Digital Dining: The FinTech Revolution in Global Foodservice… (2024)

With a -1% global market value CAGR registered over 2018-2023, the consumer foodservice industry has grappled with the challenge of eroding profit margins and the need to improve the customer journey experience. Nevertheless, fintech presents transformational opportunities, a critical factor to sustain a 4% global value CAGR over 2023-2028. It not only enhances customer journey satisfaction through payment digitalisation, but also accelerates digital transformation of operations. Meanwhile, fintechs can assist underserved foodservice to obtain business loans, leveraging digitalised transactions. Early adopters of fintechs will gain a competitive edge, capitalising on opportunities in the global foodservice market projected to reach USD4 trillion by 2028.

Restaurants: Digital overhaul from ordering and payment to operations

Restaurants is the largest category in foodservice globally, registering 78% of global value sales in 2023. Chained restaurants are early adopters of fintechs. In Singapore in 2022-2024, Japan Foods Holding collaborated with TabSquare (a Singapore fintech) to progressively equip its brands, including Ichikokudo, with QR ordering and integration of mobile payment by card or digital wallet from smartphones. Also, Subway partners with Wordline to deploy a single payment platform integrating online and in-store transactions across its European franchisees.

However, restaurants is highly fragmented, as 91% of outlets globally (92% in Asia Pacific) were independent in 2023. Constrained by budget and scale, many independent operators cannot drive digital transformation alone. Fintech partnership is crucial for gaining competitiveness in optimising payment and operations and capitalising on sales data.

For example, Chinese fintech Yeahka integrated a management system that enhances efficiency by providing statistical tools and analysis for foodservice, including Zhang BBQ Restaurant in China. This helps restaurants rearrange their menus, understand customer frequency and recommend dishes to increase overall revenue.

Third-party delivery: Payment diversification to drive inclusion

The rising cost of living has significantly impacted the foodservice industry. However, delivery services continue to thrive driven by convenience, projecting a 10% value CAGR over 2023-2028 globally (highest across all fulfilment channels). To maintain accessibility, Ele.me, China’s largest food delivery app, embedded a buy now, pay later (BNPL) service from Ant Group in 2020. Similarly, India's Swiggy partnered with checkout network Simpl in December 2023 to offer a one-tap checkout feature allowing customers to pay later and receive a consolidated bill across all operators.

According to Euromonitor’s Voice of the Consumer: Digital Survey, fielded March to April 2024, 19% of consumers globally prefer bank account transfer, while 30% prefer digital wallets when ordering food online, highlighting a significant underserved segment of the population. To address this challenge, fintechs have partnered with foodservice operators to pay via bank accounts or digital wallets. For instance, Hungry Panda and Atom in the UK, Justo with Fintoc, and PedidosYa with Yape in Latin America allow customers to pay directly from bank accounts.

Cafés/bars: Remote ordering and self-service terminals to enhance efficiency

Cafés/bars is forecast to achieve a CAGR of 7% globally in 2023-2028, outpacing the 6% overall industry growth. However, intensifying competition and shrinking profit margins have resulted in a lower outlet expansion rate compared to the industry average. To mitigate challenges and ensure sustainable growth, this category is increasingly integrating fintech solutions to optimise labour costs and enhance turnover rates.

In South Korea in 2023, Toss introduced a comprehensive payment POS terminal solution supporting all payment methods, including cards and digital wallets. It also integrates extra features including advertising and ID checks. Given that over 95% of cafés (such as Balaco and Entetepere) and bars in South Korea are independent outlets, Toss’s self-service integrated system allows the staff to focus on beverage preparation and eliminate the need for cashiers. Also, it improves customer satisfaction, as it shortens the customer journey from ordering and payment to receipt of the food or beverage.

Meanwhile, remote ordering and payment via native apps of beverage chains has been gaining traction, to adapt to the changing customer behaviours to avoid queueing. Tencent’s equity investment in Luckin Coffee has enabled the strategic partnership of embedding digital operations of Luckin Coffee (ordering, payment, loyalty) into WeChat in China. In Singapore, PayPal works with Ya Kun Café to integrate online payments.

Triangulate multiple research methods for actionable insights

In conclusion, common challenges across foodservice categories include foodservice companies’ lack of financial expertise and system integration knowledge, and payment diversification.

To address the challenges, foodservice may commission market research agencies, to prioritise key payment methods for diversification and search fintechs for operation digitalisation. Furthermore, performance benchmarking can be studied against competitors in customer journey especially payment experience.

For the medium term, to improve the profitability of foodservice, fintechs can also provide real-time analytics of the transaction data linked with the customer identity and food items. Such analysis enables the personalised recommendations to drive customer loyalty and automate menu review to prioritise popular and growth items.Read our report, Embedded Finance Ecosystem: Mapping the Path to Services Industries’ Transformation, for more analysis.

Digital Dining: The FinTech Revolution in Global Foodservice… (2024)
Top Articles
Latest Posts
Recommended Articles
Article information

Author: Jeremiah Abshire

Last Updated:

Views: 5692

Rating: 4.3 / 5 (74 voted)

Reviews: 81% of readers found this page helpful

Author information

Name: Jeremiah Abshire

Birthday: 1993-09-14

Address: Apt. 425 92748 Jannie Centers, Port Nikitaville, VT 82110

Phone: +8096210939894

Job: Lead Healthcare Manager

Hobby: Watching movies, Watching movies, Knapping, LARPing, Coffee roasting, Lacemaking, Gaming

Introduction: My name is Jeremiah Abshire, I am a outstanding, kind, clever, hilarious, curious, hilarious, outstanding person who loves writing and wants to share my knowledge and understanding with you.