casual segment, cloud POS presents numerous advantages for operators. Cloud POS is designed for scalability, with easy-to-deploy, effi cient menu management across multiple units and true, real-time consolidated data access from anywhere with an internet connection.

CHAIN HIGHLIGHTS ranks #1 among Technomic’s fastest-growing

fast casuals, delivering a whopping 220% jump in year-over-year sales according to the most recent data. The emerging chain specializes in customizable specialty

Menu specialization — the move toward downsized, focused menus doing one thing and doing it well —

This trend allows specialty menus and ethnic foods

specialty and ethnic fast casuals hold strong potential.

is an Asian grill chain that off ers a take on healthy, balanced and fully customizable Korean-style bowls, salads and wraps. The chain posted an impressive

Another growing chain in the fast-casual ethnic realm is Pancheros

CHAIN HIGHLIGHTS

BIBIBOP

MOD Pizza Pancheros Mexican Grill

Beyond the Numbers: While fast casuals lead in innovation across several fronts, QSRs are not standing still. To remain competitive, the QSR segment is working to improve quality, transparency, engagement and operations.

New tech platforms, such as kiosks, ordering apps and digital menu boards, will help QSRs not only align with contemporary trends, but will assist them in efforts to stay competitive and ahead of the curve to meet the demands of today’s – and tomorrow’s – customers.

Visibility Beyond the Four WallsAs the hottest segment in the restaurant industry, fast casual is crowded with concepts both large and small, conventional and creative, each trying to maximize efficiency and consistency as they expand.

As these chains scale, they need solutions that will help them to maintain the same quality and service standards throughout each phase of their growth plan.

One of the biggest-impact upsides for operators migrating to cloud POS is the ability to have a real-time window into their operation from any remote location, with nothing more needed than a device and internet access.

This anywhere accessibility works for any size chain, from a three-unit upstart to an established 200-unit chain, and gives operators the tools and data they need at their fingertips to run their business and free up staff at the unit level.

Key Attributes:• Real-time data• Consolidated reporting • Menu management• Kitchen efficiency• Labor oversight• Fraud monitoring

Online & Mobile OrderingConsumers have been quick to adopt online and mobile ordering at restaurant chains — and fast casuals and QSRs have been particularly swift to make this technology more widely available.

© 2016 Technomic Inc. 4

“We were looking to implement a solution that would give us greater real-time

visibility across the brand and one that we could deploy quickly.

PAR and the Brink POS Software have exceeded our expectations.”

— PANCHEROS MEXICAN GRILL

“… we knew PAR was the right partner for us and that using Brink POS

to its fullest potential would give us a pulse on our business from anywhere,

supporting our aggressive growth plans.”— GIARDINO GOURMET SALADS

of consumers

expect or want

to have mobile

ordering available

at fast casuals

83%

of consumers say the same about mobile ordering at fast-food chains

77%

For consumers, the enhanced convenience and speed of online and mobile ordering supports increasingly on-the-go and time-pressed lifestyles with a simple and familiar solution.

Consumers and operators share the benefit of improved order accuracy, while operators also reap the benefits of a greater amount of usable data on their customer’s behavior.

Beyond the Numbers: Cloud POS provides a seamless integration between the point of sale and online ordering, with easy payment processing across both mobile and desktop platforms. Technology that does not add positively to the dining experience — or help factor in a stronger element of convenience and speed of service — will not succeed.

Looking at customer behaviors by generation reveals important insights to consider.

Analyzing Technomic’s most recent generational data on mobile and online ordering, it’s clear and likely not very surprising that younger generations place the highest importance on the availability of these platforms.

While today’s restaurant and tech companies are smart to target younger consumers, they shouldn’t ignore their older customers. Technology like mobile and online ordering can enhance convenience and the overall experience for this group too; in fact, 43% of Gen X consumers make use of a restaurant’s mobile apps — a much higher percentage than Gen Z.

Some of the newest apps to debut at fast casuals and QSRs feature next-level functionality that illustrates how trends are advancing for these platforms:

• Domino’s new Zero Click ordering app lets users place speedy orders by linking to an existing Domino’s profile with saved Easy Orders

• Blaze Pizza’s new app offers mobile ordering and payment, as well as a nutrition calculator and new loyalty program that offers rewards for usage

Emerging Payment MethodsNext-gen payment options are appearing across the restaurant landscape. Most of these contemporary tools call for touchscreen modules in the restaurant. In addition to on-trend tablet, kiosk, tabletop, mobile-app and online ordering and payment systems, newer payment platforms are also emerging at both fast casuals and QSRs.

