December 7, 2020

How Mobile Ordering Disguised as Contactless Payments is Hurting Full-Service Restaurants

by Maggie Tang

Over the past 9 months, restaurants in the U.S. have had to deal with a series of challenges: increased demand for delivery due to safer-at-home orders, empty dining rooms as waves of shut downs rolled through communities, and complicated guidelines for safely reopening dining rooms. It has left many restaurateurs scrambling, and they are the lucky few who’ve survived - until now.


As a quick fix for contactless dine-in menus & payments, many companies have turned to mobile ordering solutions with functionalities originally designed for takeout and delivery service apps like Grubhub, UberEats and DoorDash. These solutions were never meant for full-service hospitality experiences and that’s left operators with some major hiccups that are totally avoidable. Here’s how mobile ordering for in-person dining is hurting full-service restaurants.

What is Mobile Ordering?


Mobile ordering effectively recreates the delivery experience in the dining room: diners browse the menu and fire their own orders directly to a POS-connected ancillary tablet. Aside from confusion for servers who have to service tables differently, this tech also activates the same price-sensitive purchasing behavior customers use when ordering online. Want to add a protein to that salad? Watch your tab go up in real time. Extra avocado? That’s gonna cost you. Going top-shelf in your cocktail? That $8 up-charge might be hard to swallow.


There’s a reason the check gets dropped at the end of a meal and isn’t tallied in real time at the table. When consumers see their choices adding up in real time they are less likely to indulge. 


There are also hidden operational costs. Because guests choose items and check out as they go, restaurants incur a transaction fee at processing rates as high as 3.5% for every card not present transaction . And what about larger parties? Even a table of 4 gets complicated fast.

This is what using mobile ordering looks like in a typical restaurant outing with friends: 

Diner #1: Steak -> Medium Rare -> side 1: Potatoes -> No butter -> side 2 -> spinach -> no butter -> no garlic. Submit. 
Margarita -> On the rocks -> no salt -> Don Julio Tequila -> skinny -> spicy. Submit.
Pass phone to Diners #2-4: to repeat the process 3 more times. 


Adding more drinks or dessert? Bring the phones back out again and start the process all over again. It’s a disincentive for people to buy more and an experience that turns the dining room into a sea of noses buried in phones, not what diners are looking for in ambiance. 


As the party gets bigger so does the nightmare! Imagine 60 tequilas on the menu, 20 mezcals, and 1000 ways to combine them - that’s one major headache. FSRs know the value a human server adds; a well-trained server with a pen and paper or a good memory can do in 5 seconds what a guest with a mobile ordering app maybe can’t do in 5 minutes. 


Although these solutions may work for QSRs, FSRs need solutions that keep them in control. Outpay is an all-in-one contactless payments solution that keeps the ordering process and hospitality intact because here’s the thing; since the beginning of time, ordering has always been contactless. We don’t need to change ordering. Just menus and payments. The problem is that keeping an ongoing real-time tab is really hard to do, and only a small handful of companies have figured it out. 


Here’s how Outpay does it:

Guests scan a QR code to pull up the menu, then – and here’s the big distinction – everything else STAYS THE SAME; diners place their order with the server, the server adds the items into the POS and throughout the meal all on the same check. 


When the meal is done, guests walk out–payment is collected without the server having to do a thing. Total, tax and tip are all guaranteed and reconciled in the POS. And since the payment is on a timed delay, the party can even decide to split the tab after they leave without wasting any of the server’s time. All transactions are guaranteed against walkouts or chargebacks. Outpay’s parent company is a certified partner of NCR Aloha, Oracle, Toast and other majors systems.


A recent article by Tim McLaughlin, Co-Founder and CEO of GoTab, cites a Mastercard survey showing that consumers have adopted contactless payments in record numbers since the pandemic began, with 79 percent of respondents worldwide reporting that they now use them. It’s a compelling stat, but Tim warns restaurateurs against mobile ordering services, which require major changes to the FOH experience, and not for the better. 


While makeshift mobile ordering solutions masquerading as FSR contactless payment solutions may seem like a quick fix, they are actually turning full service restaurants into fast food-like QSRs- not something people are willing to pay a premium for. Smart FSRs aren’t wasting time and money on these sub-par mobile ordering solutions that are not built for full service experiences. Instead, they are taking a closer look at adopting contactless payment solutions that not only keep the experiences their guests crave intact, but also allow the FSR to stay focused on genuine hospitality. 

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Maggie Tang is on the strategy team at Friend of Chef (FOC), a NYC full-service strategic advisory firm focused on creating value through hospitality driven experiences. She has been assessing contactless payment solutions since the onset of the pandemic for real estate developers and restaurant operators. Prior to FOC, she worked in Strategy and Operations for companies including Eleven Madison Park, Atelier Crenn, and Magnolia Bakery. She is currently attending the Wharton School at the University of Pennsylvania.


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