There are two ways to interpret a shake-up: as an upset or an opportunity. Arguably, the outcome is less about the source of disruption, and more about how those affected react.
This is RB’s second roundup of the people, powers and phenomenons administering a jolt to the industry. Like the first list—which included private-equity firms, smartphones, Gen Z and President Obama’s then-idea to upend overtime—these new agitators are bringing change that will reset the way restaurants do business long term for better or worse—depending on what follows.
1. President Trump
What to make of the first full-fledge businessman to be elected president? Some restaurateurs are hunkering down, recalling what Donald Trump has said about such critical issues as the immigrant workforce and paid sick leave. Others note that having chief executive with P&L experience could bring godsends like tax reform and taking a machete to employers’ red tape.
What the country can agree on is that the status quo is about to be disrupted. Trump’s victory could put Obamacare on life support—although post-election, he has said there are pieces of the law he’d keep. And questions loom about whether the new overtime rules might be rolled back, whether the federal minimum wage would be abolished or how restaurateurs would fare if Trump makes good on his pledge to tax small businesses no more than 15%.
For more on how these scenarios might play out, read 5 reasons restaurateurs should be happy about Trump’s win.
“If I had to pick one overall trend [for the next decade], it would be the single phrase: plant-forward,” says Greg Drescher, VP of strategic initiatives and industry leadership at the Culinary Institute of America. And shifting attitudes related to consumers, public health, environment and profitability are converging in a way that makes it seem likely this trend will take root.
For example, the gap between diners’ desire to eat healthy and their actual menu orders is narrowing, according to Technomic’s 2016 Healthy Eating Consumer Trend Report. Additionally, most other cultures already practice a plant-forward diet, and consumer demand for ethnic foods will help drive the movement.
Further, nearly two-thirds of consumers prefer humanely raised meat, as awareness rises about the impact of raising livestock.
And veggie-focused menu items are proving to driving traffic: 37% of diners say they’re more likely to visit a restaurant that offers some healthy options; this as Google, Tyson and investors pump funding into alternative meat exploration and ag tech startups.
3. Water…or lack thereof
By 2025, two-thirds of the world’s population could be under water stress conditions, according to UNWater.org.
Five years later, by 2030, the world is projected to face a 40% global water deficit, finds the U.S. Intelligence Community Assessment of Global Water Security.
4. The shared economy
The founders of Umi Kitchen—a West Point Grad, a former VP of Tumblr and restaurateur Danny Meyer’s daughter—won’t call it a restaurant competitor. But the app that connects home cooks to diners has potential to steal foodservice dollars. Moreover, this Uber of foodservice is the epitome of what’s fueling the shared economy: peer-to-peer sharing interactions into e-commerce. How it works:
Home cooks: “Home cooks must go through an extensive screening, training and evaluation process,” says CEO Khalil Tawil. Once selected—about 50 thus far—cooks get Food Handler-certified, and the Umi team conducts checks to ensure all kitchens meet Umi’s health, safety and quality standards.
In-app diversity: The app offers four to seven meal options that vary daily. Food is picked up from home kitchens and delivered via Postmates. The menu—with food priced at $12, $14 or $16, plus a $3.99 delivery charge—offers a wide array, from Indian and Italian to vegan and Paleo-diet specific
The e-commerce giant has more than just retailers following its every move. And its plans to change the way consumers do practically everything has ramifications for restaurants.
Its new test location of Amazon Go—a grab-and-go concept offering meals prepped by chefs—allows guests to choose items from the shelves and walk out; purchases are tallied and charged via the app.
Amazon’s free restaurant-meal delivery service now extends to Prime members in 17 states. At the same time, the company is continuing its exploration of drone delivery of packages in 30 minutes or less and negotiating with regulators. Could its robots soon be dropping off food?
With ordering and delivery capabilities like these, along with its proprietary food ventures (which include private-label products like snacks, coffee and meal kits), could Amazon be on its way to becoming the next headless restaurant?
Read about more ways Amazon is disrupting foodservice.
6. Automation in all its forms
“Automation is here to stay,” says Anna Tauzin, senior marketing manager for innovation and entrepreneurial services with the National Restaurant Association. “The areas that’ll be automated first: tasks that can be replicated easily. It’s a scary world for employees as well as consumers, because it will eliminate jobs. But it will allow for employees to focus on hospitality.”
7. Silicon Valley
The mind-blowers in the nation’s cradle of technology just can’t stop remaking the restaurant industry. First they redefined service with smartphones and other direct connections to the back of the house, upending the way orders are placed and processed. Now they’re tinkering with the fundamentals of how the food is prepared and presented. The enticement is too strong for the tech heads to function merely as enablers. They’re plunging into the business themselves, hatching and funding tech-rich concepts that shift more and more functions from humans to machines.
- At Zume Pizza, one of the Valley’s projects, three robots replace the kitchen staff. The last cyborg transfers the assembly-line pies to a delivery truck, which a human drives as the food bakes in computer-controlled ovens.
- The time saved by a 400-burgers-an-hour grill robot will let the concept planned by Monument Machines custom-grind each patty. Variables include the proportions of different proteins and the fat content.
- Starbird Chicken, another Silicon Valley upstart, doesn’t have a robot in the kitchen. But homegrown tech enables customers to follow their order as it’s prepared, a capability included in Taco Bell’s newest Cantina.
8. The Shut-In
Today, it’s easier for consumers to get a restaurant-quality meal without leaving home, with a lot of the traffic moving to the web. Some $60 billion of the total food spend occurs online, up from $50 billion in 2015, says Erik Thoresen, principal at Technomic. And many are responding to this shift—some competing with traditional restaurants, some working with them. Here are three ways the foodservice industry is catering to the lack of desire to leave the house.
Groceries at your doorstep: In the U.S., the meal kit business is trending just below $1.5 billion, says Thoresen. When asked what diners would cut back on if they began using meal kits, nearly half said that they would reduce takeout, and 37% would cut dine-in spending, he says. By 2020, Technomic expects subscription services will take $2.2 billion away from restaurant spending.
Hassle-free takeout: Delivery has gone from a perk to a competitive must for many operators. The emergence of Postmates, Door Dash, UberEats and others have proven to be a boon for business for some and a threat for others. At this point, the delivery market is $30 billion, while total off-premise sales ring in around $210 billion, showing that there’s ample room for continued expansion.
The shrinking dining room: If diners aren’t eating out, why have a dining room? That’s the mindset of some delivery-only restaurant operators. These concepts are able to trade on convenience and a mobile presence without the stress of landing top-quality real estate. However, they still aim to deliver a great customer experience, so the challenge becomes how to do that when the interaction with the diner is through an app.
Related: 2014 Disruptors