Partner Article

Outdated payment systems costing hospitality industry

According to a new industry report from Orderella, the leading mobile ordering app, licensed hospitality venues could lose £4.32 billion in sales because of outdated payment systems. A rise in expectations around using technology in licensed venues means that 24% of UK consumers would walk out of a venue if their preferred method of payment wasn’t offered by the operator. The number rises to 38% for 18-24 and 25-34 year olds.

The survey findings are taken from the ‘Always On-Trade Report’ by Orderella, which was created in partnership with the Association of Licensed Multiple Retailers (ALMR) and examines the role of technology in licensed hospitality venues in the UK.[1]

Is cash still king?

Although the majority of consumers surveyed (88%) still expect to be able to pay using cash or card (86%), technology such as contactless payment and mobile ordering are very much on the rise. Almost one in five (19% of consumers) have used contactless to pay for food and drinks when they’re out and this increases to almost a third (31%) in the 18-24 year old age group. In addition, the use of payment via smartphone or tablet is also increasing with 7% of consumers using it to pay for food and drinks. Again, usage peaks among 18-24 year olds (11%) and dips to just 4% among those aged 55 and over. It is likely that this number will rise rapidly in line with The Payments Council predictions that the majority of transactions will be cashless in 2016, particularly among younger consumers that are already less reliant on cash[2].

Whilst consumers are becoming more and more flexible with their payment methods to date only 59% of licensed venues are accepting contactless and other payment systems meaning the industry is missing out on more than £4 billion in sales through not having multiple payment choices in place.

Dennis Collet, CEO of Orderella commented: “It’s not surprising that younger generations want more from technology in the hospitality industry; they are the ‘always on’ generation. This demand for new, cutting edge technology can’t be ignored if the industry wants to prosper. It’s this younger generation that will be frequenting their doors over the next thirty to forty years on their nights out.”

Technology in the on-trade

According to over half (52%) of consumers, technology improves the overall customer experience rising to 64% for 18-24 year olds and peaks at 67% among those aged between 25-34 years old. With 24% of operators also hanging their hats on technology being an important contributor to the future of the hospitality industry, this is hugely significant.

Demand for booking tables online is also on the rise with 48% of consumers preferring to make reservations online. Although 59% of operators offer this service, that still leaves another 41% that are missing out on attracting potential customers.

Industry perception vs. customer reality

The report also highlights a discrepancy between what operators consider to be good service compared to their customers. 76% of the ALMR venues believe staff interaction with customers is ‘very important’ compared to just 50% of consumers. Likewise, operators ranked knowledgeable bar staff (75%) as the most important element of good service compared to just 16% of consumers.

In comparison, consumers rated quality of food highest (39%) and short or no queues at the bar as equally important as having knowledgeable staff. 77% went further to state that a long queue or wait for service would negatively impact their experience at a venue. Lengthy waits are also impacting tips with 22% of consumers saying they would tip more for quicker service in a bar or pub and 42% saying they would in a restaurant.

Half of consumers (50%) have posted an online review after visiting a venue and 28% have engaged with a venue via their social media channels. Following the trend of younger demographics driving this – as many as 46% of 18-24 year olds have engaged with on-trade social media channels, falling to just 17% of those in the 55+ ages group.

Collet continued: “Our expectations around what constitutes good service has completely changed because of technology. Today’s generation of pub and bar goers are used to being able to click a button and know when a bus is coming or to order a taxi instantly on their night out. The rise of contactless and mobile payments has also meant that they don’t expect to have to carry around loads of cards or cash with them either. If licensed venues want to be able to compete for this generation’s business, they need to adapt too. Although only 7% of consumers have currently used an electronic device such as a phone or tablet to place an order, this will grow at a rate that is much faster than technology has been previously adopted by licensed operators. It’s time to take action now so they don’t get trapped in the past.”

Kate Nicholls, Chief Executive, The Association of Licensed Multiple Retailers commented:

“Our customers, particularly our younger, newer customers, are increasingly adventurous in their eating and drinking-out choices and sophisticated in how they engage with our businesses. The Millennial market in particular is hugely tech savvy, using social media and associated technologies to get the best value for money, and in return they expect the same convenience on our part.

“The licensed hospitality market has responded well to fierce economic pressures over the past years to hone their USPs and strengthen their offers. Pubs, bars and restaurants need to ensure they continue to evolve in order to remain as relevant and popular as possible. “

To view the full Always On-Trade Report click here.

The Orderella App is available to download via the App Store or Google Play.

[1] The report is based on the findings of two pieces of research; a consumer poll of 2,000 UK adults who go to pubs, bars, restaurants or nightclubs regularly and a business survey of 17 ALMR members, which together, represent a total of 348 venues across in the UK.

[2] Payments Council: http://www.paymentscouncil.org.uk/media_centre/press_releases/-/page/3237/

This was posted in Bdaily's Members' News section by Orderella .