Many market forces that shaped the restaurant industry over the past few years were linked to the disruptions caused by the global pandemic. But despite the aftermath, the sector has gradually recovered by 2022 – to a point where a new sense of normality has set in.
However, normality is not the same as stability. The feeling of being in a transitional phase prevails among managers and industry experts.
It begs the question: which new challenges and opportunities will the new year bring? What will customers expect from food and hospitality brands? Which consumer trends are up-and-coming, and how will they define what’s next for the industry?
Predicting trends in the food-service industry is never easy because things change constantly. We can, however, tell you that restaurants will have to be more flexible in 2023 than ever to meet customer demand while running ultra-efficient operations.
In addition, creating an exceptional customer experience at all touchpoints remains crucial to attracting customers, building loyalty and ensuring a stable revenue stream.
Keep reading to discover what else restaurateurs, dark kitchens and (virtual) food brands can expect in the coming year (and beyond).
In 2023, restaurants will tap new revenue streams, optimise efficiency and create more brand value.
#1 In-house Dining Is Back, But Not As It Was
If there was ever any doubt about whether people would still go out to restaurants, that doubt has since subsided. We were all more than ready to return to our favourite restaurants and discover new spots.
But there’s a catch. Under the current global economic conditions (hello inflation, rising commodity and energy prices), those spending money on dining out expect a restaurant to get it exactly right.
That means:
A beyond-great customer experience. In other words, you’ll need to provide excellent service and an attractive menu you’ve engineered based on data. Additionally, hygiene and food safety standards are still very much on people’s minds (as they should be!), so don’t forget to show customers these are still at the top of your priority list.
Value for money is key. It always was and always will be, but today’s economy has made it even more outspoken. That means restaurants must reflect on their offer and how it affects their bottom line.
Again, menu engineering can help you capitalise on those dishes and menu items that are both high-profit and popular. Turning your menu more profitable means downsizing it so you can focus on executing fewer dishes better and considering alternative products and ingredients to cut costs or solve supply chain issues.
Redesigning your restaurant layout can pay off. The emphasis on safety has prompted many food brands to redesign their restaurant: to reduce shared touchpoints, maximise open space, improve air quality, and implement more easy-to-clean materials.
Shifting a restaurant’s layout can also improve much-needed flexibility. For instance, restaurants have to be better equipped to accommodate delivery and take-out orders. Adapting and enhancing the kitchen and back-of-house areas is often necessary. At the same time, optimising these spaces ensures online order flows aren’t disruptive to guests in the restaurant.
#2 Off-premise Dining Is Evolving
Delivery under fire. 59% prefers to collect the food themselves. Third-party delivery services cost consumers 40% more and restaurants 30%.
While food brands no longer depend solely on delivery and takeaway to survive, off-premises ordering still isn’t going anywhere. Consumers visit restaurants more often, but online delivery and takeout platforms still attract vast (and hungry) audiences looking to enjoy restaurant quality from their homes and workplaces.
Ghost kitchens open doors to customers.
Delivery under fire. Despite its popularity, the online food delivery space has come under fire. Consumers and restaurants have become more aware of issues surrounding food delivery companies. Critics claim that third-party delivery services can cost consumers 40% more and restaurants 30%. Additionally, there are numerous accounts from delivery couriers who face poor working conditions, benefits, and low wages.
Alternatives to capture off-premises orders. Without a doubt, third-party food delivery platforms will feel the added pressure as restaurants look into other options to capture off-premises orders. This year, we’ve seen that many restaurateurs arecreating their corporate online ordering stores to own the entire experience, get big data, and directly receive customer feedback.
Direct orders. Conversely, a recent study from Sense360 showed that 63% of consumers prefer to order directly from restaurants. This encouraging trend confirms customers are rallying behind their favourite local business owners to help them weather these difficult times. (Also see #5)
Order-ahead pickup. With this in mind, it’s no surprise that order-ahead pickup is gaining momentum. A recent study by Statista found that 59% of customers, on average, would be willing to spend more money on food services if they could purchase online but collect the order in the establishment instead of having it delivered. Pickup also makes sense from a restaurant operator’s point of view, as it is cheaper, and the restaurant remains in control of all touchpoints (see also #5 D2C is picking up speed).
Host kitchens bring in up to 20% in additional sales. Win-win.
