Amex: Independent Restaurants Make Digital Adaptations but Thrive on in-Person Service

While the restaurant industry has come a long way since the early months of the pandemic, many challenges remain. Additionally, the ripple effects of the events of 2020 have led to a range of other issues including labor difficulties, supply chain shortages, inflation and more.

Earlier this month, American Express announced the launch of the second installment of its Backing Historic Small Restaurants Grant Program, offering $1 million in grant money to help preserve historic small restaurants across the country. Through the program, the company will issue 25 $40,000 grants to such establishments, with the funds doled out by the National Trust for Historic Preservation.

Read more: Amex Gives $1M to Save Historic Restaurants

“The impacts of the pandemic continue to be a prominent issue facing many independent restaurants,” Colleen Taylor, president of U.S. Merchant Services at American Express, told PYMNTS in an interview. “From new waves and variants threatening in-person business to supply chain issues, there are still many challenges that restaurant owners are having to navigate.”

Even with all the creativity that restaurants have shown, the onslaught of challenges continues to make it difficult for them to stay ahead of the curve.

“Restaurants have done an incredible job of pivoting with the pandemic,” Katherine Malone-France, chief preservation officer of the National Trust for Historic Preservation, told PYMNTS. “We saw that with last years’ grantees, where grant funds helped to support not just working on their historic buildings, but creating outdoor spaces, upgrading outdoor spaces and things like that … but the pandemic is requiring these small businesses to pivot and then pivot again and then pivot again.”

The In-Person Experience

PYMNTS’ 2021 Restaurant Readiness Index, created in collaboration with Paytronix, which drew from a survey of over 500 managers of quick-service restaurants (QSRs) and full-service restaurants (FSRs) across the U.S. conducted in the spring of 2021, found that independent FSRs were generating 13% of their sales from outdoor dining customers. This share of total sales exceeded that contributed by third-party aggregator orders, by mobile order-ahead sales, by called-in delivery orders and by delivery orders placed online.

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The channel has proven so vital to independent FSRs’ success that many are advocating for COVID measures allowing for more outdoor dining options to remain in effect even once contagion concerns subside.

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Certainly, consumers value small, independent restaurants in part for the in-person environment and the on-premises experience.

“People are ordering online, but restaurants, and their community also deeply value their physical spaces,” said Malone-France.

Indeed, not only did outdoor seating account for a significant share of orders, but at the time of the Index’s survey, between April and May 2021, indoor on-premises orders already accounted for 27% of sales, a greater share than the channel comprised for any other kind of restaurant.

Independents Go Digital

“When [restaurants] were forced to close their doors to in-person business, many of them quickly developed new strategies to service their communities without missing a beat,” said Taylor.

In fact, the vast majority of independent FSRs now offer digital ordering, according to data PYMNTS’ 2022 Restaurant Friction Index also created in collaboration with Paytronix. The study, which drew from the results of a survey of more than 500 managers of QSRs and FSRs conducted in September, found that 86% of independent FSRs now offer order online, pickup in-store options.

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Additionally, the study found that 76% of independent FSRs offer delivery options, 64% offer the ability to pay with digital wallets, and 26% offer the ability to order online and pay in-store.

Of course, the race continues on.

As Taylor put it, “Restauranteurs need to be tech savvy and willing to leverage technology as consumer behaviors continue to change.”

Give the People What They Want

While some major restaurant chains are scaling down their on-premises businesses, unveiling smaller-footprint models with a focus on drive-thru and/or digital orders, independent restaurants’ road to success looks different. Many consumers continue to seek out the in-person service that these eateries offer, and they have an emotional attachment to the restaurants.

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“Independent restaurants are resilient,” said Taylor. “Some of the historic establishments we work with have served their communities for decades.”

Additionally, Malone-France noted that the grant program’s influx of nominations from consumers is a testament to the strong affinity people feel for these restaurants and the continued desire for the dining experiences they provide.

“We had a tremendous response to this grant program last year, with more than 3600 nominations, and the majority of those were from people in their communities,” she said. “[These restaurants] are just sewn into the fabric of people’s lives.”