The excitement of working in the restaurant industry lies heavily in the constant state of activity, the constant challenge to execute consistently and the relentless need to stay ahead of the curve. From servers dodging oncoming trays and knife-wielding kitchen staff prepping for a busy dinner service to the ever-changing industry regulations, trends, and technologies, there are always new things to learn, improvements to be made, and tactics to apply to generate more success.
As restaurant consultants, it’s our job to navigate change by researching, analyzing, strategizing, and forecasting … and in the end – always keeping our clients’ best interests (and bottom line concerns) top of mind. We do this while continuing to evolve and improve our own perspectives on new hospitality concepts and how to better serve our clients well and stay ahead of the competition.
So, we called on VSAG Principal Dan Simons for some intel on forecasting industry hot-topics as he sees them for the coming year. Here are Dan’s ‘9 Tectonic Shifts and Challenges Facing Restaurant Owners and Operators in 2014’:
1. Anti-Chain Sentiment
Or as we like to call it: the death of the chain restaurant as we know it. As our research shows, diners are savvy – they want to know where the food comes from, how it’s prepared, and how employees are treated – and they see the difficulties facing chain restaurants to consistently serve truly fresh, good food, and how that becomes the definition of a chain restaurant: big and industrialized, not homogenized. This sentiment will lead diners away from the typical chain experience, in favor of local eateries or insightful, evolving chains offering real food in work environments employees can love.
2. Use of Big Data
We see a shift from restaurants viewing credit cards as just another fee to be paid – to recognizing their value as a valuable marketing spend. Loyalty has become more about tracking diners through their payment records and their dining habits, and unlocking ways to utilize that data in customizing the guest experience each time… and ensuring they return again and again.
3. New Tech Companies Disrupt the Software and Hardware Dinosaurs
Lets face it: the major restaurant POS systems are dated, operating on core code written decades ago. Sure, they try to keep up by layering-in new hardware that still performs the same functions and evolving the UI, but all that leaves is an allegedly evolving, old system. New players in hardware and software business will challenge the established players by writing new scratch code that is more nimble, often-open source, and thus evolve their business models to focus on subscriptions that have value instead of the addictive, sometimes damaging relationships many restaurants currently have with their POS providers. They are dependent on the providers for upgrades and (notoriously bad) tech support. New, intuitive UI will replace the hard the hard-to-use, long-to-train, complicated-to-update UI that is so common today.
4. Top Chef Envy
As the millennial generation grows up posting their lives online and seeking meaning through instant celebrity with a “Hey look at me” mentality, all this comes at a cost: there is a generational disconnect in working hard to perfect a trade, vs. false expectations and delusions of grandeur (and stardom). While in operations, there is always the dose of reality, in the schools, journalism, and blogs, there needs to be a shift back to conveying the importance of building a foundation for a career … instead of chasing the chance to be the next best thing. It’s not about ‘Likes’ – it’s about the real work that creates legacy.
5. Health Care Challenges
We foresee winners and losers in the great Health Care challenge of 2014. The winners: businesses that embrace health care as a great opportunity to support employees and their families. They will find ways, through cost effective methods such as shifting food and labor costs and the like, to offer comprehensive benefits to their team. The losers: businesses that will criticize, complain, and attempt to avoid, thereby losing the loyalty and support of their staff, all at the expense of their business.
6. Living Wage, Minimum Wage & Tip-Credit Interpretation
Restaurant workforce wages will be spotlighted in 2014 as we watch business models featuring an $8-9 living and minimum wage go out the window in the face of the+ $11 hourly rate. Local legislative interpretation of tip-credit comes into play as well, as the uninformed local legislators do harm to workers and businesses alike, in the name of solving a problem where one does not exist. Private Equity’s (rightful) love affair with fast casual will be re-evaluated as average wages in the non-tipped labor models rise substantially. We foresee the industry winning the battle to educate legislators and activists about the value of the tip-credit, but nothing will slow the push towards living wages and higher minimum wages.
7. After Farm-to-Table
Now that we’ve witnessed the industry shift towards sustainable, farm-to-table, local, and real foods, we see menus and interior design looking for what is next. Restaurants won’t have to highlight fresh, real food on every menu item; it’ll be translated by the overall brand concept and will come to be expected. This also rings true for interior design. Design will evolve from the current “it all looks reclaimed” to innovative, unique and interesting elements that while environmentally friendly, do not necessarily need to include exposed light bulbs, cast iron, and brick with peeling paint.
8. Near Field Communications (NFC)
As most guests have smart phones in their pockets, around their wrists, and in their glasses (and surely someday embedded in their bodies), mobile pay, micro-geo location, and targeted, fast communications tools are industry game changers. Just think how incredible it will be to know when guests walk through the door, what they’ll order, when they’re ready to pay, all without talking to them, and being able push information to them as they walk or drive (or hover) nearby … all enabled by your computer systems and through the wave of their smart phone over an NFC compatible device.
9. Adios Pop-Ups, and Food Trucks 2.0.
Pop-ups and food trucks were never going to be long-term food & beverage business models. Pop-ups were driven by the recession that created lots of empty spaces combined with entrepreneurs with as much desire as ever, but less access to large sums of capital. Now that the idea of a pop-up, regardless of the chef/offering, is not novel, the dining public won’t be as fixated or eager to attend. Food trucks also created a path for entrepreneurs in a cash-strapped environment combined with less job prospects than in years past; but these tactics are changing as companies are hiring more, and capital becomes more readily available to properly execute new concepts. Food trucks will continue to evolve as either a promotional extension of an existing brick-and-mortar concept or as a means to getting into a brick-and-mortar location after testing the food and establishing a following.