The past years have seen a significant uptick in high-profile brand collaborations. For instance, we saw Lionel Messi teaming up with Hard Rock Café to create the Messi Burger. Coca-Cola collaborated with Marshmello (the artist) to launch a new limited-edition drink.
Restaurant brands use collaborations to reach new audiences in a low-cost way.
There’s more.
Cross-brand. The restaurant industry also developed various cross-brand collaborations, initially set up to survive the pandemic. But these collaborations proved so flourishing – as they allow brands to reach new and relevant audiences cost-effectively – we predict many more of them in 2023.
Dynamic pop-ups. Established restaurants opened up their kitchen and dining spaces after-hours (or off-peak) for other, less-known or start-up brands to use as a pop-up restaurant – and a stepping stone.
If you want to spin the pop-up concept, you can invite guest restaurants to come and cook in your establishment and collaborate on menu items. In Texas, for instance, the nationally acclaimed restaurant Suerte asked a range of restaurateurs for their Taqueria Takeover.
Host kitchens. The host kitchen is another collaborative concept that’s been gaining popularity and will continue to grow.
Host kitchens are restaurants leveraging their kitchen facilities to prepare other brands’ menus strictly for delivery. The model’s a win-win: it’s a low-cost option for brands that want to expand or enter new markets, while the host kitchen can operate at maximum efficiency and bring in at least 10 to 20% in additional sales.
Exclusivity. Ghost kitchens are partnering with celebrity chefs to create unique delivery-only dishes, helping boost each other’s brand by reaching new audiences.
A restaurant faces many challenges. Staff shortages, price inflation, and supply chain issues like stock shortages were all on the menu in 2022. That said, food businesses didn’t sulk. They seized the moment to optimise processes and find ways to extract more value from resources. Digital transformation proved to be the way forward.
Food businesses seized the moment to optimise processes and find ways to extract more value from resources.
End of the spray-and-pray approach to technology. Whereas haphazard choices characterised digitalisation in recent years, today we see F&B operations developing a thought-through tech strategy. They make targeted choices for both the customer-facing side of the business and the back end to bring greater efficiency to their day-to-day operations.
The traditional restaurant has become a digital restaurant. As in other industries, technology is helping restaurants increase convenience and reduce the margin for error. That way, quality can be kept high, costs low and employees happy.
Foodservice operations deploy tech to simplify and automate business processes, allowing them to process orders faster and more accurately and communicate easily with staff across multiple locations. The insights generated by restaurant analytics software make them more aware of productivity and business needs.
Remove friction. Data-driven restaurants continuously gather data from multiple sources, using the combined insights to improve operational and resource efficiency.
The holy grail of modern restaurant technology is its ability to capture 360° customer data, often by using open APIs and real-time insights. This, in turn, enables restaurants to interact with customers in the best way, personalise marketing, and build long-lasting relationships. But that’s not all. The increased efficiency frees employees’ time, helping them focus on the guest experience.
As a result, digital restaurants can guarantee an exceptional experience to customers and employees, regardless of channel, place, or time.
63% of consumers prefer to order directly from restaurants. 60% of US consumers buy more groceries online.
A recent survey from Sense360 showed that 63% of consumers prefer to order directly from restaurants. Online food orders aren’t going anywhere, so it’s no surprise that restaurants are exploring 1st party ordering channels to reap the many D2C (Direct to Customer) delivery benefits.
3rd party online ordering is still king, but 1st party could snatch the crown.
Benefits include:
End-to-end control of the ordering and delivery experience
Ownership of customer data which enables personalised marketing and relationship building
Getting more insights into sales and consumer trends, facilitating new product development
Better margins as you eliminate the middleman (in this case, third-party delivery services and fulfilment partners)
Developing an in-house app for online orders that offers a top-notch user experience seems to be the biggest challenge at the moment. We see things smoothing out in the short term, though. Well-performing solutions have already entered the market.
Restaurant brands are testing different strategies to lure customers away from third-party platforms to their own apps, but don’t write off third-party platforms just yet. Even though D2C offers opportunities for better marketing and bigger margins, the platforms that saved restaurants during the pandemic are still powerful in attracting new customers.
This is why we see restaurants taking a two-pronged approach when it comes to online ordering. They continue using third-party options while improving their corporate platform and digital marketing.
OLIOLI, a leading poke bowl brand from Denmark, for example:
Food operators adopt a mix of 1st and 3rd party online ordering apps.