© 2016 Technomic Inc. 5

46%Gen Z

39%Millennials

The ability to place orders online drives

their decision to order takeout

50%Gen Z

53%Millennials

Likely to use mobile

ordering

48%Gen Z

55%Millennials

Likely to use online ordering

via computer

25%18-23 yr olds

52%Millennials

Use a restaurant’s mobile apps

Cashless payment methods through smartphones are moving to the forefront. A number of influential chains in the QSR segment, including McDonald’s and Dunkin’ Donuts, now accept cashless-payment options via systems like Apple Pay, Samsung Pay and Google Wallet.

Recent Technomic data on changing consumer demographics and attitudes shows that a full third of consumers consider cashless, smartphone-based payment options like Apple Pay and Google Wallet as important drivers that influence their visitation, with nearly a third saying the same of kiosk payment.

Beyond the Numbers: Hectic schedules, on-the-go lifestyles and quick adoption of new technologies are all driving growth on new payment platforms. Options that deliver speed, convenience, reliability, security and a user-friendly interface will help operators cater to consumers’ evolving expectations.

Operators looking at new or upgraded equipment should factor in emerging payment methods in their decision-making — usage of these payment methods has become well-established, especially among younger consumers, and show signs of growth going forward.

The next trend may see restaurant chains going completely cashless, period. Fast-casual chain Sweetgreen recently announced that it is no longer accepting cash, asserting that the move represents “the future of retail,” and that “forward-thinking businesses are going cashless.”

LoyaltyThe importance of an impactful loyalty strategy can’t be understated. Technomic’s data shows that a large percentage of consumers expect and use loyalty programs and rewards when they dine out. Further, loyalty programs are the

© 2016 Technomic Inc. 6

Importance of Technology in Restaurant Selection

Mobile/online order/delivery 49%

Wi-Fi access 48%

Restaurant-based apps 36%

Touchscreen menu or ordering at table 33%

Mobile payment 33%

Ordering/paying with kiosk 31%

Tablet with games or internet 29%

...of consumers say that they expect loyalty programs to be available at fast casuals, and that loyalty/rewards benefits lead them to visit fast casuals more often

82%...and 77% say the same about loyalty and fast-food restaurants

catalysts that can turn first-time guests into loyal fans.

So when menus and price points are not enough to differentiate from competitors, offering a compelling loyalty program can help brands stand out from one another and drive traffic.

Generational attitudes and preferences are an important aspect to consider. Loyalty and rewards platforms matter much more to younger consumers than to their older counterparts. This is likely due to younger consumers making loyalty a larger part of their overall value equation than older diners.

Beyond the Numbers: With cloud POS configurations supporting multiple formats, restaurants can develop point-based loyalty, as well as those that reward for visit frequency or purchased items, through a “one-solution” platform.

To expand the reach of loyalty and rewards programs, restaurants can use the well-rounded cloud data they gather to gain access to valuable customer information. This data gives operators leverage to create personal rewards for their customers and drive guest engagement.

Loyalty is also becoming more entrenched as an expectation for restaurant-goers — particularly in the fast-casual segment, where the growing importance of loyalty rewards is outpacing QSRs.

The bottom line on loyalty programs is that they extend far beyond a mere service amenity. They exist to fulfill a consumer need that continues to grow in importance, and can function as a visit driver.

SecurityData security has become a paramount issue at restaurants as technology advances and consumers’ greater reliance on personal devices for payment rather than cash for dining transactions grows.

In recent years, a number of top retailers and restaurant brands have been vulnerable to data breaches and have seen their customers’ credit card information compromised. This of course is

© 2016 Technomic Inc. 7

Importance of Offering Loyalty Rewards

by GenerationGen Z 45%Millennial 52%Gen X 50%Boomers 33%FA

ST C

ASUA

L

Gen Z 47%Millennial 65%Gen X 48%Boomers 39%QU

ICK

SERV

ICE

Importance of Offering Loyalty Rewards

47%

39%

Fast Casual

41% 40%

QSR

2016

2015

bad for affected consumers, but for operators, it erodes the brand equity they work so hard to build.

