Mark Bunney of Ingenico and other industry leaders explore what trends are in store for the next decade for restaurants.
Over the next decade, a generation passionate about health and wellness will demand restaurants be transparent about food from farm to table. Guests will expect to know every aspect of sourcing and meal preparation, which will disrupt traditional back-of-house systems with technology that connects the farm to the food. In essence, this shift should lead restaurants to embrace the idea of maintaining a truly “intelligent” smart kitchen, one that will be tech-equipped to continue evolving with consumer demands.
Guests will demand a personalized journey when food is delivered to their door.
Additionally, guests will demand a personalized journey when food is delivered to their door. We’re seeing massive disruption to front-of-house systems, too, delivering personalized guest experiences from order to payment to final delivery. Restaurants can prepare for this disruption by investing in agile technology platforms that connect every restaurant touchpoint to work seamlessly. Restaurants will adopt mobile-first hardware architectures and API-connected software platforms that can be unified at every digital touchpoint, from order taking at POS or self-service, to food prep in smart kitchens, to service in-house, and finally delivery to in-restaurant tables or the customer’s front door.
Over the last decade, restaurant groups have disrupted individual "mom and pop" restaurants – either by acquisition or expansion –– whereby one administration sources, hires, and runs a 3-5-7 or more "mini-chain" of more efficient, profitable, and sustainable restaurant models (one HQ cost distributed over multiple locations). In my fiscal and strategic view, restaurant groupings of multiple locations and offerings using one accounting, HR, and legal system will continue to disrupt the industry, AND those single-location restaurant business models struggling to eke out a living.
Restaurant groups that figure out how to find, compensate, motivate, and keep the very best people on staff will continue to disrupt the rest of their culinary competitors.
Second, more farm-to-table sourcing of home-grown, locally raised, and highly cost-effective organic food sources will continue to disrupt the mega-industry of preserved "frozen food" delivery of yesteryear. Although the land, labor, and creativity of farm-to-table sourcing is so exciting and delicious, considerable operational disruption, scheduling, and menu management is still required to make it all a profitable business model.
Third, the onslaught of opioid, vaping, and alcohol combinations have forced the restaurant industry to begin hiring completely different generations of rock star employees, in both the front and back of the house. Vetting dining room, bar, and kitchen staff over the next decade will require probing more during job interviews, seeking candidates with more responsible lifestyles, advanced educational aspirations, and other evidence of a disciplined, drug-free work ethic will become even more of an HR imperative. Replacing irresponsible, entitled, early 20-something millennials loaded with every possible drug and alcohol combination –– including mommy and daddy's gold credit card –– will be a thing of the past. Restaurant groups that figure out how to find, compensate, motivate, and keep the very best people on staff will continue to disrupt the rest of their culinary competitors who still put up with drunks and addicts who constantly turnover and ruin their business reputation.
Fourth, the Internet and its many apps, online reviews, and socially viral communication speeds will continue to disrupt restaurant industry traffic, revenues, brands, and survivability even more over the next decade. What will factor into any restaurant or restaurant group's success in tomorrow's online world are the numbers and demographics of just how tourist-traveled your city, town, or region is going forward. Huge cities like New York and Miami and even smaller culinary Meccas like Charleston, South Carolina and Austin, Texas will experience more visitors and growing residents from around the world using the Internet to find, try, judge, and comment online for the rest of the world to see –– even more so than they do today, or ten years ago.
One great thing about the online delivery market is that it produces massive amounts of data. So, for the first time, restaurant owners and marketers are able to see exactly what their customer’s buying journey looks like. The buying journey is how a customer makes the decision to eat at YOUR restaurant instead of someone else’s. Looking at this data, you can see which other restaurant menus your customers are browsing before they choose yours. You can see which other restaurants they frequent, too, and the types of items they order from those places. And if a lot of people are considering your restaurant but choosing another place at the last minute, you’ll be able to see this, too. As the owner of a food establishment, this is very valuable information to you. It tells you a ton about who your customers are and what kinds of things they enjoy, the most successful restaurateurs of the 21st century are going to be the people who harness the full potential of customer data.
The most successful restaurateurs of the 21st century are going to be the people who harness the full potential of customer data.
But…Online delivery services are going to be the biggest disruption in the restaurant industry. If you think Uber Eats and Grubhub have already had a big impact on the way restaurants operate, just wait. These types of services are going to drastically alter the way we think about going out to eat. First and foremost, most restaurants are going to see a huge drop-off in the number of customers who dine in. As a customer, being able to have almost anything you want delivered to your door makes you reconsider the purpose of going to restaurants. I mean, why get in the car and fight through traffic if you can stay in, watch a movie, and enjoy your favorite food? Of course, people will always dine out.
Restaurants will always be popular for date nights, and restaurants with bars will always attract the thirsty. But, eateries are going to have to get creative with how they entice people to come in and sit down. One way owners are currently doing that is with their craft beer menus. By offering micro-brewed beers that are hard to find elsewhere, they’re ensuring that at least a small segment of their customer base continues coming back. A lot of places are also offering dine-in only specials or dishes that can only be ordered in-house. Over the next decade, we’ll see a lot of new and experimental responses to this problem. At the same time, we’re going to have to accept that some people are hardly ever going to go out to eat again. For this reason, a lot of restaurants are going to start hiring delivery staff, even if they never did before. Many companies are getting sick of paying all these third-party apps to deliver their food. They might not have access to all of the online customers that Uber and Doordash do, but they’ll save big on delivery fees by hiring their own couriers.
