Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)
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Restaurant operators are investing in technology to better estimate wait times and improve the process of alerting guests when their tables are ready, hoping to keep patrons from fleeing at the site of long lines.
With a constant stream of chains to choose from, competition in the casual dining sector is fierce. Some major restaurant operators could be losing up to $1 million in sales each week as guests leave because of wait-time frustrations. When it comes to investing in new technology, wait management has become a top priority for chains.
Red Robin Gourmet Burgers Inc. (RRGB) is trying out a new system of texting guests when their table is ready at one of its mall-based locations. The move will allow people to shop, or simply browse, while they're waiting to be seated. The chain is only in the very early stages of testing it, a spokesman said.
Table Top Media's Chief Executive Jack Baum, a restaurant industry veteran turned technology provider, says restaurants know they're losing guests to long lines on a busy night, but it's not just a one-time effect. If regular patrons have a bad wait experience once, it will likely turn them away for good. "People will come to a casual dining restaurant more frequently if they know they can get in and out quicker," he said.
The capital investment for a chain is relatively small, requiring a few thousand dollars for hardware such as pagers on a per restaurant basis. Technology providers are also now offering some products as software on a monthly subscription basis, making them even more affordable.
The National Restaurant Association estimates that 16% of restaurant businesses use technology for table management, and 21% have increased their technology budgets this year over last year.
Heartland Payment Systems Inc.'s (HPY) Freshtxt provides text messaging services that integrate with restaurants' current pager systems to allow guests to roam area shopping while waiting.
Heartland's Chief Information Officer Steve Elefant said texting systems also encourage increased frequency by allowing restaurants to contact customers with promotional deals to bring them back again. "You'd be surprised how popular the outbound marketing aspect is," Elefant said. "It's pushing restaurants to take that step to invest in the customer service technology."
Built on the premise of Southern hospitality, Texas Roadhouse Inc. (TXRH) is in the process of reverting back to the pager system, after switching to a cheaper alternative in which guests are given a number and watch for their number to light up on a larger screen in the waiting area.
"People were confined to waiting in one area inside, so they were blocking the door," said Travis Doster, company spokesman. "And a lot of the time, people couldn't see the screen, and we'd have to announce their numbers on the loud speaker, and that takes away from the atmosphere. It just wasn't worth it."
Texas Roadhouse estimates it turns away an average of 100 customers at each restaurant per weekend night due to long waits.
A big cost with the vibrating, light-up pagers that are often used at casual dining chains is replacing the pagers when people walk off with them. To help combat the issue this time around, Texas Roadhouse is trying out drop boxes for the pagers outside the restaurants.
Darden Restaurants Inc. (DRI) recently rolled out a new table management system at its Olive Garden chain to better detect wait-time estimations. A spokesman for the company said the new system has made a noticeable difference in customer satisfaction.
Mark Kalinowski, restaurant analyst at Janney Capital Markets, said wait time management is a critical area for restaurants.
"It can be very frustrating when you're told the wrong wait time, and you're stuck there," Kalinowski said. "So, if restaurants can help make that process better, that is probably a better investment," than some of the other swanky technology out there, like tablet ordering systems at tables.
With the recession and its aftermath leaving restaurants strapped for cash, investments in the latest technology have been somewhat on hold.
Hudson Riehle, senior vice president of research for the National Restaurant Association, says tech spending is starting to pick up again.
"The restaurant industry has typically been slow to invest in technology because it's not a high-margin industry. Casual dining, specifically, has lagged behind quick-service restaurants," Riehle said. "Casual dining concepts are now implementing more technology to enhance customer service."
Dale Carr, technology tycoon and chief executive officer of LeadBolt, says the drawback is the risk that always comes with technological advancements: Potential software errors crippling a busy restaurant.
-By Annie Gasparro, Dow Jones Newswires; 212-416-2244; email@example.com