Since March of 2020, the partners at Kinetic12 have written about the evolving state of the foodservice industry and collaborated with operators, manufacturers, and distributors through our Emergence Group, Collaborative Innovation forums, and overall discussions to understand our journey to the next normal.
As business leaders, it is imperative we understand the changing needs of consumers and operators, the shifting capabilities of suppliers, and the solutions needed to put people and companies in a position to succeed in this difficult and changing environment.
We have had the opportunity to speak at franchise conferences, industry webinars, and our own events about what has changed and what is about to change. The transition to the “next normal” continues to take longer than any of us thought and is a bumpy road for sure. In the Q4 2021 report, Kinetic12 updated our view of the industry’s Recovery Roadmap (below). This roadmap outlines three phases of transition that move us from the “COVID Crash” to the “Next Normal,” and the short- and long-term impacts to the industry coming from each.
When we published our first Restaurant of the Future article in May 2020, we saw a changing industry where restaurants became smaller, off-premises became crucial to success, and technology would play a critical role in everything. In January of 2022, we find that this schematic is not that far from where restaurant brands have gone or will be going with their footprints and overall mindset. At first, these changes were defensive, but as we look to the future, they are becoming key strategies in a successful business offense.
This article focuses on 10 key areas of change for 2022. No doubt, each of these areas will continue to evolve. And there will be bumps in the 2022 journey but that should not stop the execution of a well-thought-out strategic plan. Success will also require flexibility to quickly adapt and pivot to whatever lies ahead.
It is time to go on offense. Change is upon us, and we should all be motivated to take the steps necessary to win in 2022 and beyond.
TEN AREAS OF CHANGE IN 2022
1. PRINCIPLES OF SUCCESSFUL MENU INNOVATION
The rules of menu innovation have changed. It used to be an anything goes mentality, but now it is critical that innovation be well thought out, simple and have a specific purpose. Menu innovation must now focus on the following.
- Something that consumers want—It is no longer about what we think consumers want. It is now about what they truly want. Now is not a time to throw darts!
- Is margin accretive—If you can’t make money on a menu item or LTO, don’t waste your time. Loss leaders must be kept to a minimum.
- Can be repeated—Consistency is crucial to success. A team member must be able to execute menu items the same every time.
- Adds minimal complexity—Keeping it simple is in the best interest of all.
- Attracts new patrons—Innovation must provide the impetus for new customers to want to try it, and ultimately become fans of the brand.
- Travels well—With off-premises continuing to grow, products must be restaurant quality both in-house and off-premise.
2. CUSTOMER ENGAGEMENT
Whether it is the operator’s customer or manufacturer/distributor’s customer, it is crucial to understand their changing wants and needs. It would be a mistake to make changes to your business without engaging the customer in the process. Here are a few ways top ways engage with your customers.
- Social media analysis
- Social media reviews
- Website traffic/engagement analysis
- App usage analysis
- Loyalty program data analysis
- Focus groups
- Sales data and promotion analysis
- Direct one-on-one customer interaction
3. STAFF ENGAGEMENT
Labor retention will continue to be critical to the success of restaurants in 2022. Employees want to be recognized and have input into the decisions that are being made at the restaurants. They also are the ones talking to guests on a regular basis.
- Hiring quality people remains critical to having the right staff to execute for the customer. Quality people can be trained and molded and are not afraid to multi-task.
- Team members should be encouraged to offer ideas as well as provide quality feedback from customers to management.
- Quality of life and work-life-balance must be part of a winning formula to keeping staff engaged and loyal to the company they work for.
4. DIGITAL TECHNOLOGY AND ROBOTICS
The adoption of new technologies has accelerated through the pandemic. We see this continuing. Operators are looking to incorporate a broad range of systems and platforms to drive productivity and efficiency, to simplify ordering, drive engagement, and simplify the execution of menu items at the restaurant level. The top areas for restaurant technology investment are:
- Digital—Consumers have gotten used to ordering and paying through apps, websites, tablets, drive through, and kiosks. It will become even more efficient, and consumers will not miss interacting with staff for these functions.
- Kitchen Efficiency—Automation and robotics will become more common in the back of the house to eliminate the need for some staff. The cost of robotics will begin to decrease as the volume of production increases.
- AI—Artificial intelligence will continue to evolve. Facial recognition and license plate recognition to customize suggested orders has been tested and is now being adopted. Similar to “Clear” at airports, removing steps and ultimately simplifying the process is in everyone’s best interest.