The luxury of having everything on-demand is no longer a customer wish – it is an expectation. Technology is ever-changing and constantly disrupting industries – from restaurants and retail to healthcare – and everything in between. In order to compete, restaurant brands need to be equipped with the leadership and capabilities necessary to adapt to the latest tech trends. Not every company needs to be a tech company, but any company interested in staying relevant should be technology-enabled, which means it leverages technology to improve efficiency and enhance the consumer experience.
Technology-enabled franchises are better positioned to continually evolve to meet guests’ changing expectations. In addition to improving the guest experience, technology also makes it easier for restaurants to manage their operations. Table stakes today requires a POS system that fully integrates and automates:
At Capriotti’s we are on a continuous and ever accelerating path toward innovation while building on our unique heritage. Here are some tech disruptions we foresee taking off in the next decade:
Already, ordering through third-party aggregators (food ordering and delivery apps such as GrubHub, Uber Eats and Door Dash) is the biggest recent disruptive consumer trend, and it continues to gain traction. We can expect 35 percent of all restaurant business will be through aggregators in the next five years. Instead of people going through the rolodex in their mind as they try to decide what they want to eat and where to go, more will go to the third-party aggregators on their mobile devices to make the choice easier.
We’ll see some consolidation of the major players and vertical integration, too. For example, Amazon is very well-positioned at this point to not only deliver for existing restaurants, but with their acquisition of Whole Foods, they’re in a position to vertically integrate and sell ready-made meals and deliver them. In other words, aggregators will see an opportunity to sell their own food and vertically integrate further. There will have to be a lot of adjusting on the part of restaurants to stay ahead of it.
Decreasing labor costs and increasing efficiency is driving robotic development and implementation.
Advances in robotics and artificial intelligence (AI) is already shaping the way restaurants do business. Decreasing labor costs and increasing efficiency is driving robotic development and implementation. We’re already starting to see fully automated restaurants, both in the front of the house and back of the house. There are kitchen robots you can easily “train” by having them exactly replicate your arm movements and perform highly complicated yet repetitive cooking and preparation tasks. Consequently, restaurants can easily be staffed 24 hours a day with limited additional cost.
In the front of house, we are seeing more kiosk adoption. The kiosk trend will be embraced like it is in the airline industry. Initially, you saw just a few kiosks at airports, but today they’re in every ticketing section of every airport. Automation is going evolve quickly over the next few years. Once the customers get used to it and prefer kiosks over cashier interaction, restaurants will see a few points of labor improvement. In the short term, it’s QSR that will experience labor improvement, then fast-casual. More restaurants will embrace kiosks thanks to the higher check averages they provide. Kiosks boost check averages by about 20% by about 20 percent, so there’s a return on investment for using them. Especially given the trends in minimum wage and labor regulations and benefit requirements.
In terms of AI, we’re starting to see companies use video and AI’s ability to interpret content of video. We’re going to see companies come to market with the ability to tap into their security systems and use facial recognition and audio, enabling them to:
AI will sort through data from the point-of-sale system and provide consumer insights for us and let us know what we should be doing in the restaurant rather than having to look at reports to figure it out.
No matter what kind of technology is implemented in restaurants, they have to stay customer-centric.
Chatbots, another form of AI, are starting to make strides in customer service. A handful of companies are using them in their restaurants to accept orders. Chatbots are becoming lifelike and conversational, and you’ll see more people ordering from a chatbot using their digital voice assistants. Speaking with AI will be almost as conversational as talking with a real human being. This will change the game for customer satisfaction, how much labor we devote to phone orders and more.
No matter what kind of technology is implemented in restaurants, they have to stay customer-centric. We can’t implement technology just to cut costs – it has to improve the customer experience. From the customer side, using a kiosk, for example, gives you the ability to peruse the menu without feeling pressured, customize your order and spend less time waiting in line. If brands are just putting in kiosks to reduce labor and are not thinking about it from the customers’ perspective, there could be backlash.
Technology has to hit three points for it to be beneficial in restaurants. It must promote growth, transform for the positive and improve efficiency. Restaurant brands need to be aware of the tech trends as they evolve and think about their implications down the road in road mapping their technology and customer experience journey.
2020 marks the 30th anniversary of the Americans with Disabilities Act (ADA), and restaurants are now trying to figure out how to adjust their websites accordingly. More than 2,000 online retailers, including major restaurant chains like Domino’s, faced lawsuits last year from plaintiffs alleging barriers to digital access. That’s because any company that fails to comply with obligations under the ADA and other ADA-inspired laws are at risk for costly lawsuits. Over the next decade, more restaurants will now embrace digital accessibility platforms, which make their websites inclusive — and prevent a compliance lawsuit.
