In recent years, three companies in the world received permission to market cultured meat, and offered dishes in a limited quantity in only 3 restaurants. Recently, all restaurants stopped offering these dishes to the public. The industry itself is at a crossroads, and has to struggle with high production costs and the inability to increase the scale of production
Cultured meat companies have raised a lot of capital in recent years with the aim of offering consumers new products containing animal cells grown in a laboratory. So far, two companies in the world have managed to approve their products for consumption in two countries, and have offered cultured chicken products in three restaurants – two in the U.S. and one in Singapore. However, in recent months, all the restaurants removed the dishes from the menus and stopped offering them to customers. In January, the Israeli Ministry of Health granted its first approval to the cultured meat product of startup Aleph Farms, and it will be able to offer it to the public after completing all the regulatory approvals. But like its competitors, it will also have to overcome the significant difficulties facing the industry and the big questions about its ability to grow.
Cultured meat products are developed in a laboratory, therefore offering them to consumers requires regulatory approval to ensure they are safe to consume. At the end of 2020, an American company called Eat Just (now Good Meat) stunned the world after it was able to approve the marketing of a cultured chicken product for the first time ever in Singapore. During that year, the company began selling products in one restaurant, one day a week and for limited hours. The products were sold at loss prices due to their high cost, and the company had difficulty expanding its production line and increasing the quantities supplied to the market. More than three years have passed, and the cultured chicken has been removed from the menu of the Singaporean restaurant.
July 2023 provided another landmark for the industry. For the first time, after completing a regulatory procedure with the U.S. Department of Agriculture and the U.S. Food and Drug Administration, two companies – Upside Foods and Good Meat offered their products for sale in two restaurants in the U.S. However, now cultured meat is no longer available in any restaurant in the U.S., Singapore or anywhere else. The less than handful of restaurants that sold the products have halted sales, and the startups that received the coveted approval are now considering their next moves.
All of the cultured meat products currently in development or approved for marketing contain a very low number of meat cells grown in a laboratory, and rely mainly on soy or other plant products. For example, the product of the Israeli company Aleph Farms has 20% cultured beef cells – and this is a relatively high percentage compared to the average in the global industry.
One of the reasons for the significant difficulties the global industry faces is the fact that it is based on practices and products from the pharmaceutical industry, so the production is very expensive. In addition, there are many questions regarding the complex growing practices, and even questions about the environmental benefits, since recent studies indicate significant pollution caused by the industry. Many are asking today whether the industry can indeed grow and become significant, or whether it is a gimmick that will remain within the walls of the laboratories, or at most it will be able to offer very limited products only to the rich.
In the dynamic world of fast food, the quest for innovation, speed, and efficiency is never-ending. Amidst this quest, self-ordering kiosks have emerged as a beacon of transformation, signaling a new era in customer service and operational management. For restaurant owners, understanding and harnessing this technology isn’t just an option; it’s a strategic imperative to stay competitive and relevant. This exploration isn’t just about adopting new technology—it’s about envisioning the future of fast food. Are self-ordering kiosks just a trend, or are they the new backbone of the fast-food industry?
Let’s dive in and explore the potential of this groundbreaking innovation.
The Emergence of Self-Ordering Kiosks in Fast Food
The landscape of fast food is changing rapidly. With the advent of self-ordering kiosks, restaurants are witnessing a paradigm shift in how they operate and how customers interact with them. These kiosks, seen in increasing numbers in fast-food chains worldwide, are not merely an upgrade; they are redefining the essence of quick service.
Why Self-Ordering Kiosks Could Be the Future of Fast Food
Speed and Efficiency: In a sector where every second counts, self-ordering kiosks significantly reduce the time customers spend placing orders. This leads to faster service, shorter lines, and the ability to serve more customers, especially during peak hours.
Enhanced Order Accuracy: Fast food thrives on quick, correct orders. Self-ordering kiosks minimize human error, ensuring that customers get exactly what they ordered, enhancing satisfaction, and reducing waste.
Personalized Experiences: These kiosks can provide personalized recommendations based on past orders, aligning with the fast-food industry’s move towards more tailored customer experiences.
Cost Efficiency: By automating the order-taking process, kiosks can help reduce labor costs. Employees can be reallocated to other areas, improving overall service and efficiency.
Data-Driven Insights:Self-ordering kiosks collect valuable data on customer preferences and ordering patterns, allowing fast-food chains to make informed decisions about menu changes, promotional strategies, and more.
Overcoming the Challenges
While the benefits are clear, adopting self-ordering kiosks comes with its set of challenges:
Initial Investment: The upfront cost of purchasing and installing kiosks can be substantial. However, this should be weighed against long-term benefits such as labor savings and increased sales.