#6 Ghost Kitchens Are Switching Things Up
The ghost kitchen concept – delivery-only restaurants without a storefront – has seen explosive growth over the past few years. Unfortunately, that has resulted in delivery platforms like DoorDash and Uber Eats being overcrowded with ghost kitchens and virtual brands. And with more consumers returning to in-house dining, these brands may find it challenging to stand out and build a loyal customer base.
Hybrid ghost kitchens open doors to let customers in.
Strategy & efficiency. Ghost kitchens looking to succeed need to double down on their marketing strategy, ensure their kitchen runs as efficiently as possible and optimise their menu.
Hybrid models. This year we’ll see dark kitchens switching things up by adopting a hybrid business model, including multiple sales and fulfilment channels. We predict an increase in online orders with pickup and on-premise takeout orders via self-service kiosks for Europe. Dark kitchens are turning to self-service kiosks to improve customer service and connect with customers on-site. Additionally, the kiosks allow ghost kitchens to gather customer data and provide tailored offers and loyalty programs.
Food halls. We’ve seen ghost kitchens open up food halls where multiple restaurants come together in a shared kitchen and dining space with an online ordering option. The benefit for customers is that they aren’t limited to a specific cuisine or brand. The same order can include items from the menus of Pops Pizza, Big Ben’s BBQ Ribs and Kaiser Soze Pad Thai.
Collaborations. Another great way to add value to your ghost kitchen or virtual restaurant is by collaboratingwith other popular brands and chefs to create exclusive delivery-only dishes or give a (limited-time) spin on your signature dishes.
#7 Traceability And Sustainability On The Menu
Today’s consumers are increasingly more concerned about the nutritional values of their food and where it comes from. The growing demand for transparency is closely linked to sustainability and traceability, so it will be imperative that food brands can meet their customers’ requirements. At the same time, operators are looking for ways to get a better grip on the supply of raw materials.
Sustainability and a better grip on the supply chain go hand in hand.
Sustainable and plant-based food in demand. The pandemic has led to a change of perspective regarding food transparency. Essentially, consumers across generations are even more conscious about buying and consuming local produce, organic ingredients, and food beneficial to their bodies and the planet.
MAX Burgers, for example, the hugely popular Swedish chain, serves climate-positive burgers, meaning the company captures more CO2 than it emits.
The plant-based food trend, which has been going strong for the last few years, ties in with conscious consumerism. In 2022, some of the world’s biggest fast-food chains introduced new vegetarian menu items, like KFC’s plant-based fried chicken, McDonald’s meatless McPlant burger, and Chipotle’s vegan chorizo. So it’s safe to say plant-based alternatives aren’t going to disappear from the menu in the coming year(s).
Vertical farming is on the rise. Another trend that will continue to grow in 2023 is vertical farming, which marks a new era of sustainable food production.
Vertical farming uses indoor facilities to grow crops vertically in a weather-controlled environment. This way of working allows farmers to use technology better to achieve greater efficiency and more consistent food quality.
Vertical farms typically use less water and fertiliser and eliminate the need for pesticides, significantly reducing their environmental impact. Additionally, as they are located indoors, vertical farms can be set up almost anywhere in the world. That means these farms don’t stretch the supply chain, require less shipping (and create fewer carbon emissions), and maximise natural resources.
That’s why food brands that want to future-proof their supply chain are exploring new collaborations with vertical farms to answer consumers’ growing need for sustainable, locally-sourced ingredients.
Food traceability is gaining momentum. Hospitality and food companies are responsible for the provenance of the products they produce, distribute, and sell. As mentioned earlier, the growing need for food transparency goes hand in hand with traceability. That’s any food business’s ability to track food through the production process.
Traceability doesn’t just enable food brands to show diners where the food comes from. It also allows them to mitigate and manage risks around food recalls and food-borne illness outbreaks. Traceability efforts are gaining importance given the large (and ever-rising) numbers of multi-property restaurants and brands with central production kitchens distributing food across locations.
Therefore, restaurants and other food-service businesses want to create an end-to-end, real-time overview of their supply chain that enables them to become more resilient, reduce risk around recalls, and save time.
Restaurant Trends 2023 – An Open Mind and Flexibility Are Key
If one trend stands out in 2023, it is that restaurants that are ultra-efficient, flexible and able to adapt to changing consumer trends are likely to be the most successful.
While that’s nothing new, current economic challenges like inflation, supply chain issues, unseen energy prices, and staff shortages can make it hard for food brands to remain proactive and shift gear quickly.