7 Top Hospitality & Restaurant Trends to Watch in 2015

As restaurant consultants we make it our business to know our business.

We surround ourselves with the industry’s foremost team of passionate, perceptive, dedicated, and inquisitive individuals whose common goal is to continue to evolve our business by seeking out the latest hospitality & restaurant trends in order to better guide and prepare our clients so they gain an advantage over the competition.

Earlier this year we did just that, by gathering our team’s intel and reflecting on the top Tectonic Shifts & Challenges Facing Restaurant Owners & Operators in 2014. From consumer shifts away from chain restaurants in favor of local eateries to the fall of the cupcake, fro-yo, and pop-up concepts – we predicted the shifts and challenges facing our industry.

As we move into the new year, our focus shifts to the issues we see as having the biggest impact on the industry in the coming year, the –

7 Top Hospitality & Restaurant Trends to Watch in 2015:

  1. Crowdsourcing Becomes Legit. The latest in the evolving landscape of raising capital: “crowdsourcing” (also called “crowdfunding”) is an innovative platform where restaurants and investors unite. We see lots of private equity looking for a place to call home, and with two basic crowdsourcing models (one rewards-based, one equity based) to choose from, as well as the help of restaurant industry online sites such as EquityEats.com and Foodstart.com connecting interested parties with local F&B businesses looking for support, the crowdsourcing concept is one to watch! We also have our eye on federal regulations that are evolving relating to raising capital, accredited investor requirements, and disclosures.
  2. Fast Casual Pitfalls. It seems as though the private equity love affair driven by venture capitalists envisioning a new industry, but who don’t necessarily know the realities of restaurant economics, may have crested. The fast casual business model is colliding with rising minimum wage and higher healthcare costs. Many of these concepts do not have the pricing latitude to just “charge more” and many have their COGs latitude limited by smaller menus and limited product lines. The full-service concepts with tipped employees (albeit also facing tipped minimum wage increases in some parts of the country) and broader menus may see their flexibility start to command a higher value within this changing landscape. The Cinderellas, like Chipotle and the soon to be Cinderellas like Sweet Green, will solve and clear these hurdles, but for the middle of the pack and below, watch out.
  3. Attorneys & Advisors as Investors. As restaurant operators continue to grow their businesses and concepts, we’re seeing industry-centric attorneys and professional advisors actively participate in developing and facilitating their business plans. This participation is going beyond just professional services, as we’re seeing these roles expand to include equity investor and board member. This trend, in which attorneys and advisors parlay their expertise into equity positions be it on the carried interest side or as active, direct investors, seems to be a win/win for all involved.
  4. Landlords & Developers as Investors. Landlords and developers have always made big bets on large multi-use developments. Now they are going beyond just curating and attracting tenants, and getting active on the ownership side. Their strategy: securing a successful restaurant tenant then attracting subsequent office and retail tenants who will pay higher rent, once the anchor is locked in. While in most respects this isn’t new, it used to take the form of “landlord contribution” aka “tenant improvement dollars,” whereas now we are seeing it more and more as the landlord stepping into the equity or membership interest side of the equation to be able to attract the most valuable of tenants.
  5. Big Data Overload vs. Big Data Success. Unless restaurant operators and managers are willing to do the homework necessary to successfully streamline their technology and database systems, we see very few operators having the ability to master big data and turn it into insights that are actionable and formulated to truly drive sales and improve operations. The success stories are seen where a disciplined approach is taken by the operator to only spend time looking at the data that is distilled into actionable insights. Just because everyone wants to connect to the latest and greatest API with offers of finding gold under the rainbow, it doesn’t mean the best operators will allow themselves to drown in the data ocean.
  6. Credit Card Security. Resistance to EMV (Europay, MasterCard & Visa, aka smart chips) cards equipped with computer chip technology used to authenticate transactions will finally be overcome by small and medium size operators, who are starting to see the lofty cost and collateral damage effects of credit card fraud. Operators will be seeking expertise for new hardware and payment processes, understanding end-to-end encryption options, and percolating on cyber-hack coverage via insurance policies. As companies become aware of the liability shift from card issuers to merchants, the speed of investing in change will increase dramatically.
  7. Big Brands Go Abroad. Since many of today’s millennials aren’t clamoring for another large, chain restaurant setting up shop in their U.S. cities and towns, it’s increasingly difficult for big chain institutions to maintain an engaged customer base and keep guests from frequenting their smaller, more specialized local eatery counterparts. But worry not for the big corporations, their growth potential abroad, via lucrative licensing and joint-venture partner deals will provide for plenty of upside, even as many of the brands stagnate in the U.S.

*About the Author: 7 Top Hospitality & Restaurant Trends to Watch in 2015, written & developed by Dan Simons, co-founder of international restaurant & hospitality consulting firm Vucurevich Simons Advisory Group (VSAG).