Customer Adaptation: Some customers may initially resist using kiosks, preferring human interaction. Proper signage, guidance, and staff assistance can help ease this transition.
Technical Glitches and Maintenance: Like any technology, kiosks can face technical issues. Regular maintenance and having a responsive support system are crucial for smooth operations.
Are self-ordering kiosks the future of fast food? The trajectory seems affirmative. As technology advances and customer preferences evolve towards convenience and speed, kiosks stand at the forefront of this revolution. They offer a seamless blend of efficiency, personalization, and innovation, setting the stage for a future where technology and fast food are inextricably linked.
For restaurant owners, the message is clear: the integration of self-ordering kiosks may well be not just an enhancement but a necessity in the fast-paced world of fast food. The future beckons with the promise of greater efficiency, happier customers, and a more robust bottom line. The era of self-ordering kiosks in fast food is not just coming; it’s already here, and it’s here to stay.
The future of the industry is in embracing data-driven services to drive personalization and loyalty.
Immersed in customized content from their very first taste of digital media, Gen Z is a digitally native cohort that’s gotten used to having personalized experiences. Because the music they listen to, the content they watch, their social media feeds and so much more have always been curated specifically for them, they expect similar customization in all areas of their lives—and that includes restaurants. And when personalization has been the standard, static, one-size-fits all dining options spark menu anxiety and decision fatigue; according to a recent study from Prezzo, 86 percent of Gen Z adults experience this form of anxiety.
At the end of the day, restaurants can win with consumers by serving them relevant content that makes their life a little easier, even if it’s a matter as simple as picking the right side for the entrée. Understanding context and perception, embracing data-driven analytics, and adopting a new approach to relationship-building are key to meeting the high standards of the rising generation—and saving them from ubiquitous menu anxiety.
360-Degree Dining: Revolutionizing the Quick-Service Experience
If a consumer’s experience is clunky or disjointed—for example, if the in-store kiosk has no way of connecting a consumer’s account for an in-store order—that kind of poor engagement can deepen anxiety around ordering. With a holistic approach, the brand is taking on the emotional work, so the consumer doesn’t have to. Seamless CX and smart recommendations, like suggesting plant-based options for a loyal vegan consumer or configuring menu boards to feature items popular with similar consumers, help meet the expectations of a consumer accustomed to the exceptional. But it also means having the operational intelligence to avoid suggesting an item that’s currently out of stock or unpopular in that area. Simple changes like this help reduce the clutter, streamline the journey, and prevent decision paralysis and information fatigue.
The Nexus of Loyalty and Personalization
Loyalty is an outcome—not a program—which makes the relationship between loyalty and personalization inherently symbiotic. Quick-serves are challenged with personalizing experiences in a sector where most transactions are unidentified and behavior can differ significantly depending on any number of uncontrollable and unpredictable factors. Relationships are the true equalizer for restaurants because people naturally seek out the brands that know who they are and what they like. We see that in practice all the time on a local level – when your neighborhood barista knows your regular order, they’re offering you a streamlined experience based on how you behave every morning. Smart personalization has leveled up this concept and is ushering in a new era of consumer-centricity that will change the way we engage for the better. With the right technology, you can build the authentic connections consumers are really looking for—mastering context, perception, and expectation to build loyalty.
Taking a Macro View
According to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment, from November 1-December 24,2023, spending in the restaurant sector was up 7.8 percent year over year; put simply—consumers are still dining out, even more than they were the year prior. But the Mastercard Economic Institute predicts 2024 to be a year of tradeoffs as consumers balance prices with priorities, so it’s crucial that restaurants invest in personalization to deliver the relevant experiences consumers seek. That means building the right foundation, asking the right questions, and marrying the in-store and online experiences to maximize every interaction.
Harnessing Data-Driven Personalization to Transform Your Quick-Service Restaurant
When actioned in line with robust privacy principles and responsibly managed, data puts countless benefits and opportunities on the table. By understanding preferences and behavior—and what drives that behavior—quick-serves can make more informed decisions to boost overall business performance. With smart personalization, consumers are treated to more satisfying and memorable experiences that can surprise and delight. A deep understanding of your own business performance and an awareness of what’s happening with the competition can trigger innovation that helps you stay ahead in a competitive market. And at its core, data allows you to be more authentic in how you relate and engage with consumers, cultivating a sense of belonging that enhances long-term loyalty.
The future of the industry is in embracing data-driven services to drive personalization and loyalty. For quick-service brands aiming to attract and retain Gen Z consumers, personalization is not just an option—it’s a necessity. With the right analytics, insights, and creative thinking, quick-service restaurants can offer holistic personalization that delivers real value and minimizes menu anxiety no matter the generation.
