Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivanna Hampton. Restaurant chains that have been snacking on what technology has to offer should order a full meal plus dessert. The tech starved

industry could benefit from automating reservations, scheduling, and tip management to grow their

margins. Sean Dunlop has research how restaurant tech can create winners and losers. He's an

equity analyst on the consumer team for Morningstar Research Services.

Welcome to the podcast, Sean. Thanks so much for having me. So why has the restaurant

industry trailed other industries in adopting technology? Yeah, there are a couple big reasons

for it. So for as long as I can remember, restaurant labor has been cheap and abundant and it just

hasn't been an issue.

Fast forward to February 2020, everybody got sent home.

We saw this massive wage inflation in the restaurant industry.

So the average hourly wage and leisure and hospitality day is 26 to 27 percent higher than

it was in February 2020.

And all of a sudden, everybody's forced to look at this.

There are sort of two other big reasons. One of them is that restaurant margins are notoriously

tight. So if you look at the average independent restaurant, they typically have a low single-digit

percentage margin, which really disincentivizes some of these forward-thinking investments that don't

have a clear-cut ROI, particularly for smaller operators.

And then the third component of it is access to data.

So until recently, even the biggest chains like McDonald's only knew about 5% of their customer base.

Now, as we've seen this proliferation of digital ordering and loyalty program penetration,

it's become much easier.

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