5 lessons from the new restaurant world
By Lisa White on Jul. 24, 2017The new dining age is full of consumers who expect streamlined, tech-savvy efficiency without giving up the option to have it their way. Restaurants are facing less traffic, and diners—especially younger generations—are spending less money dining out. In response to the changing industry, operators are navigating new ways to maneuver emerging customer demands, from tackling the rising off-premise market to offering even more customizable menuing. As the overall industry struggles to find footing, restaurants have swiftly had to adapt or face the fate of being left behind.
Here are five need-to-know restaurant trends that can help operators efficiently keep pace with diners’ increasingly modern demands.
1. Increasing methods of ordering
Restaurants riding the wave of technologic advancement are creating more varieties of ordering options for diners.
As part of its campaign embracing the off-premise boom, Denny’s at the end of May debuted an integrated platform that allows guests to order takeout or delivery not only through its website and app, but also with a variety of social media options. Customers can select and order their favorite dishes through Twitter’s direct messaging. Denny’s is also the latest chain to use branded Facebook chatbots for ordering as well, a method first utilized by Wingstop in 2016 and later adapted by operators such as Domino’s and Pizza Hut.
To speed drive-thru transactions, an employee with a POS-enabled iPad directly takes orders from customers’ vehicles outside The Big Chicken locations, which is owned by KFC franchisee KBP Foods and serves KFC’s regular menu inside the city landmark and tourist destination in Marietta, Ga.
Though not a revolutionary frontier, McDonald’s is the largest chain to announce nationwide kiosk implementation, with plans to place the tech in all U.S. restaurants by 2020. The kiosks utilize recognition technology, allowing them to “read” a signal from McDonald’s mobile app, suggest patrons’ favorite orders and default to a method of payment. McDonald’s has been testing the program since 2015, and says units already updated tend to see sales gains in the mid-single digits.
When customers who place app orders at fast-casual concept The Melt get within 1,000 feet of a restaurant, the kitchen is signaled to fire food. This geotracking technology ensures orders are ready precisely when diners arrive.
2. Configuring for off-premise demands
The carryout craze isn’t slowing down, with 33% of consumers ordering takeout more often than three years ago; that percentage climbs to 49% among diners 18-34 years old, according to Technomic’s 2016 Takeout & Off-Premise Dining Consumer Trend Report. As a result, restaurants are offering more ways to order, pay and customize delivery and takeout choices, putting an extra focus on diners who are bringing in dollars for businesses while not necessarily filling up seats.
McDonald’s plans to use its mobile app to increase throughput of to-go service by offering customers three ways to pick up mobile orders—in the restaurant, via curbside delivery or at the drive-thru. The brand will launch both mobile ordering and payment in some of its largest U.S. markets starting in Q4 of 2017, and is also redesigning its kitchens with modular configurations and new equipment to speed service and improve workflow overall.
Other brands are finding ways to help field the influx of digital orders. Potbelly Sandwich Shop has added a second backline to fulfill catering, delivery and to-go orders, and Chipotle plans to retrofit its prep areas to directly accommodate digital orders.
3. The rise of headless restaurants
Virtual restaurants, nonrestaurant restaurants, ghost restaurants, headless restaurants—no matter what you call them, more delivery-only operations have popped up in the past year. With no dining room, takeout or storefront, these pared-down kitchens are cutting out a huge portion of operational costs with some pretty big backers to boot. And unlike brick-and-mortar restaurants, many of which are scrambling to add delivery, headless restaurants are created solely with delivery in mind—from the menu and packaging to infrastructure and technology.
David Chang of Momofuku fame is one operator behind delivery-only Ando in New York City. Launched as a venture with Expa, a startup lab by Uber co-founder Garrett Camp, Ando’s menu comprises comfort cuisine billed as “second-generation American food,” and orders are accepted through the restaurant’s website, a mobile app developed by Expa or third-party services.
While several headless concepts are expanding in urban areas, it’s too soon to tell if they’ll be invasive to conventional restaurants. Some headless operators are already starting to struggle with the pain points of this specific setup: competing with a limited menu against restaurants and delivery services with more variety, and struggling with operational cost management and limited scalability of location and volume sold. “The model has to be adjusted a bit in terms of pricing, cost management, menu broadening and, most importantly, scalability,” says Joe Pawlak, managing principal at Technomic. Both Maple and Sprig, two of the first and most prominent delivery-only restaurants, shut down operations in May this year after strong debuts in March 2015.
There are three entrees on the menu at Seaside’s, a delivery- and carryout-only concept in Chicago that shares a kitchen with fellow Lettuce Entertain You restaurant Oyster Bah. Diners can also order six sides, one dessert and Chef Danny’s “Four Letter” Hot Sauce.
4. Prepared meal kits
Online subscription meal kit services such as Blue Apron, Hello Fresh and Plated are putting new competitive pressure on restaurants. According to Technomic’s Understanding Fresh Food Subscription Study, U.S. sales alone will grow tenfold over the next five years, and worldwide revenues from fresh food subscriptions will top $10 billion by 2020. “We project the fresh food subscription market in the U.S. alone will grow to a multibillion dollar market over the next five years,” says Erik Thoresen, principal at Technomic. “This growth is fueled by growing consumer acceptance of the subscription service model, as well as a strengthening food culture within the mainstream market.” As a result, some restaurant concepts are launching their own meal subscription services to combat this growing industry.
Freshii, a health-focused fast-casual restaurant, launched its Freshii Meal Box in 2016. Customers choose from four meal plans, available for one-, three-, five- or 30-day subscriptions and tailored to dietary goals or needs, such as a gluten-free box, a clean eating subscription and options for those looking to lose weight or build muscle.
Similarly, Muscle Maker Grill offers a Meal Plan program at some of its locations where customers choose up to four of the restaurant’s meals for five to seven days per week, available for pickup or delivery within certain delivery zones. These meals are prepared in-restaurant and require customers to do little to no prep work or cooking, appealing to diners who don’t want to assemble dishes—a step in many subscription meal kits—and are looking for a quicker grab-and-go option.
$365
In November, Portillo’s hot dog chain launched its Portillo’s 365 meal subscription; customers pay $365 upfront (a dollar a day) to receive meal fixings for eight to 10 people every other month. Only minimal work is required, such as baking off buns or reheating items.
5. Mixing up the menu: From customized orders to breaking up the bunch
From big players to smaller local establishments, restaurants are rolling out new ways to offer diners tailored orders through customizable menuing.
At Joe’s Seafood, Prime Steak and Stone Crab, the signature stone crab is menued in portions of five, six or seven per order, but staff will happily offer diners the option to sample a claw for a prorated market price—perfect for timid first-timers. Verts Mediterranean Grill has similarly allowed guests to buy just one meatball, normally sold as a trio as a main portion in its rice bowls, pitas, salads or wraps.
Offering different portion sizes of classics or bundled options also gives consumers more ability to customize. McDonald’s rolled out the Grand Mac and Mac Jr. last fall, a larger and a smaller version of the original item. “Things like the Big Mac promotion drove a better product mix than the year before, which helped drive that average check,” CFO Kevin Ozan said in the company’s latest earnings call.
Dickey’s Barbecue Pit offers package meals that fall between individual meals and larger servings typically offered as catering options, with three sizes: Picnic Pack, Family Pack and XL Family Pack, providing flexible portions for larger crowds and not just single diners.