The restaurant industry is currently facing some simultaneous challenges. For instance, restaurant brands must:
Stand out from the (stiff) competition. Today’s restaurants face increased competition, not just from other brick-and-mortar establishments but also from non-traditional dining options like ghost kitchens and virtual brands. Restaurant brands need to differentiate themselves to attract customers and maximize sales.
Meet changing consumer preferences. Last year’s hot trends (like pickletinis and Sriracha variations) might be cooling down moving forward. Therefore, restaurants must stay aware of consumers’ ever-changing demands – and be nimble and adaptable enough to give them exactly what they want. Otherwise, customers will go elsewhere to find it.
Attract and retain talented staff. Even several years post-pandemic, many restaurants are still struggling with ongoing staffing shortages. Since there’s increased competition for employees, restaurant brands must go above and beyond to attract and retain talent in this extremely competitive environment.
Keep up with ever-evolving regulatory compliance. Restaurants must maintain compliance with health and safety regulations, especially in a post-pandemic world where everyone’s watching to make sure your staff is following safety protocols and keeping your space immaculate.
To overcome these challenges, restaurants (and other food businesses) should rely on the latest technologies, including Artificial Intelligence (AI), Machine Learning (ML), and the Internet of Things (IoT).
Technology can help restaurants:
Optimize operations. When restaurants implement digital solutions, it helps improve all elements of their operations, including scheduling, ordering, and reservations, as well as back-end systems for kitchen and inventory management. Integrated tech systems help improve efficiency, accuracy, transparency, productivity, and other critical success metrics. As a result, restaurants can drive key performance metrics (KPIs), such as customer satisfaction, loyalty, retention, and referrals.
Elevate their quality and compliance management programs. Restaurants must prioritize safety, quality and compliance every day – no matter what. Tech solutions are exponentially better than antiquated manual systems for this effort. Utilize digital systems for continuous monitoring and improvement of quality control in restaurants. Quality management software allows brands to maintain compliance with health and safety regulations, manage supplier relationships, and ensure consistent quality across multiple locations. Leverage fully featured software options, which offer audit management and compliance tracking capabilities to maximize the safety of your food, guests, and business.
Maximize compliance. Restaurants need to do more than just put safety and quality protocols in place – they must also ensure compliance across all shifts, and all locations. Modern audit management and compliance tracking features ensure adherence to health and safety standards. Fully featured platforms also assist in managing supplier quality, which is critical, given the necessary focus on safety, quality, compliance, sustainability and ethical sourcing.
Manage ongoing staff issues. Being short-staffed can jeopardize restaurants’ safety and quality efforts. Harried employees working a chaotic dinner shift may skip steps in your safety protocols because they believe they’re “too busy” to wash their hands often, check foods’ temperatures regularly, or properly disinfect surfaces or equipment throughout their shift. Tech solutions can help boost efficiency and productivity so your restaurant can do more, even with fewer employees. Additionally, offering innovative tech tools to make employees’ jobs easier can be an attractive incentive to attract and retain staff.
Give the people what they want. Whether your customers want healthier menu items, more sustainable takeout packaging, online ordering, an improved guest experience, ethical sourcing, or all of the above, leverage tech tools to meet their demands – and exceed their expectations. Tech tools can help personalize service, recommend meals based on guests’ purchase history, improve sustainability efforts, and much more. As a result, your brand can enhance guests’ experiences and keep them coming back for more.
Boost sustainability efforts. Did you know that 82% of consumers want brands to support sustainable practices and 84% of customers would avoid a company with poor environmental practices? As more consumers demand sustainability – and more brands recognize that it’s the right way to do business – many restaurants are prioritizing eco-friendly practices. Increasingly, food businesses are relying on tech tools to help them reduce waste (and related spending), find more efficient delivery routes to reduce emissions, and improve sustainability in other ways, as well.
Enhance the customer experience. Restaurants – and other hospitality businesses – are learning that tech tools can dramatically enhance the customer experience. From digital menus and online ordering systems to AI-driven kitchen automation, technology is revolutionizing the dining experience and boosting customer service innovation. AI-powered tools have also become instrumental in responding to customers’ comments, questions, and inquiries promptly and accurately, boosting the customer experience and freeing up employees to focus on other customer-facing tasks.
Tech tools have evolved from “nice to have” to essential for today’s restaurants, and are critical in helping restaurants adapt to today’s most pressing challenges. For instance, innovative technologies are instrumental in helping restaurants and other food brands enhance their safety and quality programs. Using quality management systems, restaurants can identify and resolve any risks, improve compliance, and maintain operational excellence.
Today’s innovative technologies help restaurants optimize operations, improve sustainability efforts, deliver exceptional customer experiences, and set themselves apart from the competition. These solutions will help restaurants remain relevant, profitable, and competitive in this increasingly crowded marketplace.
