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The Rustic
FreeRange restaurants provide live music venues and dining with dogs—and yes, those experiences are incredibly ‘grammable.

Business Trends to Make 2019 Your Best Year Yet

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Big predictions for big business moves in 2019
By Laura D’Alessandro January 2019 Research

This is the only primer you’ll need to keep the motor humming in 2019—we surveyed the industry to find the biggest business trends and the tiny but very significant details to make this year your restaurant’s best year yet.

No. 1 Ding Dong Delivery

iStock

The Trend:
To-Go and Delivery

What You’re Seeing:
The kitchen stays busy filling online orders.

Our Prediction:
Prepare for more to-go orders.

Busier kitchens and quieter dining rooms are what restaurateurs saw in 2018. That trend is positioned to grow even more in the year ahead. Why? Millennials may be cooking less and eating out more, but those meals are ordered as food to-go.

In 2019, to-go and delivery orders could drive restaurants to rearrange menus and redesign physical spaces to better accommodate the volume of online ordering and pick-ups. Think Chili’s and DINE Brands’ move in 2018 to open more stand-alone to-go shops.

The to-go and delivery proposition is an attractive one, on the surface at least, says Dave Bennett, CEO of Mirus Restaurant Solutions. Given competitive pressures, anything that can add to top line growth is of utmost importance to operators.

The increase in online ordering is reducing the friction of the increase in to-go and delivery orders and by increasing order volume—restaurants are still making money, but less comes from sit-down covers. Restaurants need to be prepared, says Steven Sperry, CEO of smart food kiosk manufacturer Minnow. Sperry says restaurants should consider reducing seating, open pickup only locations, or even adding drive-throughs.

“Time is really the new currency today,” says Nicky Kruse, strategist with The Culinary Edge in San Francisco. “I can get my food at the push of a button on my app. That is the new value over the amount of food I can get for x amount of dollars. It’s the value menu of today.”

For Kruse’s clients, this means focusing more on the quality of the food delivered to preserve the on-premises experience for off-premises consumption.

“Time has become our most valuable resource,” echoes Louis Maskin, Kruse’s colleague at The Culinary Edge. Millennials and Gen Z seek out restaurants they know are app-friendly where they can get breakfast, lunch, or dinner without a single human interaction. “We have so many clients come to us for help with continuing their brand story through the delivery and pickup platforms. It’s about making sure the packaging has the right pop of color, message, or note that continues this journey of the brand all the way from start to finish outside of their four walls. Customers need to be able to take a picture of that food item on their couch and still have the inclusivity with the brand without being inside the store.”

The to-go and delivery trend dovetails into all three of the big business trends we’re seeing this year: traffic is declining, but when customers do come in, they want an experience; meanwhile; the entire process is getting streamlined by automation.

No. 2 Bye Bye, Bricks

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The Trend:
Traffic Declines

What You’re Seeing:
Fewer butts in seats.

Our Prediction:
Think differently about your brick and mortar.

The restaurant industry’s decline in in-person visits is perhaps larger than an independent restaurant can see. The data Bennett gathered from his clients, for example, show the industry three years into a declining traffic pattern.

“It’s fluctuated for sure. There’s been worse periods and better periods, but it has pretty much been in negative territory for 36 months now,” Bennett says. This makes it a systemic problem, he says, not just a brand-level problem. And the fact is, the decline is not sustainable for a mature industry.

It begs the question, is the brick and mortar model really the best investment when delivery is turning out more of the profits? Do kitchens and dining rooms still belong together? Bennett wonders if the answer in the long-term is no.

“Delivery out of a sit-down restaurant is probably not the optimal investment model, and these gray buildings we read about in some cities—kind of a commercial space or industry space with a dozen kitchens and all of those kitchens are being delivered by one fleet of folks—could be a superior business model,” he says. “Maybe it’s that the brick and mortar are fundamentally different in the future. Is it possible that you go into a restaurant someday and the kitchen isn’t even there?”

But the kitchen seems to be what restaurants previously revolved around. How did we get here? The to-go and delivery trend appears only a symptom when Bennett looks at the big picture. It’s a combination of lifestyle adjustments on the consumer side.

“There’s much more awareness and sensitivity about quality of food, sourcing of food, where did it go, who touched it, a level of scrutiny and appreciation of those factors that are unprecedented in the industry in my 40 years,” he says. “It used to just be the taste of the food and the service provided.”

People want more than a tasty meal when they do dine out, and it’s not just millennials in the driver seat when it comes to the decline.

“I’m a baby boomer but I’m finding myself locked in on Sundays getting delivery—I’m watching too much football,” he jokes. “But if this trend is long-term and the volume continues to grow at the rates we’re seeing, restaurateurs need to ask themselves how they can best service the market.”

No. 3 Years of Experience

Mutts

The Trend:
Experiential Dining

What You’re Seeing:
Your brand or a competing brand is driving traffic with promotions that go beyond the plate.