5. THE NEW RESTAURANT PROTOTYPE
Early in 2021 restaurant brands were scrambling to figure out what their restaurant of the future should be. And this was not a five-year outlook. This was a plan that needed to take place immediately to address the importance of off-premises business and the reduction of the labor force. Here’s what operators want their Restaurant of the Future to be.
- Smaller—This includes in house dining, storage, and back of the house.
- Efficient—To execute consistently, cost effectively and without mistakes. Most brands added off-premises pick-up by putting shelving racks in prior to COVID. This was clearly a stop gap. In 2022, it must be about multiple service options with efficient execution to provide restaurant quality food and beverages regardless of the option the consumer picks.
- Customer Options—Flexibility is the key to a great prototype. This means multiple options for customers to order, pay, and pick-up with the operator having the ability to execute orders and ultimately to adjust all of this as the marketplace changes.
- Ghost Kitchens—These will not be what we thought they were. The next evolution of ghost kitchens is best-selling menu items from multiple brands that are produced by the same team members in a non-traditional location. It is not just delivery. There is pick-up, possibly drive-thru, and outside seating as well.
6. AVOIDING COMPLEXITY
In 2022, operators will have the daunting task of maintaining their standards and executing their menu items for their customers flawlessly. It starts with continuing to reduce the number of SKUs and the size of menus. It must be easy for the customer to order, pay, and pick-up, as well as easy for the employee to prep the ingredients, produce the recipes and execute the orders for the customer.
A key trend in simplifying the kitchen is to push work back up stream to manufacturers and other third-party assemblers.
Differentiation is what consumers are looking for in 2022. They are aware of labor and supply chain issues, but if they are going to go to a restaurant, they want to get a product that stands out. A burger can’t just be another a burger—a pizza can’t just be another pizza.
Here are five questions to ask yourself and your team to test your true level of differentiation.
- Do I really do this well?
- Is there a better way?
- Do I really understand my customer’s needs and frustrations?
- Do I have any real competitive advantages?
- How open minded am I to change?
8. COMMUNICATION and TRANSPARENCY
Poor communication and lack of transparency caused a lot of problems in 2021. There seemed to be a fear on the part of suppliers about what the response would be, so instead of confronting issues, such as out of stocks or returning emails or calls, many just said or did nothing. The best response to problems has always been creative solutions and now more than ever collaboration with other operators, manufacturers, and distributors is critical to success. Those that open-up and seek great partnerships will find greater success.
9. DON’T BE AFRAID TO CHANGE
Over the last couple years, everyone was forced to make many changes. Quite of a few of those changes, understandably, were defensive moves. The leaders in our industry embrace change and have already gone on the offensive. Change is good and forces you to expand your mindset. People become more creative, more flexible, and become better listeners when they go on the offense. It is OK to eliminate sacred cows. You will quickly find that many of these items were not customer favorites but were just emotional favorites of the restaurant operator. “Winning means embracing change and being bold.”
10. ELEVATE THE EXPERIENCE
It is no longer just about the food, the service, and the ambience inside of a restaurant. Today consumers are looking for an experience, a memory, a photo worthy Instagrammable moment that will have a positive impact on their day. It starts with providing the consumer with what “they” want, then building on from there.
- Making it easy to navigate a menu, order, pay, and get the meal. A stress-free engagement
- Provide innovative, compelling, and different menu items and LTOs that are prepared the same every time.
- Replicating the dine-in quality of delivered food.
- Wowing customers with exceptional take-out packaging
- Telling a food story makes it special
- Innovative marketing such as take-home meal kits with an online chef video that helps them prepare the food at home
Playing offense means leading and about making the adjustments necessary to win. It is about the customer and understanding their needs. It is about leveraging your capabilities and providing a consistent exceptional and differentiated experience. Do that and loyalty
Bruce Reinstein and Tim Hand are partners with Kinetic12 Consulting, a Chicago-based Foodservice and general management consulting firm. The firm works with leading Foodservice suppliers, operators and organizations on customized strategic initiatives as well as guiding multiple collaborative forums and best practice projects. They also engage as keynote speakers at operator franchise conference and supplier sales meetings. Their previous leadership roles in restaurant chain operations and at Foodservice manufacturers provide a balanced industry perspective.
Contact us to talk or learn more about how we can help your organization understand the Restaurant of the Future and how Emerging & Growth Chains will define the future of Foodservice. Kinetic12.com Bruce@Kinetic12.com or Tim@Kinetic12.com