The National Restaurant Association is forecasting a record $1.1 trillion in sales in 2024 and the addition of 15.7 million jobs.
The National Restaurant Association released its annual State of the Industry report today with the sales forecast as its top headline; the association expects to exceed $1.1 trillion in 2024. Should this forecast play out, it will mark the first time sales from the nation’s second-largest private industry will tip into the trillions.
Last year, the foodservice industry forecast was $997 billion, while the pre-pandemic forecast from 2019 was about $863 billion, illustrating a staggering growth trajectory throughout the past four years despite a global black swan event. Of course, much of these sales have been driven largely by pricing; menu prices peaked at an 8.8% year-over-year increase in March 2023, but have since started to cool a bit and were 5.2% higher in December.
Still, demand for restaurants has also proven to be quite high, particularly among younger consumers. Fifty-two percent – including 67% of millennials and 63% of Gen Z adults – say ordering takeout from a restaurant is an “essential part of their lifestyle,” meaning pricing isn’t the only driver here. Notably, the trillion-dollar breakthrough is a cause for optimism given that the industry remains much smaller than it was in 2019. According to Technomic Ignite data, there were just over 631,500 restaurants in 2023 versus just over 703,000 in 2019.
“Looking at the operating environment for the upcoming year, it is one where there is an overall moderation in industry growth, but the milestone of passing $1 trillion is truly astounding when you consider that is over $3 billion a day on average and $125 million an hour,” Hudson Riehle, SVP of the association’s research and knowledge group, said during a recent interview. “As decades have passed and consumers continue to shift their food spending toward away-from-home solutions, the industry continues to not only garner consumer support but also increase in its economic size and importance.”
Riehle points to data showing that the restaurant industry comprised 25% of the family food dollar in 1955. By 2010, that rose to 49% and Kalinowski Equity Research estimates that share-of-spend for restaurants was at nearly 56% in December 2023.
Workforce
In addition to hitting record-high sales this year, the association is expected to employ a record-high 15.7 million people and with more room to grow. Forty-five percent of restaurant operators report that they need more employees to meet consumer demand and a majority (70%) have job openings they say are hard to fill. The association expects the industry to add 150,000 jobs per year on average for the next eight years, with total staffing levels reaching 16.9 million by 2032.
“The industry has become an area of training and development for the national workforce. This latest research shows that over three out of five adults have worked in the restaurant industry and that is even higher for younger cohorts,” Riehle said. “As a result of that, and in tandem with the demographic changes which have occurred as the decades have progressed, younger consumers place a higher priority on spending at restaurants and deem them more essential than other generations.”
Investment priority? Technology
As these younger consumers prioritize restaurant experiences more, the industry’s operating model has shifted. Though off-premises became a necessity during Covid, the channel continues to grow because of how these cohorts use restaurants, whether via delivery, drive-thru, carryout or curbside. As such, technology has become critical and will be a top investment priority for operators big and small in 2024; 60% of operators plan to make technology investments this year, versus 48% in 2023.
“It is evolutionary, not revolutionary. For those younger cohorts, their expectations are higher. It doesn’t mean all restaurant concepts have to incorporate technology into their operations to remain viable. It means, looking at younger cohorts and how they use restaurants differently, operators that are seeking to grow are obviously more focused on meeting the needs of those younger consumers through technology,” Riehle said.
What they especially want is the ability to order and pay quickly and seamlessly, he said. They also like the ability to tap into a loyalty program to earn stronger value opportunities not available to non-loyalty members. Seven in 10 adults said they look for a daily special or discount, and the association’s data suggests consumers prefer using a loyalty or rewards program facilitated through a mobile app.
For operators, Riehle makes a point to note their priority isn’t to deploy technology that replaces workers, but rather to augment what those workers are doing, especially as labor shortages remain. Nearly half (47%) of operators say the use of technology and automation will help with those shortages.
“There is still a sizeable number of job vacancies,” he said. “The logical extension is that more resources are invested in how labor is onboarded and deployed. Operators have made it clear they’re augmenting the workforce versus automating. This is still the service industry.”
All told, Riehle is optimistic about this state of the industry, acknowledging a moderating year ahead but solid and consistent growth in the long term.
“Even after four years of the pandemic, (restaurant spending) is over 50% again. The typical American consumer has made it quite clear in terms of their standard of living as to how they want to spend their money. They want to prioritize restaurant spending,” he said. “The typical consumer over the upcoming decade will continue to allocate a great portion of their spending to restaurant meal, snack, and beverage solutions.”
A recent demonstration outside a Philadelphia falafel spot was just the latest in a history of boycotts and conflicts.
George Recine, a Boston advertising executive, knew exactly where to eat lunch last week during a business trip to Philadelphia.
“What better place to stop by than Goldie?’” he said.
