The industry is ripe for more transformation.
As we wrap up a year that brought more tremendous change to the hospitality industry, I like to look ahead and anticipate some of the opportunities and challenges we will see in 2022 (and beyond). As FSR’s Danny Klein recently said, “the industry has moved well past the ‘pivot’ stage and this worn-out idea of a new normal,” and is ripe for further transformation. Here is what possibly awaits the restaurant and food tech industries in the months/years to come:
Restaurants Will Invest in Bridging E-commerce and Real Commerce
Similar to the one the retail industry experienced more than 10 years ago, we will see real investment in transforming the restaurant industry using technology. The pandemic has forever upended restaurants, wineries, breweries, entertainment venues, businesses that had been reluctant to embrace technology. Many operators had to rethink how to approach their business digitally this past year, and realize that on- and off-premise experiences are more closely connected than ever. With technology at their fingertips, hospitality operators will be able to bridge e-commerce with real commerce. Solutions designed to stir up new revenue streams during the pandemic will be further utilized - expect more meal kits, retail or grocery offerings, subscription- or membership-based options from restaurants, beyond special holidays or occasions. And since purchasing food from restaurants, wineries, breweries, and entertainment venues is easier (thanks to best-of-breed technology), one can wonder if we’ll see on-premise food consumption surpass off-premise food consumption in 2022.
Marketplaces Will Become More Expensive for Consumers and Operators
I believe that marketplaces will continue to consolidate through acquisition and that we will end 2022 with maybe three major players vying for the entire off-premise market. Here’s why: with consolidation, venture funding will slowly disappear and the marketplaces will be pressured to operate profitably (many for the first time in their history). This means marketplaces will become even more expensive, for both operators and consumers. While in some markets we’ll grow accustomed to automated delivery methods, from robot to drone delivery, and while it’s hard to predict how the consolidation might fully affect consumer behavior, I tend to think that it could lead to a ghost kitchen bubble burst.
Hybrid Service Models Will Become the Norm
Operators will increasingly see a demand to flex their hospitality service and payment models, within what have traditionally been siloed experiences. Guests will have the ability to order through a kiosk, a server and through their phone all in one venue. They will be able to start their order with a server, or on a kiosk, add items or order more via a server and check out via text. I also expect to see text-based ordering become a preferred way to order, particularly among tech-savvy guests.
More Consumer Payment Method Turf Wars
The recent turf war between Amazon and Visa in the U.K. and Australia gives us a glimpse at what might happen in 2022. Amazon is possibly testing the ground for future ACH payments, to prevent operators and vendors from having to pay high processing fees to credit card companies. It will be interesting to see the potential consumer blowback for forcing users to enter a new payment method. And to see how consumer behavior affects Amazon’s next moves (and how the credit card and payment processing companies respond). Finally, I don’t expect cryptocurrencies to play a huge role in this turf war, but the restaurant industry’s appetite for digital currency is growing, and could make things even more interesting.
Breakfast Becomes Even More Essential
Breakfast service has long been considered an expensive yet less profitable service, when compared to lunch or dinner. The average check is low and labor costs are high. With technology helping operators manage the labor side of operations, we will see breakfast offerings expand, making the day part of the business more profitable for operators and providing more options to customers. More particularly, breakfast takeout will expand further, as customers continue to grow accustomed to pre-order on their mobile device for faster and better service.
I’ll wrap up with my one hope for 2022. After resisting much change for so long, the restaurant industry is finally embracing technology. As someone who has been focused on resolving pain points for all types of hospitality venues, I certainly hope that more technology solutions will adopt our philosophy: listen to operators and focus on serving the industry. It’s time we all prioritize putting our technology solutions to work for hospitality operators, and keep adapting and innovating to answer their needs.
Since 2016, Tim McLaughlin has served as co-founder and CEO of GoTab, Inc., a leading contactless ordering and payment platform serving more than 500 large & mid-sized full-service food & beverage establishments in almost 30 states and growing. An experienced executive and board member, McLaughlin led Siteworx, Inc., a mid-sized digital experience agency with clients including PayPal, Goldman Sachs, VeriSign, Bain & Co., and Thermo Fisher Scientific, to a successful PE exit in 2013. Subsequent to Siteworx, Tim co-founded and operated Caboose Brewing Co., an upscale brewery and farm-to-table concept based in Fairfax, Virginia. Many of GoTab’s most important features were incubated at Caboose.