While restaurant indoor operations have leapt into the future with increasingly seamless digital consumer-facing technologies, the back room is still stuck in the past. Instead of state-of-the-art digital platforms, restaurateurs often have to manage checks, postage stamps and stacks of physical documents.
Notch, a business-to-business (B2B) food and beverage wholesale marketplace for restaurants and distributors, earlier this month announced the launch of a new payment platform, notchPay, in an effort to increase speed and payment efficiency. CEO Jordan Huck spoke with PYMNTS about the challenges facing restaurateurs and distributors today.
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“For a typical restaurant, between front and back, they go [have] between seven and 10 different wholesale distribution relationships, from alcohol to meat to seafood to dairy to produce,” he said. “Essentially, sourcing will be done for these distributors offline. We will be using text or even email. I will not have the ability to browse the full catalog. This is an industry that still exists outside of price lists.
Huck added that the paper invoices used in this process can take more than a month to be paid and that 50% of these payments are made by check.
“From the time the provisioning happens to the time I update my system, I cut a check,” he said, “there’s just a tremendous amount of friction.”
The ripple effects
These B2B payments play a central role in restaurant operations, and Huck says digitizing them can improve many other restaurant processes. Specifically, he said digital invoicing removes friction from the inventory management process, by automatically updating systems with transaction information, and simplifies accounting by integrating with systems such as Quickbooks.
Research from PYMNTS’ January 2022 study, “The Strategic Role of the CFO Handbook”, created in collaboration with Versapayfound that 95% of wholesale CFOs believe digitizing Accounts Receivable (AR) and Accounts Payable (AP) will benefit customers and suppliers, 60% expect it to provide a more transparent, 55% expect it to improve efficiency, and 52% expect it to better integrate AR and AP functions.
Read more: Report: CFOs see digital AR/AP as the best way to improve efficiency and transparency
However, the study found that half of them believe it is difficult to find the right technology to digitize AR and PA, and 77% believe that the lack of internal expertise is a barrier to scanning.
Fewer hours, fewer problems
Restaurants in the industry face a tough job market. Demand is higher than before the pandemic, with consumers seeking both on-site dining experiences and frequently ordering restaurant meals for off-site consumption, but the workforce is smaller.
According to Census Bureau data on monthly food services and drinking places forward sales in January, the most recent month on record, seasonal sales were up 33% from 2021 levels — and even 12 % compared to February 2020.
However, data from the Bureau of Labor Statistics shows that staffing levels have not kept pace with this growth: the number of employees in food services and drinking places (i.e. restaurants and bars) in February only increased by 14% compared to February 2021 and decreased by 7%. from February 2020.
Huck noted that by reducing the work required to send and receive payments and bringing the entire system online, restaurants can save much-needed hours during a time when time is a very limited resource.
“There’s nothing these restaurateurs hate more than the manual work of entering bills like this,” he said. “It’s just not the job that any of these companies want to spend their time on.”
Additionally, he claimed that retailers see a similar benefit, with AR scanning allowing them to reduce the time it takes to enter credit card and other payment information.
just the beginning
Even though restaurants are, overall, much more digitized than in the first two months of 2020, when it comes to digitization, much of the industry still relies on outdated processes.
“We are in the very early stages of digital adoption, so we think globally [software-as-a-service] penetration — restaurants using only software to automate many of the functions they use — is significantly underutilized,” Huck said.
Looking to the future, he is excited about the explosion of technology in B2B payments, and he predicts the space will advance significantly in the near future.
“People don’t realize how much commerce is still being done, especially in B2B, through means like paper checks and invoices,” he said. “[In one year, I hope] this tipping effect would have happened where you start to see it’s easier to pay for things in bulk [digitally] than paying offline.