Times have certainly changed for the everyday restaurant owner as hyper-connectivity and busy lifestyles continue to influence consumer behavior and where society eats. To remain competitive in this new era, it’s imperative that restaurants adopt technologies to augment the dining experience and give their customers a taste of what they can’t get in the comfort of their homes. The restaurants leading the charge are the ones leaning into the convenience factor and implementing new technologies like pay-at-the-table, mobile order-ahead and contactless payments to accelerate and enhance the customer experience.
With self-service options, like kiosks, restaurants can improve efficiency, create new business opportunities and enhance the customer experience.
A disruptive technology that will continue to gain momentum is mobile order-ahead, which has quickly gone from niche activity to mainstream as restaurants and customers witness its benefits. What’s better than cutting the line and not being scolded for doing so? In fact, customers are even rewarded through generous loyalty programs and restaurants can improve the efficiency of its operations in the process.
Self-service will also have a tremendous impact on the restaurant industry, driven by the convenience and speed customers have come to expect in a technologically-advanced world. With self-service options, like kiosks, restaurants can improve efficiency, create new business opportunities and enhance the customer experience.
Canter told MRM magazine the sleeping giant is virtual kitchens and the biggest schism he anticipates will be the flipping of the typical restaurant layout as e-commerce aspects of the restaurant industry begin to take more of a hold.
The sleeping giant is virtual kitchens.
Restaurant design footprint will fundamentally change with more BOH kitchen size needed and less FOH seats as more people gravitate toward digital and delivery. Brick and mortar needs to be digital as it offers the opportunity for efficient profitability and the opening up of new dayparts— think wings at 3 a.m. Brands will look to collaborate with menu splitting. People will always go out to eat with focused experiential dining playing a role as everything will be customer focused.
As we look at the restaurant industry in the decade ahead, we’ll continue to see a move from personal, human interactions to digital. At the core of all the changes is the fact that the restaurant workforce model is broken. Few people – and even fewer skilled people with the hospitality gene – want to work in such a demanding and unpredictable industry, leading to high turnover, and even higher costs for restaurant owners to retrain new people. As a result, there will be more automation both in the front of house and back of house as restaurants look for ways to become more efficient to increase productivity and provide the best customer service for diners inside and increasingly outside the four walls of the restaurant.
Virtual restaurants, or 'dark kitchens,' are set to be a disruptive factor in the industry. As food delivery continues to grow, valued at $100B with 20-percent increase year-over-year, virtual restaurants allow for kitchens to take advantage of this expanding trend. Virtual restaurants can cater to different consumers, expanding clientele. And with no storefront, kitchens can increase margins and ultimately maximize revenues. This is not only going to redefine our industry in the future, but is already altering the landscape today.
The restaurants of the future will disrupt the industry with: specialization, availability, exclusivity and speed and, media engagement. The consumer will also need to be able to interact with your brand socially, beforehand, during and after to have staying power.
The new luxury is convenience; this will put a premium on mobile ordering and in turn we will see restauranteurs work through this debacle: mobile ordering vs. foot traffic demand. My prediction is you’ll see a split here between a mobile-ordering track versus an old-school approach with cash only bar / restaurants popping up with cult followings, that can abandon reservations all together. Additionally, I think you’ll see menu offerings by channel- with items tailored for mobile ordering. The use of discounts and happy hour savings will also be used to alleviate the bottlenecks with mobile ordering.
Not only do interiors need to be interesting, they need to be a point of interaction with diners- before, during, and after the experience.
As the digital pace, lifestyle and ubiquity continues to grow, a premium will be placed on top tier environments, so diners can switch into neutral and enjoy. Not only do interiors need to be interesting, they need to be a point of interaction with diners- before, during, and after the experience. Diners can interact with your brand while in your restaurant, or researching the new menu item, the entire restaurant experience will be more real-time, and organic. Restaurateurs will need to be more digitally savvy and relevant to the star power of design and bar rescues that are a hot in media.
Restaurants need to be instagrammable. Sketch London, designed by Parisian designer India Mahdavi is in fact the most instagrammed room in the world. Note: not just the most instagrammed restaurant in the world, rather the most instagrammed room. This shows that restaurants are now designed spaces, not simply for food and drink, but for an aesthetic. Successful restaurateurs will need to be curating design finds as much as they do high quality provisions and talent.
Bergdorf Goodman launched a new cocktail bar this winter, and a tasting bar I designed in a recent menswear store, Union Hall Supply Co., in Saratoga Springs, NY, shows the trend isn’t just in big cities. The reception is amazing and it’s not widely offered. Hospitality is the new "secret sauce" that many industries are using to differentiate. With 85 percent of all discretionary income spent within five miles of home, consumers want their experiences more comfortable, and purveyors are incentized to capture those revenues.
Hospitality is the new 'secret sauce' that many industries are using to differentiate.
Table side service like guacamole made to order allows for customization and freshness, paradigms of the growing millennial set. Add in the allure of theatre and you have an experience that adds dimension. Its theatrical and yes it might cost slightly more, but it has a lot of added cool factor for restauranteurs to have their cold side prep cook on the floor- and it’s easier to customize, and cuts down on waste with errant orders.
