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The Restaurant Industry 2019: What’s In Store?

Will technology help restaurants achieve profitability - and what are the downsides?

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Will technology help restaurants achieve profitability - and what are the downsides?

Opinions

The Restaurant Industry 2019: What’s In Store?

Will technology help restaurants achieve profitability - and what are the downsides?

Share this article

In 2019, restaurateurs are at a critical juncture. In spite of disruption, innovation, and continued growth, the long-term health of the industry is far from assured: the middle and higher ends of the market have been hit by a number of high-profile closures.

Chains such as Carluccio’s and Jamie’s Italian saw several sites shut down in 2018; everything from burger joints to fine dining establishments have been plagued by financial challenges.

Questions around staffing practices have been a lingering and persistent worry, with over 10,000 UK workers losing their jobs last year alone, while home delivery apps such as Uber Eats and Deliveroo have represented an exciting growth opportunity for some businesses, and quite literally eaten the lunch of others.

Consequently, 2019 could be a significant year for the restaurant industry. Consumer preferences are changing – but are establishments changing with them?

Here are the key trends you need to know about for the year ahead.

1.    Restaurants are facing financial challenges

The restaurant industry is highly competitive: there are too many competing for too few customers. As a result, they’re bringing in less money – while still having to pay their lease, pay their staff, and pay their other considerable, escalating operational costs.

The latter expenses are some of the most substantial: as mentioned before, 10,000 restaurant employees were let go last year – but eateries which can’t afford a full complement of service professionals can’t afford to keep up with consumer demands, or to purchase technology that might mitigate the impact of understaffing.

This naturally leads to inefficiencies, which contribute to more errors and longer waits – which in turn make customers unhappy and more likely to take their business elsewhere.

Restaurant patrons, in turn, are less enthusiastic about eating out: consumer confidence has declined in the wake of the UK’s momentous vote to leave the European Union, and with less optimism about their personal finances comes less willingness to spend on a pleasant evening meal.

It’s therefore no surprise that research from Price Bailey shows that insolvency rates within the UK restaurant scene have risen by 35% year on year.

In 2019, UK restaurants will therefore give more thought to cutting costs, streamlining processes, and generally using technology to do more with less – with the ultimate aim of improving productivity and attracting more customers. Only time will tell if they succeed.

2.    Consumer preferences are changing

The most successful restaurants have always been the ones that stay firmly ahead of consumer trends and preferences.

The rise in vegan eating establishments has corresponded with popular concerns around animal cruelty, factory farming, and climate change; the rise of home-delivered food coincided with a commercial landscape that – thanks to Amazon and other e-commerce retailers – is now defined primarily by customer choice and convenience.

The latter shift has been one of the most significant. According to Deloitte research, the home delivery market is growing ten times faster than the dining out market, and the restaurant industry must manage this trend very carefully.

On the one hand – just as politicians always talk about using technology to win over people who don’t vote – there’s a clear opportunity to court customers who aren’t inclined or geographically close enough to eat out. It also provides a means for smaller chains to operate without setting up expensive locations and hiring staff.

On the other hand, it means the restaurant is now another slide on the app: one to be embraced or rejected in a second, at the user’s whim, and without any deeper consideration.

There are also public concerns about the number of ‘dark kitchens’ – essentially, small forward outposts (often simply metal boxes in a car park fitted with kitchen equipment) for chains that want to serve a Deliveroo area without setting up a new location.

Home delivery raises additional questions around how to reinvent the casual dining experience to make it as easy and as attractive as ordering takeaway. Some experience-driven restaurants have already jumped on this trend – and we might see more of the ‘you-can’t-get-this-at-home’ style restaurant in future.

Otherwise, restaurants can accommodate consumer service expectations by partially removing service from the question – with self-serve kiosks, tablets and other digital ordering options, staff have more time to focus on enhancing customer experience in other ways.

If they can redirect focus to improving the loyalty of their patrons as well as attracting new ones, they will benefit from repeat sales.

3.    Technology will become even more influential

It’s hard to overstate the impact technology has had on the restaurant industry – both front office and back office functions have been radically changed.

Digital technology has gone from a nice add-on to a restaurant’s service to an absolute must-have: consumers expect it wherever they go, be it an office, a shopping centre, a cinema or indeed a restaurant.

They’re less interested in service than in serving themselves and doing what they want as quickly as possible, and with minimal interaction.

Point-of-sale (POS) and self-service kiosks are an essential part of this trend: the more sophisticated and customisable options allow staff to process orders quickly, accurately, and with fewer errors – and if they’re cloud-based, it’s even possible to roll out mass upgrades and system changes across multiple sites and with minimal issues.

Some POS systems come with delivery apps such as Uber Eats or Deliveroo already integrated.

Self-service kiosks are making a huge impact on QSRs – reducing labour costs, and giving customers a superior sense of control over what they order and how they order it.

If Brexit makes it more difficult for EU nationals to work in the UK’s restaurant and hospitality sectors, self-serve technology will also relieve the pressure of a potential shortage of human staff.

Some restaurants are even experimenting with tableside ordering through tablets and mobile apps: giving consumers even greater control within an environment that’s particularly conducive to increasing spend and upselling.

Millennial customers are particularly comfortable with digital menus and display systems, and integrating kitchen technologies with POS and kiosk systems can speed up order delivery – while guiding and motivating kitchen staff.

But beyond the individual functions, these technologies offer a common benefit: data. The more a restaurant gathers, the more informed it is. Through analytics platforms, decision-makers can achieve deep, superior insights into sales patterns, labour costs, inventory management, and more.

They can also refine their operational practices, develop better and more user-friendly menus, manage staffing levels, and ultimately make better, more consumer-friendly choices.

2019 will likely see these trends continue. Whatever happens, bet that technology will be at the centre of it: it matters to customers and it matters to establishments.

Jurgen Ketel is managing director EMEA, Givex.

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The Restaurant Industry 2019: What’s In Store?

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