These are interesting times for both restaurants and the National Restaurant Association (NRA), which provides representation and advocacy for over 500,000 restaurant businesses – more than half of America’s one million restaurants.
The largest organization of its kind in the world, the National Restaurant Association (NRA) represents an industry that employs 15.6 million people. A significant part of the NRA’s function is the collection and analysis of data to help its members make informed strategic decisions and keep them apprised of industry trends, and of the latest and greatest technologies that will help them cope with variable market conditions and thrive in a hyper-competitive industry.
At the end of last year, the NRA, in partnership with Technomic Inc., conducted its What’s Hot Survey, consulting more than 600 American Culinary Federation chefs in twelve categories to gain a greater sense of the direction of the food and beverage industry in 2020. Overwhelmingly, explains Hudson Riehle, Senior Vice President of the Research and Knowledge Group for the National Restaurant Association, it seems that increasingly discerning consumers want to know where their food comes from. They want reassurance that it was produced in sustainable ways. They want to enjoy the food while feeling good about their consumer choices.
Trends will still trend
As trends change year to year, the industry can expect this year and next to be dominated by the demand for healthy and sustainable foods and packaging, as well as for the greater integration of authentic international cuisine. Trends will include lifestyle diets, carbohydrate and dairy alternatives, unique cuts of meat and specialty burger blends, scratch-made goods, the rise of vegetables like mushrooms, caulilini and broccoli rabes, as well as the emergence of CBD-infused food and beverages.
This year, the market will also witness the reemergence of some revamped classic cocktails, while seltzers, spritz beverages, and international spirits like mezcal and sake take the lead in the alcoholic beverage industry. International beverages like kombucha, boba and bubble tea are also trending.
One of the hottest menu trends for Americans this year is plant-based food, but Riehle notes that just because it is a trend, not every restaurant needs to embrace it: “It doesn’t mean that every restaurant operator has to focus on each one of these trends; it is dependent upon that operation and their business plan and the alignment of that plan with certain customer demographics.”
The changing pulse
In addition to its What’s Hot Survey, the NRA surveys hundreds of restaurant operators each month (and has done so for well over a decade) to gain a sense of the changing pulse of the industry and the challenges and opportunities its members face, and to create an accurate projection for the coming decade.
The food and beverage industry is composed of seventy distinct market segments, each of which contributes to its overall competitiveness. Its diversity is its strength, and renders it resilient, dynamic, and flexible enough to adapt to the various market trends that emerge year after year in both the quick serve and table service segments.
According to the NRA’s ‘Restaurant Industry 2030: Actionable insights for the future’, which was prepared by NRA in association with Knowledge Group, much of the industry’s growth is taking place in the off-premises market, which currently represents sixty percent of the entire food and beverage industry. The demand for on-premises meals has not diminished, but restaurants have had to adapt to survive.
Riehle provided some insight into the industry’s potential. “Despite a host of challenges, restaurant industry sales will reach a record high of $899 billion, making 2020 the eleventh consecutive year of sales growth for the restaurant industry,” he says, though these figures may need adjustment to reflect the COVID-19 slowdown.
An interesting impact
The COVID-19 pandemic has had an interesting impact on the restaurant industry.
On the one hand, eat-in establishments were forced to close by mandated social-distancing policies, with some closing permanently as they found themselves financially unable to sustain the temporary closures, but on the other hand, restaurant drive-through, delivery and pick-up options found themselves on the front lines.
Two of the strongest drivers behind consumer restaurant choice are socialization and convenience and since socialization (in the traditional sense) is off the table, so to speak, the appeal to convenience assumes even more importance. Convenience has had an impact on a number of industry changes and trends, specifically in the off-premises market, and long before people were home-bound because of COVID-19.
As a result of increasing food delivery platforms and apps like UberEATS and Skip the Dishes, food delivery and pick-up options are the convenient go-to for many. As such, food portability has become a focus of consumers and the industry. Bonus points for eco-packaging solutions.
The table service segment of the market has also responded to the increased demand for off-premises dining by assigning space in restaurants for a dedicated take-out counter that can facilitate online and call-in orders, pick-ups, and deliveries without disrupting the eat-in experience.
Red Lobster has traditionally been an eat-in family restaurant, but it has established a take-out counter to bring its offerings to people in the comfort of their own homes. This is just one of many examples of the dine-in industry adapting to a changing market.
Differing industry models
There are a number of hybrid models that have emerged in the food and beverage industry as of late, including ghost kitchens that have a small physical footprint to facilitate delivery-only orders, as well as convenience stores and grocery stores that have increased their foodservice offerings.
In the wake of COVID-19 and the changes necessitated by government response, some restaurants are doing their bit to alleviate the strain on grocers who are being forced to limit the number of shoppers in the store at any one time and are struggling to keep pace with demand, as panic buying and closures have led to supply issues and bare shelves.
To remain operational these restaurants have started leveraging their wholesale purchasing ability to offer grocery purchase and delivery via an online or telephone order. It is a time for industry innovation to shine.
In addition to offering grocery orders, some restaurants are repurposing their menu items into do-it-yourself home bundles, like build-your-own-pizza or decorate-your-own-doughnut kits, a truly innovative way to continue operating in the face of this challenge.
Technology’s new role
Technology was already being used for point of sale, payroll, and inventory, to some degree, but it has been integrated into restaurant operations on a far greater level in the front- and back-of-the-house operations, including sophisticated food-preparation hardware and software configurations, and as a communication platform.
Technology has enabled restaurants to remain operational during the COVID-19 pandemic by offering a “contactless” way for customers to communicate with restaurants. Online orders, curbside and contactless pick-up and delivery options, and mobile payments, are more crucial than ever before.
“In an industry which is extremely labor-intensive, the rapid integration of technology now within restaurant operations is very important to heighten the efficiency and productivity of those operations,” explains Riehle.
Consumers have greater access to information via restaurant websites and social media platforms and are increasingly ordering online via smartphones and apps, all of which serve as rich sources of data. The use of kiosks and iPads is also eliminating the need for human interaction when ordering at dine-in establishments.
McDonalds was one of the first to use kiosks and many all-you-can-eat sushi operations have transitioned to using iPads for ordering. These increase the speed at which orders can be sent to the kitchen and make for accuracy and more efficient, rapid ordering.
Spurred by the youth market
Riehle notes, “For the younger – not only employees but customers too – the basic expectation of the restaurant experience now is that it includes some aspect of technology. There are definitely greater focuses now on technology skills both onsite and in the business because it has become such a critical component of sales for the typical restaurant operator.”
Like many other industries, food and beverage operators are experiencing a tight labor pool which is resulting in a demographic shift in its employees. Employees are increasingly diverse in age and background which requires a more thorough approach to training.
Thus the increasing focus on training, not only for food safety but also to ensure that staff are up to date technologically. NRA has a dedicated education foundation, and greater efforts are being made industry-wide to create a stable, viable workforce and to offer employees well mapped-out career paths to support the industry through its continued and rapid evolution.
The rate of change and innovation being experienced in the food and beverage industry is both a challenge and an opportunity. The ability to respond quickly and relevantly will be the difference between operations that survive and those who don’t.
While trends come and go, it looks like the trend towards a technologically advanced industry focused on healthy and sustainable offerings is here to stay.
With this in mind, the NRA will continue to monitor industry changes and promises to be there as a resource, an advocate and a representative for its members – and the industry as a whole – to promote a healthy and viable sector.