Mr. Recine, 45, had read reports about a protest there a few days earlier that Pennsylvania’s governor and the White House had condemned as antisemitic. A crowd carrying Palestinian flags had gathered in front of the popular falafel restaurant, co-owned by an Israeli-born chef, and chanted, “Goldie, Goldie, you can’t hide, we charge you with genocide.”
All Mr. Recine knew was that the owners had donated restaurant proceeds to an Israeli medical nonprofit organization that has supplied that nation’s troops with toiletries and gear in the Israel-Hamas war. He showed up to buy a falafel as a statement. He didn’t think an American restaurant serving Israeli food should be a target.
George Racine, an advertising executive from Boston, stopped at Goldie for lunch to show his support for the restaurant. Credit…Kriston Jae Bethel for The New York Times
Like the protesters, Mr. Recine was participating in a longstanding American practice: If you want to ignite social change or protest a war — or even just air an opinion — do it at a restaurant.
Why? Unlike many other businesses, restaurants often proclaim their nationality, ethnicity and sometimes the owners’ political views. And at a time when Americans of differing political tribes often stay in their own corners, a restaurant can serve as a de facto town square.
“Food is very accessible and has a very low barrier to entry, so the restaurant becomes a proxy for whatever your feelings are,” said Johanna Mendelson Forman, a professor at American University who teaches a course called Conflict Cuisines that examines the nexus of food and war.
Food in America, she said, has always been political.
During World War I, many Americans refused to patronize German restaurants or beer gardens, an import that had proliferated in the late 1800s. (New York City had more than 800 at one point.) Drinking beer was such an expression of German identity that to do so was portrayed as unpatriotic.
During World War I, many Americans pushed back against restaurants like this one that were perceived to be pro-German. Credit…U.S. National Archives and Records Administration
Nearly a century later, French fries served as another barometer of American patriotism in 2003 when France opposed the U.S. military plan to invade Iraq. Restaurant owners poured French wine into the gutter and renamed French fries freedom fries.
After Russia invaded Ukraine in February 2022, dozens of people waited in the bitter cold to eat pierogies and borscht at the 70-year-old Ukrainian restaurant Veselka in the East Village of New York. The Russian Tea Room, founded in 1927 by members of the Russian Imperial Ballet who were escaping communism, lost business to a boycott. Members of the staff were harassed online.
Ruth Reichl, the food writer and former New York Times restaurant critic, said that in an increasingly fractured society, restaurants and the people who run them function as a sort of family — with many of the flash points that one might see among relatives.
“Restaurants are the heart of the community,” she said. “In moments like this they become a place where our deepest emotions play out.”
Restaurant-centered political action can be both ineffectual and short-lived. Americans seem to love French fries more than ever, and the crowds at Ukrainian restaurants have thinned.
But world events can have a lasting effect on businesses. In the days following the 9/11 attacks, restaurants serving Middle Eastern food were attacked and closed.
Chinese restaurants emptied out at the start of the pandemic, when little was known about Covid’s origins and President Donald J. Trump fueled anti-Chinese sentiment by calling it the Wuhan virus or the “kung flu.”
Grace Young, the cookbook author and culinary historian, ate at Wo Hop, the second-oldest restaurant in Manhattan’s Chinatown, the day before the city lockdown began. The manager told her that 70 percent of the neighborhood’s restaurant owners had already decided they couldn’t go on without customers and closed.
When Covid hit, many Chinese restaurants, like this one on Canal Street in Manhattan’s Chinatown, lost nearly all their business. Credit…Ashley Gilbertson for The New York Times
“It was a really heartbreaking situation,” she said. “What happened to Chinatown is people just didn’t discriminate against the restaurants. They discriminated against every business in Chinatown.”
Many restaurants never reopened, and business in Chinatown hasn’t returned to pre-Covid levels, she said.
Because restaurants are one of America’s most accessible cultural products, they have been barometers not only for social change but for cultural understanding. Food becomes a vehicle for public acceptance of political ideas.
Americans skeptical of both the communist Chinese government and Chinese food beyond chop suey watched President Richard Nixon eat Peking duck and steamed chicken with coconut during his visit to China in 1972. The trip stabilized a precarious diplomatic relationship, and the cuisine took off in the United States.
Wyche Fowler, a former U.S. senator and ambassador to Saudi Arabia who also happens to like good food, was fond of saying that you could always tell where the latest global conflict was taking place by looking at the list of new restaurant openings in Washington. Indeed, restaurants serving the food of an immigrant’s homeland serve as both a point of entry into the American economy and a place to gather.
Restaurants have been the locus for civil rights battles. In 1960, four Black college students sat down at a Greensboro, N.C., lunch counter reserved for white people. They were working under the simple notion that anyone should be able to order a cup of coffee anywhere.