Fine dining will evolve away from strictly sit down, and you’ll see more bar seating options, ice bars, transitional seating in bars and pop-ups, like fireside dining for après ski- but with more premium menu offerings that will continue to shape fine dining as more fluid. Ice in your scotch or Bourbon can be prepared crushed, with granite stones or an 3” sphere at The Bishop Albany, a bourbon and beef centric old-world bar room and restaurant in Albany, NY’s historic capital neighborhood.
The next decade will face many operating challenges, it is continually difficult to maintain prime cost margins in the industry. Cost of goods and labor only continue to rise and the price a consumer is willing to pay for dining experience is harder and harder to earn as consumers become smarter with the way and options they have to spend their money. Decade disrupters can be listed in the following issues:
The ability to eat at home is and will continue to be disruptive to the restaurant industry over the next decade. Consumers can get anything delivered without changing out of their pajamas and while remaining in front of their screen of choice at home. Every restaurant is now a drive-thru at your front door. The eruption of ghost kitchens will further disrupt traditional restaurant space as we compete for market share.
Every restaurant is now a drive-thru at your front door. The eruption of ghost kitchens will further disrupt traditional restaurant space as we compete for market share.
Larger box restaurants will be disrupted as the competition for dining seats continues to grow over the next decade. Those that have the discipline to operate in smaller boxes, with less overhead and labor will succeed while the larger spots with hundreds of seats will struggle to remain open.
Technology continues to expand and become prevalent in the restaurant industry. From pay at table devices, to self-ordering kiosks, fraud and payment theft will become more disruptive than ever before. Investing in keeping these devices secure within the four walls of the restaurant must be a priority.
Traditional marketing has been significantly disrupted over the past 10 years, and we will again see a new disruption as social media marketing becomes more common and less effective. The ability to market directly to a consumer’s screen of choice, outside of any social platform, will become more relevant, causing a shift in today's marketing strategies.
Restaurants will become increasingly casual. The shift towards QSR dominated restaurants will continue to trend as more and more restaurants rely on advance order and take away. This will also mean the average sq. ft of restaurants will decrease, the number of restaurants overall will increase, and the number of satellite restaurants for multi-units will increase. It also means upscale restaurants will dwindle, and that mostly famed chef concepts will be able to occupy this space.
Restaurants will now need to juggle multiple alternative revenue paths: CPG development, dark kitchens, pop ups, events and more.
Chefs are increasingly participating in roles and culinary positions outside of the restaurant space. This most recent change means that the overall staffing landscape of restaurants will continue to be difficult and that technological alternatives or corporate partnerships may replace traditional roles within the restaurant.
Restaurants are facing a generational shift more abrupt than other sectors, which seems to be leading to structural change across the industry. Older chefs and restaurateurs are retiring after decades on their feet, while young, innovative cooks are rising to the challenge, often without the financial backing to do so.
Pop up restaurants, food carts, ghost kitchens, and other non-traditional food service structures are the new launchpad for young chefs.
Pop up restaurants, food carts, ghost kitchens, and other non-traditional food service structures are the new launchpad for young chefs because of the low capital needed to launch. The old school of brick and mortar restaurants sees this as a threat to their business model, but these younger culinarians see it as a new industry paradigm: instead of proving themselves via long hours at low wages in an established kitchen, they are pursuing proof of concept.
Many of these young chefs launching atypical business models have already held underpaid positions in established kitchens full of turnover. Small ventures with low overhead can afford the opportunity to offer more competitive wages and fine-tune an intimate, long term staff, contributing to a stronger but more demanding workforce. This certainly shirks the traditional path through a culinary career, but the younger generations are proving quite handily that they can create something delicious–and successful–outside of tradition.
As 2020 plays out, food companies will start investing in more tech to enhance sanitation and sterilization efforts. Currently, retailers like grocery stores, have remote monitoring technologies that measure protocol and data (temp, sanitation, traceability). Such automation can also help with minimizing bacteria spread and recalls.
When we think of a grocery store – there are several touch points employees and customers come in contact with, thus spreading germs and bacteria. Truthfully, a big, busy place like this is impossible to keep clean all the time. Especially when grocers are short of staff, constant sanitizing could fall through the cracks. Automated LED tech is safe to use around people (opposed to UV) and can solve these issues.
Labor will be a critical challenge restaurant operators will face in the coming decade. With rising minimum wages and a significantly smaller pool of available employees, restaurants will struggle to retain employees more than they have in recent years. Technology will also play into this as automation and robotics will be available to fill some of the labor gaps through ordering kiosks, mobile apps, drone/robot delivery and cooking equipment, however if brick and mortar is going to survive, they cannot lose the human element entirely.
We see QSR moving towards more automation to maintain speed of service and output quality, while FSR will have to focus more on the human element and consumer experience of dining out.
In the next decade, the restaurant industry can expect several trends to expand the disruption in the market, which is impacted by changing customer tastes and economic influences. Today, casual restaurants like Applebee’s or Chili’s are struggling because younger consumers want fast casual dining such as Panera Bread. In the future, you’ll see this trend taken a step further with “fast fine restaurants” where customers order from a counter, but the average check will be 50 to 100 percent higher than current fast casual options. Rather than $10 for a sandwich, the customer will be paying $20 for an entree. This disruptor is driven by both consumer preference and the restaurant industry’s labor shortage. When it’s tough to hire enough servers, you create your business based on that need.
