The foodservice industry saw dramatic changes during the pandemic, particularly in the lunchtime dining sector, as working from home became the norm for many employees. Operators who made it through restrictions and lockdowns are now facing the ongoing challenges of inflation and staffing, but there are opportunities to adapt, and to attract the workers who are gradually returning to offices.
“People no longer go out as much as they used to. Sydney has around half the number of people going out,” says John C W Thomas FCSI, director of Sangster Design Group Pty Ltd. With working from home still common across Australia, operators face fluctuating customer numbers.
Similarly, Richard Warneke, the managing director at RW Marketing in Melbourne, says that even though a lot of Melbourne has reopened, due to the government health advice to maintain hybrid working, the city isn’t at capacity. “We’re seeing that a lot of businesses closed and weren’t able to reopen. We’re seeing that there are staff shortages, which are starting to ease. Also, with 10 interest rate rises over the last year, people are finding it a lot tougher than they used to.”
Changing spending habits
Although overall customer numbers are down, people who are returning to work in offices are eating out more often and are willing to spend more on lunch.
“As hybrid working becomes the norm, many office workers will opt to purchase their lunch on the days they don’t work from home; they’ll look for better-quality lunch options than before because, if they’re only going into the office once or twice a week, an out-of-home lunch will be considered a treat,” says Elysha Young, Mintel’s associate trends director, APAC.
As the cost of living is increasing, diners are also favoring spending on lunch rather than dinner. “People are eating differently. They can’t afford to eat out as much. Instead of going out for dinner, they’re catching up over lunch, brunch, or coffee… and they’re happy to spend a bit more [on these occasions],” says Warneke.
Young explains that, alongside operators that provide good value for money, customers are also searching out certain types of cuisine during their lunch breaks. “Authenticity is another key trend we’re seeing. In foodservice, this means that cuisines are zeroing in on specific regions rather than countries – think Sichuan and Lanzhou rather than just Chinese, for example.”
Healthy alternatives and sustainable sourcing of ingredients are also in the spotlight and allow operators to carve out a point of difference. Young believes that “while budget is a factor in purchase decisions, brands can up the value of their offerings by tapping into health, naturalness and sustainability. Wholesome and local ingredients will likewise appeal to consumers looking for on-the-go options that are nutritious and filling.”
In the lunchtime dining sector, Warneke has seen a growth in popularity of Asian offerings such as ramen and curries, and in Mexican cuisine. “Value for money dishes where you seem to get more, but from a hospitality side it’s food that’s easier to prepare, frozen dishes that can be regenerated quite easily or wet dishes that involve less cooking. Mexican cuisine is quite popular. Everything can be sous-vide, prepped in advance, it can be blast frozen, or distributed. Businesses such as [Mexican restaurant chain] Guzman y Gomez are doing really well, because their food concept allows them to feed the masses quite cheaply because they’re achieving economies of scale.”
Warneke has found that operators looking to survive and compete in the lunchtime dining sector need to reduce labor and improve efficiency. “What we’re now seeing are ingredients being purchased in pre-formats – for example, pre-cooked meats, pre-sliced tomatoes, pre-sliced lettuce, shredded cheese. Instead of having to use technology or labor – a lot of smaller businesses don’t have the ability to do [all the preparation] anymore.”
Technology can help with this. “Brands like Sammic that do a lot of vegetable preparation equipment; Winterhalter, which allows for glassware to be washed without polishing; combi ovens; people are looking at the new EVEREO (Hot Fridge), which allows you to keep food hot for days. There is the ability to reshape the way you look at things to adapt,” Warneke explains.
Demand for convenience
Convenience has long been key to the success of the lunchtime dining sector, but even more so post-pandemic. One way operators are dealing with fluctuations in customer numbers has been to shift some focus to delivery. “A lot of places are setting up counters for the grab-and-go types of couriers,” explains Thomas.
According to the Uber Eats Pulse Check: Restaurant Report 2022: “92% of Aussie restaurant owners remodeled their business during lockdown, with more than a third introducing online ordering/third-party delivery, new/limited/rotating menu items (36%) and adjusting operating schedule and employee roles (34%).”
Rebecca Burrows, the general manager ANZ at DoorDash, has found that employees who are still working from home favor delivery over pickup. “People working from home generally have less time to pick up from their local merchants, and are finding increased value and convenience in home delivery,” she says.
Similarly, drive-through is becoming an important offering for quick service restaurants. Glenn Walford, founder at Franchise Buyer & Magnetic Business Media says: “Once the domain of McDonald’s, KFC, and a few other larger brands, now a significant portion of cafés, and smaller chains are trying to execute a strategy into that distribution method.”
The rise of franchises
During the pandemic, bigger groups and franchises were generally less affected than independents. “People who have the financial capacity tend to be the larger groups, and they’re doing OK,” Thomas explains. “People who have the financial capacity to be able to move resources and staffing around have been able to adapt and adjust.”
Walford explains that many cafés and operators located in office towers and relying on foot traffic either struggled or closed during the pandemic. On the other hand, “franchise owners… with the support of franchise brand support teams were mostly nursed through, seemingly with significantly greater success than independents battling on their own.”
The return of office workers and changes in eating habits have provided an opportunity for growth in the lunchtime dining sector post pandemic, particularly for operators who are able to reduce labor and improve efficiency to give customers solid value for money. Embracing technology can assist with labor shortages and costs; and to-go offerings, as well as delivery and drive though, can be embraced to help deal with fluctuating clientele and demands for convenience.