6 Tectonic Shifts and Challenges Facing Restaurant Owners and Operators in 2018

Our annual look forward takes us in exciting directions for 2018.

From venture capital and delivery concepts taking a plunge to creative green marketing concepts continuing to pave the way for even more sustainable progress… Here’s our 2018 Restaurant Industry Trends Forecast, with some help from our very own Dan Simons.

Venture Capital will continue to flow into restaurant tech, and continue to be destroyed at an increasing rate. From our vantage point, Meal Kits (which have been gobbling up venture capital far faster than people are gobbling up the Meal Kits), will pave the way. We’ll see this short-lived venture falter, consolidate, and ultimately collapse. Losers will be evident. We’re not confident there will be any winners, at least not at their initial valuations.

The better burger trend will begin to collapse, with clear winners and losers. The growth buzz for this restaurant trend has been intense and seen remarkable growth over the past several years, but we predict the glory days of the better burger are in the rearview. Although we see similarities with the “high temp/fast casual pizza battle,” we believe there will be clear winners, and we’re looking at Blaze Pizza to light up fast casual pizza in 2018. We’ll be watching to see how it shakes out. For every big winner like Shake Shack or Blaze, there will be 10 or more losers.

The demise of delivery concepts will take shape. This was a trend to watch, but as Dan summed it up in our Look Back last month, “The feast with delivery concepts will begin to see them feast on each other.” As they consolidate to get market share and cut costs, restaurants will realize the high fees paid to the delivery companies eat up whatever incremental profit they make. Consumer demand will remain high though, and one (or more) of the delivery players will figure out how to rip costs out of the system and win. Or, the one with the deepest pockets will grab market share, keep burning cash, and bet on the long game – when delivery is via driverless vehicle. Maybe that’s the answer. But food will still need to get from curb to front door. Maybe when reaching its delivery address, the sunroof opens and a drone flies the food to the front door or thru an open window after texting the guest and “ringing” the doorbell? Time will tell. For now, keep your eyes open on the sidewalk, and you’ll start seeing the robots with 4-wheels doing deliveries.

Big chains of the old guard continue to collapse, restaurant industry analysis is clear: more closures in restaurants and retail, job elimination and shrinking kitchens, and competition will signify the end of the old guard but heat up new growth concepts grabbing locations, and landlords and developers have little choice but to keep filling the open retail spaces with food concepts. There are only so many nail salons, hair salons, escape rooms, and paint bars a developer can use to fill space. Massive shifts in the economy, as the Internet (and Amazon) eat traditional retail concepts, will also continue.

The convergence of immigration policy, labor policies, rising wages, and low unemployment will put more stress on operators. While these issues will get worse in the short term, in the long run, the amount of automation coming into the industry will destroy so many jobs, it will lead to a flattening of wages and increase in unemployment. Jobs like cashiers, for instance, will all but disappear over the next few years, and 2018 will see the widespread onset of this trend. But, if your operation has a solid training program that can take former cashiers and develop them for other roles, you’ll end up with plenty of candidates over the next few years.

Green Opportunities Abound. Savvy marketers should usher in 2018 armed with targeted, authentic playbooks that focus their corporate marketing departments on seeking out like-minded partnerships in order to develop impactful, responsible, sustainability-related outreach programs. As authentic, green-minded programs will (hopefully) abound, we see the “all-natural” stories, and generic catchphrases like farm to table, artisan, chef-crafted, and farm-inspired, becoming adopted by the largest of the restaurant chains and corporations, and prove even more meaningless than they were in 2017.