When they were asked to leave, they stayed. For six months, they and other protesters who joined in endured racial slurs and food dumped on their heads. The action inspired other sit-ins and helped fuel a powerful new chapter in battle to desegregate the South.
In 1960, civil-rights protesters braved verbal and physical abuse by taking seats forbidden to Black customers at a Woolworth store in Greensboro, N.C.Credit…Bettmann / Getty Images
More recently, chefs themselves have actively brought politics into their restaurants. That’s in part why marchers decided to protest at Goldie, one of several restaurants co-owned by Michael Solomonov, whose sales on Oct. 12 were donated to the Israeli nonprofit. (In a letter to the staff obtained by The Philadelphia Inquirer, Mr. Solomonov said he was unaware that the Israeli organization was providing the army with ambulances and medical supplies.)
In November, support for Israel also caused a deep public rift between the staff and the self-identified Zionist owner of an Upper East Side coffee shop that drew international attention.
Not all the chefs’ political involvement is as controversial. In 2012, the James Beard Foundation began its Chef Bootcamp for Policy and Change to train hundreds of chefs to influence national and local food politics.
José Andrés created World Central Kitchen in 2010 to mobilize local chefs to help feed people in disaster zones. When the Ukraine war began, the organization decided it would also begin helping in active war zones which now includes Israel and Gaza.
Feeding people is feeding people, regardless of the contours of any conflict, Dr. Mendelson Forman said.
“There is less politics in their motivation than humanitarianism,” she said. “Isn’t it human to want to support those who have been victims and need to be cared for?”
Jon Hurdle contributed reporting from Philadelphia.
We’re heading into a new year, and while that brings celebrations, new beginnings, and moments for reflection, it’s important to anticipate that challenges may not be far behind. The quick-service restaurant industry is no stranger to adversity. But to really predict any potential challenges or growth opportunities in 2024, it’s best to look at the last few years leading to this point.
COVID-19’s Impact on the Quick-Service Industry
No industry was left untouched by the pandemic. Every company, no matter what sector they were in, had to pivot their strategy to keep their doors open. The National Restaurant Association estimated that approximately 100,000 permanently closed during the pandemic. For restaurants, this meant a massive shift to online ordering, carry out, delivery and taking care of the guests ever changing needs. Overnight, customers were forced through government policy, to eat food off premise as dining-in was either limited or eliminated.
Third-party delivery apps like Uber Eats, DoorDash, Grubhub, and Postmates soared in popularity, with consumers and restaurants both taking advantage of contactless delivery. Brands that had developed an app prior to 2020 saw increased usage across their client base. For example, Chipotle went into 2020 with less than 10 million app users. By October of 2021, they had more than 24.5 million members—learning them a 40 percent increase in only a year.
Mobile ordering, due to its convenient nature, is here to stay. A recent study showed that 71 percent of consumers had recently ordered food through a mobile app. Most of the respondents cited that convenience was the main factor influencing their purchase.
Industry Growth is on the Horizon
Even with dining room shutdowns, reliance on takeout and delivery, and a slow return to on-premise dining, the global quick-service industry has been able to bounce back and is now poised for growth in the coming years. In 2023, the worldwide quick-service restaurant market was valued at $7.981 billion. From now until 2031, it’s projected to grow at a compound annual growth rate of 8.88%, reaching an estimated value of $13.297 billion by the end of the forecast period.
However, even with strong growth projections, an industry can still face obstacles. The pandemic changed the landscape of many businesses. While it’s no longer considered a public health emergency by the CDC, many of the behaviors people adopted during COVID-19 have become mainstays of normal life.
Potential Challenges Quick-Serves May Face
Difficulties such as hiring and unprecedented inflation can make generating a strong return on investment tougher than the past.
Labor shortages and rising wages: while the labor market has improved the past six to twelve months, the industry is likely to face ongoing challenges in both recruiting and retaining employees. This has been exacerbated by workers continuing to seek higher wages.
Higher interest rates: Securing loans will likely be more difficult for small businesses. Due to the Federal Reserve’s interest rate hikes over the last couple of years and the collapse of three large banks—Silicon Valley Bank, Signature Bank, and First Republic Bank—lenders are all tightening their purse strings. New or expanding businesses may struggle to secure loans in 2024 without the contribution of sufficient capital by the investors.
Rising inflation costs: In recent years, the industry has grappled with rising inflation impacting both food and service costs. Although inflation has eased somewhat for goods, the service sector continues to bear the brunt of high inflation expenses. Additionally, the cost of constructing new restaurants has seen a notable increase compared to the past two years in particular.
Consumer spending habits: Consumers have suffered the most from astronomical inflation costs. In fact, a recent survey revealed that restaurants and bars were the second nonessential category to see a drop in sales. Of the respondents, 62% admitted to spending less on meals out.
