Shake Shack Sees Digital Experience Driven by Dynamic Kitchens

2020 saw restaurants rush to become available through digital platforms, and 2021 gave restaurants a glimpse into how digital behaviors might normalize when contagion concerns subside. Now, looking to 2022, restaurant brands are looking to make the digital innovation of the past few years stick, generating long-term loyalty and building deeper relationships with consumers.

“I think that in 2022 … there will be a focus on customer service in the digital space,” Steph So, head of digital experience at Shake Shack, told PYMNTS in an interview. “There hasn’t been a lot of talk about this, because it’s not as guest-facing, but enabling kitchen operations with more digital, allowing for more dynamic kitchens … Those kinds of things will be a trend in the restaurant space as folks move out of just that pre-order and fulfillment function. Digital’s going to expand into other spokes of the wheel.”

Taking on Omicron

With the rise of omicron, Shake Shack is able to benefit from changes made to the business in the past couple years.

“We’re so pleased that we had all those digital channels set up, all of the pivots we made in 2020,” So said. “I think we’ve adapted to omicron as best as we possibly can.”

Across the restaurant industry, brands digitized in 2020 and 2021, according to data from PYMNTS’ 2021 Restaurant Readiness Index, created in collaboration with Paytronix. The study, which surveyed more than 500 managers of quick-service restaurant (QSRs) and full-service restaurants across the United States, found that the share of restaurants offering the ability to pay online skyrocketed 77% in the five months between September 2020 and April 2021, and the portion offering consumers the ability to pay with digital wallets grew 24%.

Moreover, the study found that restaurants facing new contagion concerns can benefit from widespread digital adoption. By April, 55% of chain QSR sales came through digital channels, as did 39% of chain restaurants with tables service’s sales.

In fact, with widespread digital availability, Shake Shack is even able to see some benefits from the downshift in mobility, though these positive effects are tempered by the labor challenges the outbreak poses.

“Over the last couple of weeks, we’ve seen record digital traffic,” said So. “A surge like this leads to more digital traffic, more downloads to our digital platforms, and … those are ultimately very high lifetime-value guests.”

The New Ordering Experience

So believes that kiosks have been going undervalued as a digital technology key to restaurants’ future success.

As she sees it, consumers’ hesitancy early in the pandemic to touch public kiosk screens only lasted “a very, very brief moment,” soon giving way to their expectation of self-guided convenience.

“The customer has certainly voted that the experience of ordering on a kiosk versus ordering face-to-face with a person is actually preferred,” she said.

Research from the Index finds that 19% of consumers and 28% of restaurant managers believe that self-service kiosks will be key to driving long-term success. Notably, the share of restaurants offering the ability to order via kiosk fell from 23% to 19% between September 2020 and April 2021.

With Shake Shack having opened its first drive-thru in early December, and with two now open for business, So expects the drive-thru ordering channel to also play a significant role in the chain’s future, opening up new markets, a pivot from founder Danny Meyer’s original vision for the brand.

“We’re going to take these first five, 10 drive-thrus to really hone the model, understand how it’s working for us,” she said. “Then I think, from there, it could be a really big expansion plan for us. So that’s kind of how we’re looking at it this year.”

The Road Ahead

So anticipates a shift in how digital orders will be fulfilled.

“This is going to be an unpopular opinion, but I actually think delivery service partners are being overhyped,” she said. “I think most restaurants who have been able to weather the storms of COVID have launched their own native delivery product.”

Noting the chain’s “great relationships” with leading aggregators, So nonetheless highlighted the cost challenges of the third-party aggregator model for restaurants. She predicted “a rightsizing” of the delivery model, expecting elevated demand for the channel to normalize once cases begin to go down.

In fact, restaurants’ highest-value customers prefer restaurants’ direct ordering channels to third-party marketplaces, according to data from PYMNTS’ November study “Digital Divide: Aggregators and High-Value Restaurant Customers,” created in collaboration with Paytronix, which surveyed more than 2,200 U.S. adults about their restaurant ordering behavior. The report found that 15% of restaurants’ high-spending, high-frequency customers order through direct channels, well above the 8% that order via aggregators.

Read the full report: Digital Divide: Delivery Service Aggregators And The Digital Shift

Within five years, So expects that restaurants will be expected to have self-service kiosks, contactless payment options, pre-ordering capabilities and delivery options.

“I think the bar will continue to raise in terms of guests wanting that personal experience, and then I think that the winners in five years will be those who can really differentiate their experience beyond that,” So said. “Frictionless will be absolute table stakes.”