Gone are the days when a family or friends go out to dinner and order individual entrees—sharing is now becoming the norm with the emergence of more tapas-style, dim sum, and gastro pub options.
Another trend that’s influenced by labor shortages is how food will be offered in restaurants. Gone are the days when a family or friends go out to dinner and order individual entrees—sharing is now becoming the norm with the emergence of more tapas-style, dim sum, and gastro pub options.
Clearly, people’s eating habits are changing, which will also influence what cuisines we see in the restaurants over the next decade. In the 1970’s the only place to find pasta was in Italian restaurants, but as more people started to like pasta, the dish began popping up in other places such as seafood and continental restaurants. In the future we’ll see more dishes from previously exotic locations penetrating the market. We can already see this with Asian and Indian food influencing menus and becoming widespread.
Consumers are also becoming more conscientious about sustainability, which is primed to disrupt the restaurant business. Younger people especially are cutting down on the amount of meat consumed during the week, and it’s not for health reasons, it’s for environmental and sustainability reasons. Restaurants who are keeping a pulse on consumer preferences will start adapting to these lifestyle factors, which will only grow in the future.”
As evident in 2019, the year of the Beyond Burger and Impossible Meat, Howard predicts that plant-based food alternatives will continue to rise in popularity throughout the restaurant space, as consumers proactively demand more menu variety. In 2019, Coconut Bliss found success partnering with popular California spot, Mel’s Drive–In, a Los Angeles staple since 1947. Mel’s has been able to stay relevant and popular over the years because of its ability to evolve based on customer demands, thanks in part to its active social media accounts
As we head into 2020, expect to see cloud-based point-of-sale systems gain an ever-increasing share of the POS market. Stand-alone POS systems and payment processors will fade as integrated software offerings grow. A specific focus for providers will be in helping restaurants integrate more smoothly with third-party delivery services which continue to grow rapidly. Overall, look for improvements in customer-facing services, integrated payments and comprehensive management features like accounting and inventory.
We can anticipate a major disruption in the distribution model of food and supplies. The ability for companies like Amazon, to deliver low volumes of goods in a short delivery range, means fresh ingredients will arrive at restaurants more frequently. This not only alleviates the issues of freshness and quantity shortages, but it has implications in the footprint of restaurants. Smaller coolers and dry storage areas will free up square footage that can be used for more seating or other innovations.
We can anticipate a major disruption in the distribution model of food and supplies.
The other key disruption we can expect to see is in the area of 3-D printing. While we won't see this in wide release anytime soon, it will be a factor as the unit economics become palatable in terms of creating high-margin, high-labor products. Foods like pasta and instagrammable desserts will also find relevance here.
If the last decade has been defined by digital disruption, surely the next decade will be known for analog disruption. For modern restaurant operators, this currently takes the form of on-demand delivery. The explosion of off-premises sales has taken a historically sustainable industry and turned it into one of the largest contributors to single-use plastic consumption, globally. While paper and fiber packaging are an improvement, there is a lack of recycling and composting infrastructure to effectively reuse them – most end up in the landfill.
If the last decade has been defined by digital disruption, surely the next decade will be known for analog disruption.
By 2030, restaurants will have solved this problem through reusable packaging and closed loop logistics. Together, they create a closed loop, sustainable food delivery system. Some restaurants are already piloting reusable packaging including Blue Bottle Coffee, Just Salad, and Dig. Consumers continue to demand more sustainable and environmentally conscious retail experiences. Restaurants that are early adopters of reusable packaging will be able to attract more customers, more frequently as they continue to reuse and return.
Advances in technology coupled with a growing tech-savvy consumer population will dramatically accelerate on-line ordering and off-premise food and beverage consumption leading to reinvention of the restaurant format, myopic focus on convenient quality, generating open-air delivery hot spots, and personal experiences not yet thought of or unveiled. Embracing and adapting such rapid change to create ultra-personalized customer relationships will be a catalyst for dramatic revenue growth.
These are some of the major drivers of change we see in the restaurant industry that we’re already working through as an organization. No restaurant is going to go unaffected by these major shifts..
Technology: e-commerce and tech business models hit Main Street QSRs and restaurants.
Knowledge and data have been underutilized by many restaurants. There will be a large knowledge transfer (or gap) from ecommerce that will either help restaurant groups earn an edge in finding and serving customers or leave others behind.
Personalization of the customer experience is going to happen much more quickly and will drive substantial growth for restaurant businesses.
Third Party Marketplaces such as DoorDash and UberEats are going to disintermediate restaurant and customer relationships. This is a classic aggregator platform playbook that's been carried out for a couple decades. This is already creating major shifts in customer discovery, loyalty, and relationship.
All restaurants will need to balance high levels of customer service with an increasingly expensive labor base.