Health and sustainability concerns: Consumers are becoming increasingly more health-conscious and environmentally aware. In fact, nearly 80 percent of U.S. consumers take into consideration a brand or product’s sustainability practices when making purchasing decisions.
Anticipated Growth Opportunities for Quick-Service Restaurants
Even though consumerism has transformed, change can bring about new opportunities when fully embraced by restaurant operators and brands.
Technology integration: Considering how important technology was to restaurant survival during the pandemic, it would only make sense for quick-service restaurants to continue integrating new tech into their operations. Penn Station East Coast Subs, for example, has recently committed significant resources to technological advancements—all of which will be unveiled in the coming year.
Menu innovation: To keep up with consumer demand, quick-service restaurants need to look at offering healthier, sustainable, and diverse food options to attract a broader customer base. This includes limited time offers to keep both current guests engaged and attract new customer.
Space redesign: With mobile ordering and delivery remaining popular in the post-pandemic world, quick-serves may want to look at reworking their restaurant space to better accommodate takeout orders—thus reducing dine-in space.
Strong branding: Consumers want to engage with a brand. Strong marketing isn’t just a well put together ad campaign anymore. Participating in conversations on social media is becoming more important. Brands need to have more than just a name, they need personality, too.
Sustainability: Adopting eco-friendly practices can not only reduce operational costs but also appeal to environmentally conscious consumers.
Strategies for Quick-Service Operators and Investors
It’s unlikely that any quick-service restaurant owner can immediately seize all of the opportunities listed above. Picking one or two things to focus on in the new year is a great strategy. Look at what it is that you’re excelling at. Do you have a strong social media presence? Are you regularly incorporating new menu items to suit consumer trends? If not, these could be good areas to start making changes.
Adaptability will be key in 2024. As trends and consumer demands evolve over the next 12 months, the businesses who show flexibility will see lasting success.
Food preferences are a complex interplay of taste, health, value, and convenience. While these factors are universally important, the way they manifest can vary across generations due to differences in life stage, culture, macro-economic conditions, and technological influences.
Often overlooked, Generation X (1965-1980), sandwiched between Baby Boomers (1956-1964) and Millennials (1981-1996), stands out for its distinctive embrace of customized traditional food.
To understand this embrace of customized tradition, let’s delve into the past. Gen X, known as the latch-key generation, grew up with little adult supervision, fostering independence and a strong emphasis on work-life balance. Raised largely unplugged, with computers existing in only 51% of households in 2000, they were the last generation to experience family dinner regularly.
A less diverse cohort, Gen X – 71% identify as Non-Hispanic White vs. 61% for Gen Z – enjoyed television shows centered on wholesome relationships (such as “Little House on the Prairie”, or “Growing Pains”) and is now at the peak of their earning potential, as noted by NBC News.
Gen X Cuisine and Food Preferences
Generation X’s engagement with food can be characterized as traditional with a twist. Whether eating at home or at a restaurant, they appreciate comfort food like meatloaf, hamburgers, pizza and soda.
Unlike the Boomers, Gen Xers are also attracted to personalized versions of traditional foods such as hamburgers or pizza with unique toppings or sodas with unique flavors like Coca-Cola freestyle fountain drinks. While Gen X explores global cuisine, its palate isn’t as diverse as Gen Z or Millennials. Gen Xers’ top three global cuisines are Mexican, Italian, and Chinese.
In contrast, Gen Z has the broadest palate with Asian cuisine, Japanese, Thai, Indian, and Chinese being much more popular, according to a Civic Science report. This may be due in part to changing USA demographics. Asian Americans grew 81% between 2000-19. making up 7% of the US population in 2021, as noted by Pew Research.
All generations express an interest in healthy, fresh food. Gen X and Boomers’ focus on foods delivering health benefits such as energy, immunity, and feeling full. They’re seeking to address health and wellness as well as addressing health conditions such as obesity, diabetes, and cancer. They’re also attracted to products that tout superfoods like blueberries, kale, berries, almonds, etc.
In contrast, Gen Z and Millennials are both interested in healthy, fresh foods, and local foods often with a sustainably component.
Where and How Gen Xers Eat
Generation X is more likely to eat at home in comparison to younger generations. U.S. consumers eat a home-cooked dinner 4.6 times each week, on average, according to FMI. For Gen Z consumers, it’s 3.6 times weekly; millennials, 4.2; Gen X, 4.8; and boomers and older consumers, 5.1, as IFT reported.
This preference stems from valuing the wholesomeness of home-cooked family meals. Gen X is also most likely to hold the family recipes (77% in comparison to Gen Z’s 53%) emphasizing the importance of family traditions, the New York Post reported.
