A Guide to Payment Processing Changes in the Food Industry

The coronavirus pandemic affected every industry, but one of the hardest-hit was the food industry. For example, due to recommended social distancing measures, many full-service restaurants were forced to limit capacity or close indoor dining altogether. Statista shows that on January 25th, 2021, the year-over-year decline of seated diners in restaurants in the United States was a shocking 65.91 percent.

Whether food delivery, catering, food service management, restaurant management, or food trucks, each line of business in the food industry had to make changes to quickly adapt to new circumstances. Here is a look at how 2020 changed operations, including payments, for the food industry, and how some of these changes might be here to stay.

Physical Changes to Restaurants

Many restaurants have been required to abide by limited-capacity guidelines from their state or local governments. Some restaurant owners adapted to these rules by blocking off every other table in order to limit capacity. Others switched to outdoor-only dining if space was available.

New Ways of Doing Business

Curbside Pickup

While many sit-down restaurants already offered takeout/to-go orders, this previously was generally a smaller portion of a restaurant’s business. The pandemic caused many in the restaurant industry to focus solely on takeout/to-go orders if they could not be open for indoor dining.

Many restaurants went a step further and implemented curbside pickup, enabling patrons to drive up and pick up their order at the curb, lessening potential contact. With this new option came new payment functionality requirements - restaurants had to ensure they accepted online payments, or that they had handheld POS terminals so the customer could pay from their car upon pickup

Delivery

Restaurants who previously had not offered delivery started to examine ways to add this service. Some used third-party services like GrubHub or DoorDash, but with those services charging restaurants commission fees of up to 30% per order, many restaurants found that the costs were not sustainable.

A better option is for restaurants to keep any delivery service they offer “in-house.” This way, they can avoid having to make the choice between absorbing the additional costs or passing them on to the consumer. Restaurants can enable online ordering, where the order is made and paid for on a website, or mobile ordering, where it is done on a smartphone, usually through a mobile app.

Keeping delivery service in-house also gives restaurants more control over the customer experience. The right integrated restaurant software will also provide restaurants with customer data and analytics to inform their business - important data that third-party delivery services often don’t share with restaurants. Robust analytics and reputation management tools are vital to restaurants, as they help them to engage customers, drive return visits, and manage their online reviews and social reputation.

New Restaurant Payment Methods

With many diners switching from indoor dining to curbside and delivery, restaurants had to find alternatives to their traditional point of sale system (POS system). Restaurants are among the many businesses that have been increasingly adopting contactless payment methods, such as digital wallets or text to pay.

Restaurants, in particular, have increased their usage of QR codes. These codes can be used for payment - a waiter can present a patron with a receipt that has a QR code. The patron then scans the QR code with their mobile phone to bring up their bill, which they can then pay by using a digital wallet or simply inputting their credit card details into their phone.

Restaurants have also started using QR codes to replace physical menus. Restaurants place a card on the table, and patrons scan the QR code on the card with their phone to pull up a list of menu items, without having to download an additional app. Some establishments are also incorporating ordering platform capabilities into their QR functionality so customers can order directly from their phone.

Infographic showing ways restaurants adapted in 2020

Value-Add Programs for Restaurants

To help boost cash flow during this time where indoor dining is less common, restaurants are implementing loyalty programs. In a Pymnts.com survey, 39% of respondents said they would spend more at restaurants that offered loyalty and rewards programs. In keeping with the contactless theme, these programs are now digital rather than requiring customers to keep up with a paper membership card.

Gift card programs - particularly e-gift cards - were another area that restaurants sought to leverage during the pandemic. A recent study found that in 2020, the average load amount on an e-gift card to a quick-serve restaurant (QSR) was more than double the average load for a physical gift card.

Other Lines of Business in the Food Industry

Catering

Catering is another area of the food industry that was affected by the pandemic. With corporate offices closing and meetings becoming virtual, two-thirds of operators suspended their catering programs. To make up for some of this loss of revenue, some operators switched to offering takeout or delivery, or even take-home meal kits. These changes caused catering companies to need to update their payment functionality in similar ways as discussed earlier in regards to restaurants.

Food Trucks

While food trucks by nature have a little more flexibility when it comes to social distancing guidelines, they were still affected. Many food trucks do not have a permanent location - their revenue comes from appearing at large group events such as concerts and fairs, many of which were canceled due to the pandemic.

Some food trucks have pivoted their business plans to target essential businesses that remained open during the pandemic, such as hospitals and factories. Others have targeted rest stops or even residential neighborhoods. Some have even shifted to offering groceries.

Whichever direction food trucks decide to take their business plan, they can benefit from an integrated payment processing solution that will allow them to accept various payment methods and can also include value-added functionality such as loyalty programs.

Food Service Management

Food service management companies such as college dining operators also had to pivot during the pandemic, with some college dining halls implementing mobile ordering, takeout, and delivery options.

“Ghost kitchens” have also begun to make an appearance. These are production kitchens optimized for very little customer interaction other than a quick meal pickup. To further reduce contact, some colleges have implemented meal lockers where a code is texted to a customer’s phone, and the customer then enters the code on the locker to open it and pick up their meal.

Automated serving stations can now be found in a few colleges. These are high-tech vending machines that can produce full meals such as salads without the diner having to interact with anyone.

With so many new options available to food service management companies, they need to ensure that they are continually optimizing their payment functionality to work with these new technologies

Conclusion

While the rise of many of these new technologies in the food industry and especially in restaurant operations was due to the pandemic, many restaurants are likely to continue using them permanently because of their ease and convenience for the customer.

To meet changing customer expectations caused by these changing times, restaurants need one software solution that can handle it all - from various payment methods to gift card functionality to customer analytics and more.

To learn how Global Payments Integrated can help improve restaurant software and payment processing, contact us today.

Ashley Jones

Marketing Content Coordinator

Ashley Jones is the Marketing Content Coordinator at Global Payments Integrated, where she is responsible for digital content strategy, development, and analysis. A communications and digital marketing professional, Ashley has experience in the areas of social media, digital content creation, event planning, broadcast journalism, and administration.

View Profile

Ashley Jones