Digital Wallets in Restaurants

EHL Editorial Team | 14 May, 2016

In just about every industry, loyalty and payments have an intrinsic link. Marketing specialists rely upon transaction data from customers to improve targeting, personalization and impact of loyalty programs.

However, customer retention in the restaurant industry is famously short-term, and given the fact that many food and beverage operations are classified as small businesses with fewer than 100 employees, many of them lack any type of loyalty program.

According to Seth Priebatsch, CEO of LevelUp, "If you shift to mobile payments, you will have an opportunity to compete with the big credit card companies for customer mindshare. The payment is the focal point of customer interaction, and whoever controls that interaction attracts the customer."

Dining apps offered various solutions to this problem, yet they did not integrate payment solutions. OpenTable addressed that issue, and now the floodgates have opened with ApplePay, Google and its competitors driving innovation in the payment and reservation arena. Restaurants that embrace these innovations stand a greater chance of capturing future loyal customers.



Increasingly, Millennials who have grown up with smartphone and tablet technology are driving the adoption of digital wallets. Connie Alires, director of franchise development of Which Wich, said, "It's not really about the golden rule of treating someone like you want to be treated. Find out how millennials want to be treated and treat them that way. The want respect, but they want to be engaged in the process." While the golden rule still drives customer service, mobile technology is what the younger customers want.



Aside from offering easy payment, the new digital wallet technology offers a wide array of highly useful features for both customer and business owner. These include:

  • Enhanced user experience: Rather than fumbling with a wallet for cash or cards, digital wallets streamline the payment process allowing for more time to relax and enjoy the dining atmosphere.
  • Practical integration with debit and credit card networks:  Customers have the opportunity to use active accounts and monitor payments from one source.
  • Secure technology: Most major vendors offer security features such as encryption while others offer fingerprint authorization.
  • Personalization of customer experience: Some features allow the tool's integration with other mobile platforms and the capability to recover lost data.

While this seems like high-tech gadgets that may dampen the warm, inviting atmosphere most restaurants strive for, these new digital wallet options can reduce friction, streamline the process and focus the customer’s attention on the food and customer service. This in turn reduces churn and improves customer lifetime value.



For the business owner or restaurant manager, these digital wallets also collect and provide data analytics on each individual customer order. These features can enhance and go beyond what a skilled waiter or concierge provided in the past with greeting a regular customer by name or with their favorite drink.

The hospitality industry is in the business of making people happy. Technology enhances that effort and offers effective tools to business owners in the process of providing good experiences while increasing sales.

As usual, the big chain restaurants are leading the way, thus making adoption of the technology more cost effective for the smaller businesses. Approximately 50 percent of pizza orders now take place online, and while take-out pizza seems mundane compared to a boutique, 3-star restaurant, each needs the improved customer experience to remain competitive.

The next step in the advancement of the digital wallet will be easy integration with the restaurant point-of-sale system. Online platforms and apps will communicate directly with the restaurant, as the waiter enters the order into the system. Some full-service restaurant chains have begun to experiment with tablets attached to each table, giving the customer the opportunity to enter the order themselves.

Innovation is well underway in the food and beverage sector of the hospitality industry. As technology advances, competitors will offer more options making it easier for individual restaurants to personalize the payment experience for their own client base.

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