As proven in the past two decades, marketplace platforms have shown that you need to invest heavily in a distinctive brand (very very unique offerings and brand recognition)
Or you need to be able to leverage marketplace dynamics and technologies fast to keep an edge among a sea of competitors (undifferentiated restaurant offerings)
Shared services – related to third party marketplaces (sharing delivery / fulfillment capability), this is where dark kitchens come in. We are going to see increasing innovation and accessibility to shared services address classic challenges to the restaurant space (eg, high real estate costs, archaic long lease lifetimes, time to launch).
Labor: changes to the job markets will likely make talent more expensive to find, hire, engage and retain. All restaurants will need to balance high levels of customer service with an increasingly expensive labor base.
Supply: access to certain goods will impact niche restaurant concepts – in our world, fish is a precious resource, and we will need to balance customer affordability, cost, and sustainability effectively in order to succeed.
Having come from the technology space, it's clear supply of goods, labor and other traditional retail restaurant industry are the biggest operational drivers, but it's also clear that the restaurant industry (not including the larger, resourced restaurant giants) is not necessarily ready for some of the shifts driven by more recent technology startups entering the space.
Sustainability is going to become a major disruptor which will influence every aspect of the industry. With some estimates that foodservice waste accounts for 25 – 30 percent of CO2 emmissions, we're seeing industry leaders diving in to tackle how to reduce their own impact. Either through this kind of self motivation, regulation or guest demands, operators are going to be making decisions with sustainability in mind.
Transparency and brand trust will become increasingly important.
Not only are restaurants going to have to solve for a number of things operationally, they are also going to have to figure out the best way to communicate what they are doing in a meaningful way to their guests. Some will do this by aligning their brand with strong leaders (McDonalds and KFC's recent partnerships with Impossible Burger and Beyond Meat) and others will do this by building brands that fundamentally communicate their commitment (Bamboo Sushi). Industry organizations will also play a role and we believe we'll see businesses looking to outside "certifications" to verify their authenticity (like James Beard Smart Catch, for example.)
Transparency and brand trust will become increasingly important. As the operational piece of true sustainability is much more complex than simply making a commitment, operators and marketers are going to be caught up in much of the nuance involved in simple phrases like "zero-waste" and "sustainable seafood."
New restaurant formats: Years ago, restaurant success hinged on location and the in-house experience. But decreased foot traffic and evolving customer needs means restaurants no longer come in one shape or size. Kiosks, ghost kitchens, and online-only concepts are just the beginning.
Decreased foot traffic and evolving customer needs means restaurants no longer come in one shape or size.
Shifting customer expectations: Customers want their food when they want it, how they want it, and where they want it. That includes pizza delivery to a home on a Friday night, and catering to an event at an office on a Tuesday afternoon. Restaurants must adapt in this on-demand digital era. At ezCater we’re seeing catering lead times shrinking, with increased search volume for events four or less hours away. But the ability to fulfill last minute orders is operationally complex, and the best operators are relooking at their delivery infrastructure and menus to figure out how to best meet this demand.
Increased Labor Constraints: A top challenge for nearly every restaurant is staffing, and with increasing minimum wages, sustained low unemployment, and high turnover, it gets more complex. Restaurants will lean more on technology and third-parties to automate or outsource parts of their operation while focusing their people on what they do best, preparing great food and perfecting the in-person guest experience. Catering benefits from this trend. It takes less work to fulfill a $300 catering order than it does to fulfill 30 individual $10 orders. Additionally, catering orders are prepared outside of the typical breakfast and lunch rushes, keeping employees active on revenue-producing activities throughout the day.
This next decade is dishing up social change with a side of growing pains for the restaurant industry. As consumer eating habits evolve and become more thoughtful, restaurants have to keep up with marketing themselves as socially conscious businesses that deserve diner's time and money.
As consumer eating habits evolve and become more thoughtful, restaurants have to keep up with marketing themselves as socially conscious businesses that deserve diner's time and money.
Social media has been able to amplify negative feelings towards brands and industries that operate under older and sometimes outdated practices so it is crucial for restaurants to listen and understand diner desires. For example, 2019 brought restaurants a plastic straw ban movement that made establishments take a step back, analyze their non-food inventory, and really listen to the customers with the most influence. Because of this movement, diners decided to ditch their loyalty to outdated restaurants, promote establishments that meet their standards, and they did all of this openly on a variety of social media channels.
Millennials and younger generations have made it clear that they operate by a more enlightened set of principles compared to older generations and they care about where and when they dine. To survive, not even prosper, restaurants will need to make operational adjustments, increase transparency with diners, and take their digital marketing efforts to the next level.
The cost of operating is a very real concern for restaurants across the country – labor, food costs, and real estate are all on an upward trend. I would love to see corporate food programs become a beacon of hope for restaurateurs facing high costs. At ZeroCater, we oversee corporate food programs for companies of all sizes, and partner with local restaurants on employee meals, corporate event catering and more.
I would also anticipate restaurant menus will become more and more data-driven with customization options not only allowing customers to personalize their meal but also gathering data on the most popular ingredient and menu items.