When dining out, they value family time and a leisurely experience, with on-premises service being crucial (Gen X 68%, compared to 48% for Gen Z), noted hatocorp.com.
A Common Thread for Gen X
Ultimately, while taste, health, value, and convenience are universally important in food preferences, their manifestation varies across generations. Understanding these differences is crucial for the food industry.
Generation X’s unique position, combining Boomers and Millennials eating patterns, results in an embrace of customized traditional food, seen in the popularity of customizable soft drinks, pizzas, burritos, and gourmet burgers.
Millennials are the top demographic to use restaurants during the holidays as a way to avoid crowded grocery stores during the holidays, per a National Restaurant Association survey of over 1,000 U.S.
Dive Brief:
Over the next few weeks, two-thirds of adults plan to eat out while 48% said they plan to order takeout or delivery, per a survey from the National Restaurant Association released Wednesday.
When it comes to take out, 66% of consumers said they would order an entire meal while 89% said they would order a main course, sides (86%), appetizers (74%) or dessert (63%), according to the association’s survey of 1,010 adults in the U.S.
Takeout and delivery remain “critical components of the guest experience” across all demographics, Michelle Korsmo, National Restaurant Association president and CEO said in a statement.
Dive Insight:
While all generations continue to turn to restaurants for their meals at home, there are generational divides on how and why consumers are eating out. The association found that 82% of millennials take into account takeout and delivery options when choosing a restaurant compared to 53% of baby boomers.
Millennials (75%) are more likely to use a restaurant over the holidays to avoid grocery stores during busy times compared to 65% of Gen Z and 57% of baby boomers. However, baby boomers at 72% were the least likely to order from a restaurant during the holidays while 86% of Gen Z consumers said they would likely dine in or order takeout.
Thanksgiving already proved to be a busier time for independent restaurants, which saw a 5.8% increase in the number of transactions and an 8.2% in sales on Thanksgiving compared to 2022, according to SpotOn data emailed to Restaurant Dive. Average checks for SpotOn’s restaurant clients were up over 2%. The company also noted over 1,000 Christmas menu items were added to independent restaurant menus between Nov. 19 and 28. Most of these (52%) were beverages.
Consumers are also expected to tip more during the holidays, according to a survey of over 2,000 adults conducted by The Harris Poll commissioned by DailyPay. About two-thirds of Americans said they plan to give bigger tips during the holiday season compared to the rest of the year, according to the report emailed to Restaurant Dive.
The restaurant industry has confronted substantial challenges in recent years, primarily due to the global pandemic’s initial impact. This crisis brought about labor shortages, disruptions in the supply chain, and inflation, all of which placed significant financial burdens on most restaurant owners. Nevertheless, amid these hardships, restaurant owners and operators exhibited remarkable resilience by rapidly adapting and innovating to not only salvage their business but also protect their reputation.
As we transition beyond the pandemic, the outlook appears increasingly optimistic. U.S. restaurant employment reached pre-pandemic levels in September, marking a milestone after three-and-a-half years of post-pandemic recovery. However, while there is reason to feel optimistic about the future, responsible restaurant operators must be prepared for the next crisis – because if the last few years of disruption have taught us anything; it’s not if a crisis will happen, it’s when the crisis will happen. Using this time to prepare and get your house in order is critical.
So, what constitutes a crisis preparedness plan, and how can you develop one tailored to your restaurant? Below, I’ve outlined the steps! These will provide you with a structured framework designed to address the needs of both internal and external stakeholders during a crisis.
1. Risk Assessment: The first step in crafting a crisis preparedness plan involves conducting a comprehensive risk assessment. By studying how competitors responded to crises, you can gain valuable insights to identify potential threats and unique stressors specific to your restaurant concept and business model. This assessment will form the bedrock of your preparedness plan.
2. Creating a Comprehensive Framework and Protocols: Craft a thorough document that acts as your all-encompassing manual and strategy for preparing, managing, and evaluating your organization’s response to a crisis. This framework empowers your team members to adhere to specific steps in accordance with the situation’s severity. It should also delineate essential roles and responsibilities within your team, establish transparent communication protocols between different departments, institute a structured reporting system, such as a decision tree, and incorporate communication templates and tools.
3. Plan Testing: With a robust foundation in place, it is critical to stress test your plan. Schedule a dedicated simulation of a crisis and run through the protocol as if it were a real scenario. Engaging in this activity will enable you to pinpoint vulnerabilities and make essential enhancements before the real crisis hits. Testing your plan is the best method to ensure the smooth operation of your protocol when confronted with a disaster.
Now, with a well-prepared crisis management plan in place, you can divert your focus to what truly matters—ensuring your kitchen consistently delivers exceptional dishes and your guests enjoy a memorable dining experience.
