Two industry leaders peek into their crystal ball.
Over the past two years, the hospitality industry faced myriad hurdles that will likely inform the future of foodservice. For instance, full-service restaurants discovered how to manage off-premises sales at an unprecedented rate. Many grew from 5 to 100 percent of sales overnight during COVID. This shift also occurred as more customers flocked to apps and third-party delivery.
“Managing this demand has been a learning process,” says Jim Balis, managing director of CapitalSpring’s Strategic Operations Group. “Think of a pizza place that has seen their off-premises business double. Those that choose to dine-in at 7 p.m. are competing with orders placed at 4 p.m. for 7 p.m. pickup, so you have many more orders to prepare at the same time.”
BBQ Holdings CEO Jeff Crivello says restaurants now understand, “first and foremost, [to] be flexible. Stay in communication with your vendors, franchise partners, and landlords. Businesses that are good at the basics will win—famous food and service.”
So what does the future hold? Balis says automation will surge to the forefront.
As the labor shortage endures and safety and sanitation remain chief concerns among consumers, robotics and AI emerge as potential solutions. Balis says robotics and automation can reduce liabilities associated with safety and sanitation while automating tasks so that hours and staffing can be reduced. Operationally, there is no risk of showing up for a shift, Balis says. They also save labor costs as hourly average wages keep on increasing.
In a survey released in September, One Fair Wage found more than 1,600 restaurants were paying an average wage of $13.50 plus tips across 41 states. Earlier this year, the majority of these restaurants paid a tipped minimum wage of $5 or less.
These wage increases come as operators struggle to bring in as well as keep staff in place. Seventy-eight percent of operators said recruiting and retaining employees was their top challenge in a National Restaurant Association survey in July, a sizable leap from the 8 percent who said so in January.
“Robots can replace human work hours—especially in situations where there is no guest interaction or impact to the guest experience,” Balis says. “Also, they produce a very consistent product so there is little variation in execution of recipes and other standard operating procedures.”
And there’s little to suggest robotics and AI and are not being widely accepted by restaurant consumers, he adds.
“Automation and robotics are proliferating all industries, and the consumer has become more accepting and almost expecting of advancements in robotics as we progress,” Balis says. “In the restaurant industry, our guests have been very receptive to robotics whether they are preparing a beverage or assembling a smoothie. Given the guest acceptance, adoption will only accelerate.”
Balis predicts hundreds, if not thousands, of restaurants will deploy voice AI in drive-thrus by the end of 2022.
“Voice will not only take your order, but utilizing AI will determine what the consumer is most likely to be upsold,” Balis says. “Then, through both verbal communication and visual technology, restaurants will try to upsell the customer to improve tickets and profitability.”
Robotics can also thrive in a coffee, smoothie or cocktail preparation situation where there is not a lot of complexity to the process. Even back-of-the-house food prep like dropping items into a fryer, lifting a basket, or emptying items in a receptacle for order assembly can all be accomplished with the simple help of a robot.
In the new year, some reports show guests are likely to look for more plant-based foods on menus as well. With greater awareness of how meat proteins emit carbon and contribute to climate change, consumers have become more sensitive to how their food affects their environment.
According to the Good Food Institute, the retail market for plant-based foods is worth $7 billion, and plant-based food dollar sales grew 27 percent in the past year.
Plant-based meat alternatives present a lower environmental footprint and an attempt to catch up with competitors. In quick service, this could mean capturing some of the market share of fast-casual competitors.
McDonald’s, A&W, Burger King, Carl’s Jr, Wendy’s, Subway and Nathan’s Famous all either launched, or are currently testing, plant-based meat alternatives. The menu items can be a strong indicator of brands that will “walk the talk” of environmental sustainability practices.
Likewise, the off-premises trend will only continue in the foreseeable future, Balis says. He adds third-party delivery will fight for a share against pickup, and there could be a slight change in ratio toward self-pickup as costs associated with delivery keep rising. And of course, ghost and virtual kitchens will move full steam ahead.
“Between the cost of labor, rent and other expenses associated with a brick and mortar restaurant, combined with some recipe limitations, we will see more ghost kitchens enter the market,” Balis says.
BBQ Holdings, the company behind Famous Dave’s, Granite City Food and Brewery, Village Inn and Bakers Square, is one of many fully invested in the rise of ghost kitchens. In all, BBQ Holdings opened 27 ghost kitchens across three brands.
“One of our pillars of growth is to fill the unused capacity of the restaurants,” Crivello says. “Ghost kitchens are efficient because they don't require a second layer of occupancy or operational expenses. This gives our loyal Famous Dave's customers access to more of their favorite BBQ.”
So far, BBQ Holdings targeted Iowa, Tennessee, Indiana, Illinois, Michigan, Texas, California, and Missouri as ghost kitchen markets, but it plans to open three to five more units in 2022.
“We are finding ghost kitchens in areas of high brand awareness do best,” Crivello says. “For example, if there was a Famous Dave's full-service location in the past, this is likely a good market for a ghost kitchen. Marketing is the greatest challenge.”
Due to the cost benefits, he anticipates more brands will follow suit. But that doesn’t mean there isn’t a limit to the ghost kitchen category’s success.
“There will be a saturation—you are already seeing it in third party delivery apps where there may be a list of 50 providers under a salad category,” Balis says. “At some point, the customer will become overwhelmed.”
Balis also predicts supply chain issues will return close to normal by the second quarter of next year. In the meantime, more restaurants will open, and there will be greater consolidation, Crivello says.
“Between now and then, restaurants need to be nimble and stay on top of their suppliers to make sure they are getting product to serve their guests,” Balis says.
Crivello echoes this sentiment on restaurants’ navigation through the labor and supply chain shortages.
“Time is the only mitigating solution,” Crivello says. “The industry was hit with a massive earthquake, and we will feel the aftershocks for a while.”