We have seen a number of our culinary partners surpass the $1M mark in catering sales through ZeroCater, and take pride in knowing our partnership has enabled these restaurateurs to expand, open new locations, and even send their kids to school. In the last few years, we've seen employee meals become table stakes for businesses looking to recruit and retain top talent in an incredibly competitive labor market. For restaurants, partnerships with companies like ZeroCater are invaluable for the additional revenue stream and exposure to a desirable audience of potential customers.
I would also anticipate restaurant menus will become more and more data-driven with customization options not only allowing customers to personalize their meal but also gathering data on the most popular ingredient and menu items.
I think there will be a few things that can or will cause disruption. First is the increasing use of technology in restaurants. Today, those that use kiosks or table-top ordering, for example, primarily operate in the QSR or Family Dining/Casual segments. As labor costs continue to rise, combined with a historically low unemployment rate, it will be interesting to see if this bleeds into the Upscale Casual or Fine Dining segments, which are traditionally so service-oriented.
We may also see disruption in the third-party delivery business. The segment will not be going away anytime soon. However, there are a lot of players out there now, so it will be interesting to see what kinds of mergers and acquisitions will occur. It could potentially produce the “OpenTable of third-party deliverers,” and they may have a monopoly for some time.
Finally, as consumers increasingly become more aware and conscious of their carbon footprint, this will cause disruption in the industry – positive disruption, that is. The restaurant industry is not known to be the most eco-friendly as a whole. But this is something Millennial and Gen-Z consumers particularly care about. As they get older and progress in the workplace, earning higher incomes, their purchasing habits will evolve and gravitate toward more local or hyperlocal, sustainable and organic ingredients.
Over the next 10 years, restaurants will innovate with new ways to attract and retain a highly-productive and engaged workforce, and satisfy consumer demands for convenience, speed and experience. A recent study by Restaurant Dive announced 48 percent of restaurants are struggling to keep up with rising labor costs, employee turnover, and insufficient training practices — opening up promising opportunities for qualified, on-demand workforce models, enabled by mobile technology that makes managing a gig economy-based employee turnkey.
Making technology solutions that source the gig labor needed, then effectively direct labor once on-site, are essential to solving both the staffing and experience problem for tomorrow’s restaurateurs.
The gig economy continues to morph to meet new commercial demands—making inroads in restaurant and retail. The recent Statista Trend Compass found that 79 percent of executives expected contingent and freelance workers to substantially replace full-time employees in the coming years. As restaurants experiment with alternate workforce structures and attractive salary models, including Taco Bell’s $100,000 starting salary designed to attract new managers, flexible shifts are meeting rising demand from Gen Y and Gen Z workers, 74 percent of whom seek greater flexibility and freedom for their working hours.
App-based gig platforms like Shiftgig enable restaurants to efficiently post available shifts, receive well-qualified applications from nearby workers, and employ them for short-term needs. Brands investing in gig labor are using execution management SaaS products on mobile like GoSpotCheck to direct tasks and training, uphold SOPs, and protect food safety standards. These solutions provide context and direct action in sequence with little-to-no training for new employees and create a safety net for the guest experience.
Black Box Guest Intelligence sentiment data continues to show the strong relationship that exists between perceived service experience at the restaurant level and a restaurant’s sales and traffic results. Making technology solutions that source the gig labor needed, then effectively direct labor once on-site, are essential to solving both the staffing and experience problem for tomorrow’s restaurateurs.
Distributor Consolidation: Regional distributors will continue to consolidate with larger players to create mega-distribution channels with a great deal of industry control.
The industry is inching closer to data standards that will allow restaurants, distributors, manufacturers and consultants to utilize purchasing data to draw conclusions about the financial well-being of restaurant concepts.
Ubiquity of Group Purchasing: Participation in Group Purchasing Organizations has been increasing for years. GPOs will continue to exert influence on purchasing and pricing with more manufacturer partnership and expanding memberships.
Purchasing Data Revolution:The industry is inching closer to data standards that will allow restaurants, distributors, manufacturers and consultants to utilize purchasing data to draw conclusions about the financial well-being of restaurant concepts.
Tech-enabled Restaurants and Ordering: Restaurants will become decreasingly personal as off-premise dining continues its upswing. Technology adoption will continue as companies develop newer, faster ways to connect restaurants and patrons.
Increased speed of trend adoption: Trends fly through social media platforms and new foods and preparations will need to come to market faster than ever before in order to hit the market with relevance. Trends are becoming ever more fleeting and it's the operators' jobs to keep up.
Dilution of restaurant profits: As ordering, delivery and enablement services become more ubiquitous, restaurant will fight ever harder to keep their pieces of each restaurant dollar.
Private Equity Funding: The private equity market will continue to fuel the rapid expansion of emerging concepts and money will be poured into ever-younger concepts. Successful localized concepts will look to investors to grow quickly to regional or national scale.
It’s never business as usual in the restaurant industry. Today’s customers want what they want when they want it, and their changing tastes – literally and figuratively – will drive disruption in the industry over the next decade. We expect restaurants will find ways to meet these changing expectations aided by technology and their own innovation.
Voice ordering, facial recognition and AI are all likely to play a role in continued restaurant disruption as merchants cater to consumers’ demands.
