Bottom-Line Needs and Customer Desires Drive Restaurant Trends and Innovations
As we kick off 2023, fast-food franchises look much different than they did before the pandemic. New restaurant trends and innovations have come at a furious pace since March 2020. One big switch: Restaurants have 16% fewer on-site diners today than before the syllables Covid-19 were ever uttered, according to National Restaurant Association statistics.
Drive-through picked up much of the slack, with a 13% increase – that’s no surprise to those of us who have queued up at one of Chick-fil-A’s multi-lane drive-throughs. And delivery was up more than 5%. Perhaps surprisingly, carry-out has dropped by 3%.
National Restaurant Association economist Hudson Riehle told The Washington Post that 39% of all restaurant customers hit the drive-through. “Many restaurants function differently than they did three years ago, with a greater reliance on technology integration and on the off-premises market,” Riehle said.
Food Franchises Lean on Technology
The newspaper also quoted Technomic analyst David Henkes, who said restaurants tend to fall into two camps: those serving people in a hurry and those supplying table service, ambience and/or even entertainment. “The dine-in business is going to be radically smaller than it was, with much more focus on takeout orders, a huge shift in the basis of competition to be all about technology and convenience,” Henkes said.
Fast-food franchises clearly agree, and going forward in 2023, they will continually streamline processes – often leaning on technology – to cater to the hungry-and-hurried. A McDonald’s franchisee is tested a no-human-facing restaurant concept in Texas with kiosk/app ordering and a conveyer belt delivery system – no dine-in option whatsoever. The small-footprint franchise is speedy and slims labor costs amid a shortage of workers and rising wages.
By way of another example, Henkes mentioned Taco Bell’s Defy, is a new store model with four drive-through lanes and a second-floor kitchen. There are lanes dedicated to delivery drivers and app orders; a couple of minutes after receiving an order, the food travels down a tube to waiting vehicles. As with the McDonald’s franchisee’s experimental restaurant, the Taco Bell Defy has no dining room.
Online Ordering and Delivery
Taco Bell, McDonald’s and other franchises – indeed, all types of restaurants – increasingly rely on app and online ordering. Eighteen percent of restaurants added online ordering in 2022, according to BentoBox, a restaurant website company.
But the creation of a food-delivery app – with vast complexity due to customizing meal choices, coordinating pickup times with food prep, and notifying customers – costs tens of thousands of dollars, an unaffordable perk for many mom-and-pop operations. This gives franchises an edge: The franchisor can spread the development cost among franchisee- and corporate-owned restaurants.
If 2023 brings a recession, fast-food franchises may have a further advantage: Budgeting consumers will probably veer toward cheaper fare. Some, of course, are just cooking at home and brown-bagging; Rabobank research indicates restaurant transactions fell nearly 7% in the third quarter of 2022 as menu prices rose with inflation.
Other Restaurant Trends and Innovations
Supported by digital pivots and automation, franchises are well-positioned to weather economic downturns and future Covid spikes (with cases in China soaring, epidemiologists predict another global surge). Which brings us back to earlier pandemic-driven changes that have persisted.
Restaurants added patio dining to reassure nervous clientele who were adhering to recommendations not to congregate indoors. Some restaurants debuted drive-through lanes and drive-up order pickup; fast-food restaurants often supplemented existing drive-through lanes.
Restaurants also have veered to the use of more disposables and touchless experiences. Menus may be displayed only on signs, on smartphone screens (scan a QR code to see it) or disposable print-outs. To minimize the spread of Covid, some restaurants ditched palm-pump ketchup dispensers in favor of ketchup packets. Table-service restaurants began using disposable eating utensils, salt and pepper packets, paper napkins and… drum roll… ketchup packets. Then ketchup packets became scarce, and touchless dispensers debuted.
Even without digital ordering, delivery options expanded as restaurant owners battled to stay afloat and consumers wanted a change from home-cooked meals. Fast-food purveyors saw opportunity in the delivery space, too. Chick-fil-A, McDonald’s, Burger King, KFC and the previously mentioned Taco Bell restaurants, among others, know how to bring it on!
Restaurants Feel a Pinch
But the picture isn’t 100% rosy for franchisees. Restaurants, whether fast-food or traditional, took a hit this past autumn, Henkes told The Post. An underlying softness developed during the fall, he said, because “inflation coupled with a high level of uncertainty has begun putting a damper in restaurant traffic.”
So perhaps restaurants will experience even more new trends and innovations. Faced with rising prices for food and other supplies several months ago, many fast-food brands scaled back their value menus. But sensitive to consumer buying habits, they haven’t abandoned them. And Sonic Drive-In has rolled out new two-for-$5 deals in television commercials. You can order them online, of course.