Our Prediction:
The experiential and eatertainment segment is fertile for innovation and expansion.

It’s clear that it takes more to get diners to come in and stay for a meal, let alone become regulars. Take Pacific Catch as a case study. The West Coast-style seafood restaurant in the Bay Area was known for poke for at least a decade before the poke craze hit the fast-casual segment. As soon as we hit peak poke, Pacific Catch started losing traffic dramatically. The restaurant worked with its parent company, The Culinary Edge, to get its groove back.

“We created this whole new story around fresh, sustainable seafood in raw form—the raw bar tower,” Kruse said. “It was a whole new interaction, a whole new, shareable, fun, useful energy.”

You can’t get the Pacific Catch seafood tower experience in your living room. If you want that totally ‘grammable tower of fresh seafood in your stories, you have to go into the restaurant.

“You can only get that experience if you go in-store,” Maskin says. “You’re creating reasons, events, and occasions to come instore and experience.”

Meanwhile, in Dallas, Kyle Noonan and FreeRange Concepts co-founder Josh Sepkowitz, are using experiential dining to build successful brands that keep growing. When asked why his brands focus on experience, Noonan says the internet.

“This is no surprise to anyone—the internet is disrupting the way we do business and shop and eat,” he says. “Whether it be ordering something on Amazon or siting on my couch with the few clicks of a button on my phone, I can have everything delivered to me in 20 or 30 minutes. The best way to counteract that would be to fill in the gap left by having everything—creating an experience, a reason for someone to get off the couch and come to you. That’s the one thing that can’t be delivered by delivery drivers.”

FreeRange restaurants provide live music venues and dining with dogs—and yes, those experiences are incredibly ‘grammable. Why music and dogs? Well, it’s kind of a no-brainer.

“We sat down and said, What is compelling? What are people passionate about? Let’s target those things that people really get excited about,” Noonan says. “Music is one of those things, especially live music. People are passionate about their dogs, so let’s create an experience around that.”

But even with all the bells and whistles, the service that Bennett says was the foundation of the restaurant experience still reigns supreme. Noonan sees it with his restaurants’ guests, too.

“We are very close to our guests, and we listen to them,” he says. “We have a direct dialogue with them to find out how we’re doing, and that feedback has been overwhelmingly positive.”

No. 4 The Robot Did It

Spyce Restaurant

Trend:
Automation

What You’re Seeing:
Gadgets and gizmos galore.

Our Prediction:
Those shiny gadgets won't replace your service staff just yet, but use them where you can to increase efficiency and cut costs.

The word automation in the restaurant world conjures images of Jetson-era robots preparing and serving food in lieu of humans and we’re not there yet—although a few restaurants have gone so far as to bring in a robot that can toss a salad or sautée the satay. Spyce, for example, opened in Boston in 2018 with the restaurant guidance of Daniel Boulud and technical know-how of MIT. The use of technology to create efficiency in restaurants isn’t a bell-and-whistle deal like it may seem—those efficiencies can drive down cost.

Katie Haggart of San Francisco-based strategy group af&co calls it the “robotic restaurant revolution,” and says we’re just at the beginning.

“Robots are a huge trend currently and only increasing,” she says.

The first why is substantial: cost. The cost of labor is going up as more states mandate higher minimum wages. Paying your staff $15 an hour could cost thousands more per month—the same amount you’d invest up-front in a piece of automation technology that would keep on giving.

“By moving to automation, by having robots make food, you significantly reduce labor costs, and you also win on time,” says Kruse of The Culinary Edge. “It’s a huge time savings that automation provides for people in the restaurant space.”

But the upfront cost can be too much, and the technology too daunting to approach just yet. Andrew Freeman, founder of af&co, says just bringing more technology into the kitchen is a step toward the future.

“That’s displaced labor, but the clear fact of the matter is there just isn’t enough labor out there, and we’re looking at robotics to alleviate some of the stress,” he says.

For now, it sounds like everyone is comfortable with robotics in the back of the house, but not necessarily in the front. While Bear Robotics has introduced food-running robot Penny, some may not be ready for a robot to make the table drops.

“From a restaurant experience perspective, I don’t know if I would want my food being delivered by a robot,” Freeman says. “I think in certain concepts it could work, but I definitely see [automation] more from a point of view of alleviating stress in the kitchen.”

The second why for exploring automation is the inherent advantage robots have over humans that might become more desirable as the labor pool and consumer demand continue to change: consistency. Maskin of The Culinary Edge points to how the mood of an employee can impact restaurant operations.

“With automation you’re really able to eliminate the people factor or human error,” he says. “At the same time, you also lose the human touch. But automation really removes a huge factor of chance and provides a consistency for procedures, timing, and liability. We are not seeing mom-and-pop places adopting this type of technology. It’s really the bigger players with the expense accounts who can just explore this type of investment.”