As third-party delivery businesses become more pervasive (and remain largely unprofitable both for themselves and for restaurants), we can look forward to disruption of this disruptor, as we’ve already begun to see with Door Dash opening its own ghost kitchen and GrubHub’s newly introduced in-restaurant kiosks.
In addition, technology will enable payment to become a quicker and more seamless part of the dining experience. One example is the potential growth of tableside payment, through physical devices or mechanisms such as QR codes, which can provide convenience, time savings and security benefits. This may foreshadow a day in the near future when the entire transaction from order to payment is enabled with a mobile phone in both table service and counter service restaurants. Voice ordering, facial recognition and AI are all likely to play a role in continued restaurant disruption as merchants cater to consumers’ demands.
Right now, we’re seeing the same overall trends others are noticing – more take out/delivery, more technology, more automation etc. – but we’re looking at how those trends might change the design and construction of restaurants.
Here are a few things to watch:
Polarization: I believe that there will continue to be a polarization within the industry driven by the two main factors that motivate consumers to utilize restaurants: convenience & social engagement. These two factors will continue to have dramatic bifurcating effects on the industry. As the demand for delivery grows and technology develops to hold various types of food at the proper temperature and consistency for traveling 15 – 30 minutes, restaurants will have to respond by changing their facilities to accommodate significantly higher volumes of off premise business without diminishing the experience for their dine-in guests. Ghost kitchens and food trucks that supplement the traditional restaurant facility will become more imporant and likely more popular. Conversely, the casual dining and polished casual restaurants that succeed will be the ones that focus on a unique dine-in experience. Great food, alone, will not be enough to capture the socially driven guest to frequent a restaurant. The atmosphere and service will need to be truly remarkable and will need to foster social engagement.
It won't be enough that the ingredients are locally sourced and the sauces are house made. Cooking to order, even at QSR and fast casual concepts will be what guests are looking for.
Eatertainment: As mentioned above, the drive toward a more socially engaging atmosphere is already leading several food andbeverage brands to incorporate entertainment programming into their concepts. Arcades with great food and a full bar, duck-pin bowling and other interactive bar games paired with self-serve beverage taps (not just for beer) and rotating food programs / food halls with community programming and live entertainment are just a few examples we're already seeing disrupt the traditional casual dining food and beverage establishment. Concepts like Truck Yard, Punch Bowl Social and Top Golf with interactive entertainment / sports programming are already expanding nationally with significant success.
Cooked-to-Order: We've seen the rise of responsible food sourcing and even food 'provenance' over the last decade. We believe that this will continue and become the standard. The next step to this evolution will likely be the importance and celebration of most menu items being cooked-to-order. It won't be enough that the ingredients are locally sourced and the sauces are house made. Cooking to order, even at QSR and fast casual concepts will be what guests are looking for. To achieve this perceived quality and add a level of culinary theater, we expect to see more multi-unit concepts and even large volume independents move to co-packing arrangements with food manufacturers that will deliver custom recipes in smaller minimum quantities at reasonable prices. We see the technological advances and growing popularity of the cook-chill-retherm process supporting this shift to limit prep labor so that it can shift to more customer-focused, cook line labor. This should further help to make expo kitchens cooking menu "hero" items afocal point within restaurants.
Chatbots for list building, ordering, restaurant sales and reviews will be disruptive factors in the coming decade. Right now, chatbots are texted based and returning $5 to $60 in restaurant sales for each $1 online ad spend.
Brand is everything in this decade as chatbot usage grows, and we move from text-based chatbots to voice-base chatbots.
Few restaurants are even aware of text-based chatbots, but those who have launched them are experiencing amazing ROI. Within the decade, chatbots will be voice-based and gated by the voice-based service — Amazon, Google, Apple or an up-and-coming player. At the point that chatbots become voice-based, then restaurant brand will be vital.
Today, you can speak into a search engine "Pizza near me," and receive text-based search results with multiple options to choose from.
In the future, once consumers complete the move from search engines to voice-based chatbots, such as Amazon's Siri, "Pizza near me" will result in Amazon choosing the one pizza restaurant to make the connection to. The voice-based chatbot services will gate the transactions. Restaurants will pay to be that one restaurant customers are sent to.
The way around this is to start today to build your restaurant brand, so when local customers want pizza, they speak to their chatbot "get me a pizza from Joe's Pizza." Then the voice-based chatbot is not sending the buyers to the highest paying pizza advertiser, but sending the buyers to Joe's Pizza.
Brand is everything in this decade as chatbot usage grows, and we move from text-based chatbots to voice-base chatbots.
Technology and business intelligence will be key to superior customer service over the next decade. Geofencing, for example, is a powerful tactic that allows operators to apply business intelligence in real-time. Through receiving this hyper-targeted information about our customers, we can connect with them like never before.
Imagine this: you’re close to your favorite lunch spot and you receive a message on your cell phone reminding you of an unused balance on a gift card. Then, they ask if they can get your usual order started – and it will be ready in five minutes. No ordering. No standing in line. Many large QSR’s are already edging out the competition by leveraging real-time consumer data to build customer loyalty. These personalized and seamless customer service experiences are sure to win market share over those who are not using it.