The good news for restaurant companies and consumers alike is that the new chip-embedded credit cards are leading to lower levels of data incidents worldwide.

The greater visibility enabled by cloud POS also allows operators to stay on top of potential fraud incidents even from remote locations.

Beyond the Numbers: Another cost advantage in implementing cloud POS: credit-card providers such as Visa, MasterCard and American Express shoulder all costs incurred by lost or stolen credit cards—but only for merchants that use the latest POS technology.

Cloud POS platforms run security patches and system updates on a regular basis. These updates, server backups and maintenance strengthen security, and are all performed through the cloud so that there is little to no interruption in a restaurant’s day-to-day operations.

Data/APIOne of the other major factors to consider when looking at migrating to a new cloud POS system is how well a platform integrates existing and future technologies.

A system with an API that works well with third-party applications enables operators to quickly adapt to the latest technology to keep up with consumer demands. At the same time, it also allows operators to get the most out of the data collected through these various platforms by essentially connecting all the dots.

With cloud POS, data is safer and more secure, and is remotely accessible without requiring a long-term contract. Additionally, offline mode keeps operations seamless during service interruptions, with automatic data synched once operations come back online.

Cloud POS also helps restaurant chains streamline their IT operations, reduce the footprint of their data center and be in a prime position to rapidly adopt new features and functionality.

© 2016 Technomic Inc. 8

— FIVE GUYS BURGER AND FRIES

“The cloud-based SaaS architecture of Brink POS is the ‘launch-pad technology’

allowing us to offer a complete solution for our brand that will easily adapt to changing demands.

No longer do we need to keep our various technology platforms in silos.”

“The cloud-based SaaS architecture not only allows the data center to be hosted

off site and minimize our footprint, but the open design is completely future

proof to allow for whatever upgrades come down the road. The ability to

add features/functionality to the platform quickly is essential in our mission to be

leaders in restaurant technology innovation; a strategy we share with PAR.”

— SONNY’S BBQ

Cloud POS makes it easier for restaurants to get on board with newer, more secure technologies, such as EMV chip cards. Chip features protect in-store payments by generating unique, one-time codes to approve payments — effectively reducing in-store counterfeit fraud.

Liability laws are changing, putting merchants at risk of being liable for counterfeit transactions from magnetic-strip cards. Because cloud POS more easily facilitates the adoption of chip technologies, it can act as a powerful tool for restaurants in strengthening their payment card industry (PCI) compliance standards, by helping to eliminate the risk of liability of fraudulent card activity.

Finally, software as a service (SaaS) on the cloud is a vital point of distinction. What makes SaaS advantageous for restaurant operators that install cloud POS is that all upgrades, bug fixes and new features are performed automatically and across the entire system.

Key TakeawaysPOS is the engine of a restaurant. Cloud POS makes that engine more dynamic

than ever, giving operators the tools they need to drive sales and loyalty now and in the future.

Younger consumers are the first true digital natives. Offering technology that

fits into their lifestyle is crucial. Restaurant operators that do not meet expectations for fast, easy-to-use apps and online tools risk losing share of the Gen Z and Millennial customer base.

One of the most impactful ways for restaurants to leverage trends with

cloud POS is through development of loyalty and rewards programs. Integration of loyalty platforms into cloud POS systems enhances operators’ ability to turn single visits into repeat business.

Software as a Service (SaaS) is highly beneficial for restaurant operators from a

cost perspective. Rather than time and expense for updating and maintaining traditional POS systems, cloud POS provides regular updates for the price of the devices and a simple monthly subscription.

Access to real-time data lets operators gather useful insights quickly to make

nimble decisions about their business, from anywhere an internet connection is available.

Installation of cloud POS is generally far less time-consuming and less

complicated than for traditional POS systems. Once the network is configured, restaurants can download the software to all of the connected devices.

© 2016 Technomic Inc. 9

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To learn more about ParTech, Inc. and how its cloud POS services can help grow your business, please contact:

Katy HeintzMarketing Manager

ParTech, Inc.8383 Seneca TurnpikeNew Hartford, NY 13413P 303.444.0120 x 5849C 315.525.5919 www.partech.com