Restaurant and Hospitality News – August 7, 2017
By Christine Kern, contributing writer
In news this week, Texas Roadhouse holds to its standards with no delivery; and chip-on-chip transactions are on the rise as the EMV migration continues.
Texas Roadhouse Stands Firm on No Delivery Services
In an age when most restaurants are exploring delivery options as a way to boost sales and customer engagement with their brands, Texas Roadhouse Inc. has said that delivery is a definite “no-go.” The chain has generated strong sales in its second quarter, with same-store sales up 4 percent, and it credits the majority of the increase to new customers, according to The Nation’s Restaurant News. This is indeed encouraging news at a time when most brands are struggling to attract new consumers.
In an earnings call, Texas Roadhouse CEO Kent Taylor asserted, “We encourage all our competitors to do as much delivery as they can so they can deliver lukewarm food to the people who order it. We’ll stick to our guns on this.”
The bottom line for company execs is that delivery compromises the quality of their product, a sacrifice they are not willing to make. “Those people are going to call between 6 and 8 when we’re busiest, and our kitchens are already at pretty high capacity,” company president Scott Colosi said. “I’m not sure operationally it will be the best thing for us to be advertising delivery.”
“It’s easy for a restaurant who is underutilizing their kitchens and have a lot of negative traffic and want to add delivery,” he added, “We’re just in a different position.”
One reason for the chain’s continued success, which bucks the national trend, is that it has remained firm on maintaining prices even as labor costs rose 6 percent during the quarter. The company raised prices just 1 percent during the same period, as part of their commitment to quality. That does not mean they are not looking into other options., like online ordering and mobile app development, however.
Colosi explained, “It’s not in the DNA of our company. We keep our prices very aggressive. WE just don’t take the next day’s sales for granted. We see how tough it can be in the restaurant business, especially casual dining, when you let prices get away from you.” And while wage rates are increasing pressures on operating costs, Colosi stated, “we just don’t take anything for granted when it comes to traffic counts and guest loyalty. Historically, our operators have figured out ways to help grow traffic counts to help us deal with inflation. That’s the model we’re going to stick to.”
Chip-on-Chip Transactions Increasing, Consumer Transactions Improving, Says US Payments Forum
The U. S. Payments Forum has released its summer 2017 market snapshot, which revealed that chip-on-chip transactions are on the rise, while consumer transaction experiences are also improving. According to the state of the market research, approximately half of all U.S. credit and debit transactions are now chip-on-chip. And approximately 50 percent of all merchants are also now enabled for chip.
“It is encouraging to see the number of chip-on-chip transactions on this upward trajectory,” said Randy Vanderhoof, director of the U.S. Payments Forum. “To see significant declines in fraud, chip-on-chip transaction rates will need to account for approximately two thirds of all credit and debit transactions, and with this reported growth, it is clear we are on the right track towards removing counterfeit card fraud from the system.”
Transaction speeds are also helping to improve customer satisfaction with chip cards, as Vanderhoof explained. “Shaving seconds off chip transaction times is significant. As the U.S. continues to make progress in the migration to chip, we’ll see more improvements made in the consumer experience, whether by merchants optimizing their chip acceptance processes at the checkout lane, or through new ways to pay, like increased consumer use of mobile devices and wearables, more contactless cards being available, and more seamless omnichannel experiences.”
Hospitality and restaurants have unique challenges in migrating to chip technology; many hospitality merchants are examining how to manage pre-authorization and card-on-file chip transactions, while restaurant merchants face decisions regarding the adoption of pay-at-the-table and tip handling options. Members of these industries are invited to participate in the U.S. Payments Forum’s next meeting on September 12-13, 2017 in Rosemont, Illinois. Click here for more information.