When the National Restaurant Association (NRA) unveiled its Restaurant Industry 2030 report in November 2019, they had little idea how much the world would change due to the Covid pandemic.
The 2030 projections expected restaurant industry sales to reach $1.2trn. Hudson Riehle, senior vice president of the research and knowledge group for the association said: “Restaurant owners are swiftly adapting across their businesses to meet the wants and needs of guests. The radical transformation of the last decade will change the way the industry operates going forward. It’s exciting to ponder how the industry will transform over the next 10 years, and consider how the association can best support the industry in capitalizing these opportunities.”
The report said that the definition of ‘restaurant’ would change as off-premise continued to drive industry growth. It predicted that over the next decade, technology and data would become a greater focus for restaurants as they adapt to growing consumer expectation in the on-demand world. Guests will expect a seamless digital experience and want their preferences known at each interaction with a restaurant.
As off-premise traffic and sales continue to accelerate, consumers will place a heightened importance on experiential dining for on-premise occasions. Areas to watch include: a continued rise in delivery, virtual restaurants, subscription services, and grab-and-go at retail locations; continued growth of cloud kitchens and the growth of online, delivery-only brands; Consumers may grow increasingly loyal to third-party delivery apps, impacting loyalty to individual restaurants; and restaurants becoming smaller in future with more automated kitchen equipment and a change in typical kitchen layout.
Accelerated changes
It did not take 10 years to see the transformation of the restaurant industry. The pandemic accelerated these changes with the off-premise revolution becoming one of the strongest growth areas in the industry.
At the end of 2021, Deloitte found that consumers were demanding convenience, digital experiences, and safety as permanent fixtures on the menu. 61% of consumers order take out or delivery at least once per week, up from 29% one year ago and 18% prior to the pandemic. Demand for frictionless digital experiences continue to be at the top of the menu, with 57% of consumers ordering take out or delivery preferring to use a digital app, nearly 67% of on- premise diners prefer to order digitally.
Jean Chick, principal Deloitte Consulting LLP and US restaurant and food service leaders sums up nicely how restaurants should respond, “It has been said that the only constant is change, which holds true for the restaurant industry today. The pandemic has accelerated the progress of the restaurant of the future, calling for fundamental shifts in business models to meet new demands. Now, amid continued pressures in areas like supply chain, safety-related costs, and labor availability costs, restaurants should work strategically to build loyalty among on-premise and off- premise diners. Those that can quickly adapt and meet diners’ evolving demands for convenience, frictionless digital experiences and safety can be poised to not only survive, but thrive.”
Chipotle was among those that adapted quickly, opening its first ever digital-only restaurant called the “The digital experience is as important as the in-house guest experience Whether ordering from a website, app or a third-party platform, the ease of use can make or break the customer relationship”
Chipotle Digital Kitchen in Highland Falls, New York in November 2020. It has no dining room or front-of-house service staff. Guests must order online via the Chipotle app or website. The digital kitchen is for pick-up and delivery only.
Similarly, Taco Bell innovated its restaurant design, opening its first Taco Bell Defy restaurant in Minnesota last June. It features a four-lane drive-thru, a proprietary vertical lift to transport Taco Bell menu items from kitchens straight to the customers. These innovations reduce service times to two minutes or less and include employing digital check- in screens for mobile order customers’ unique QR codes, to audio-video technology allowing customers to talk to a team member on the second floor.
Enhancing the digital experience
Recognizing that off-premise dining is here to stay, Panera also redesigned its stores in November 2021. Each store is 20% smaller than its current location and offers digital only ordering and pick up, dual-lane drive-thru, and seating inside and outside has been reduced. It is working to significantly increase drive- thru services.
“The digital experience in today’s environment is as important as the in-house guest experience. Whether ordering from a website, app or a third- party platform, the graphics, personality, and ease of use can make or break the customer relationship,” says Arlene Spiegel FCSI, president of Arlene Spiegel & Associates and a restaurant, retail,
and foodservice consultant with over 25 years experience points out. “Investing in top-notch software that seamlessly integrates with ordering platforms is wise and necessary to compete. In fact, with many meals now being prepared in ghost kitchens and off-site commissaries, the customer’s only experience with the restaurant brand is a digital one. It is here to stay and will become more important as customers are more demanding of ‘just-in-time’ dining.”
When ordering off-premise delivery, consumers rely heavily on third party apps such as DoorDash and UberEats. These digital platforms connect restaurants to a large customer base with an established digital delivery infrastructure. However, they also take a cut of the restaurants’ profits.
Reaching more customers
DoorDash unveiled a revamped merchant suite, a platform that helps small and medium-sized restaurants grow, promote online sales, and increase brand recognition to attract new customers.
It also enables them to discover best sellers, use data insights and increase order volume. DoorDash reaches an estimated 94% of the US population. According to the company’s chief revenue officer, Tom Pickett, 87% of DoorDash merchants have the ultimate goal of attracting new customers.
DoorDash will be kicking off in-person restaurant conferences to offer real-time support, one-on-one networking and executive speakers to help businesses create tailored approaches to grow their businesses. The delivery platform is showing it is committed to more than just delivery.
Another way restaurants deliver off-premise dining is by offering meal kits you can make at home. There’s the Shake Shack Burger Kit, getting your burger fix without leaving your house. Angus beef patties, American cheese slices, potato buns and sauce packets are delivered to your door. You do your own grilling and add your own lettuce and tomato. Then there’s Memphis-based Central BBQ’s famous ribs and pulled pork dinner for four, choose your barbecue sauces and spice rubs, just use your microwave to reheat the marinated, slow-cooked meat.
Both of these meal kits are delivered to homes by Goldbelly. While third party- delivery apps work with local restaurants, Goldbelly ships food items across the country. It currently has over 700 restaurants, including Momofuku, listed on its website.
“Off-premise dining has proven to be a key feature for all types of restaurants. The restaurant’s dining room can now be in your home, car, office, beach, park bench, event space, or shipped via third- party platforms. Any time an operator has the know-how to make a profitable sale while extending their restaurant’s brand, it’s a win/win,” explains Spiegel.
“With many communities promoting ‘open-streets’ and enabling outdoor- dining structures, restaurants can now serve more guests than their limited seating brick-and-mortar restaurants,” she adds.
To create the restaurant of future, she concludes: “Off-premise dining is becoming more important, and operators need to master this process and design. They need to see this as an opportunity that allows them to reach more customers and discover new markets to serve.”
Maida Pineda
