South by Southwest, the 10-day tech and entertainment festival in Austin, Texas, might not be the first place restaurateurs would go to mine for ideas. But we picked up on a number of game-changing trends during our coverage of the event that are sure to impact the restaurant industry in the not-too-distant future.
1. Virtual reality will get real
VR (virtual reality) easily was the most uttered acronym at SXSW. McDonald’s, one of the conference’s sponsors, offered attendees a VR experience at its off-site hospitality space. Participants donned special goggles and headphones filled with happy music, grasped a joystick in each hand and were transported to the inside of a Happy Meal Box set in a virtual world that resembled Teletubbyland. The experience let you paint the sides of the box with neon or rainbow colors while virtual butterflies flitted around.
As Julia Vander Ploeg, McDonald’s U.S. vice president of digital, said during a session, “Digital is about convenience, but it’s also very much about fun.” Separately, members of the team from McDonald’s envisioned using the technology to introduce future prototypes, or perhaps as a future iteration of the McDonald’s PlayPlace.
2. Journeys are the new transactions
One widely retweeted point from futurist Kevin Kelly’s “12 unstoppable forces that will change the world” session during SXSW was, “With virtual reality, we’ll move from the internet of providing things to the internet of providing experiences.”
Experiences is how McDonald’s now is thinking about the amenities it offers customers. For example, wireless charging stations—which it previewed at the tech conference—aren’t just nice to have; they’re necessary for a cashless world where customers will pay with their phones. “If you go all the way through the customer experience, having power to do these things is part of what is going to make it work,” said McDonald’s Vander Ploeg.
Asked how the burger chain is handling global payments, Vander Ploeg explained, “We created a global digital function that would look at customer journeys and identify the [experiences] that should be universal.” But how McDonald’s deploys these ideas in individual markets varies. “It’s a way to be fast with how we’re moving in digital and still be smart about what the local market wants and needs,” she said.
3. Doing good will be a must-do
Max Levchin, the co-founder of PayPal who also helped launch Yelp, named beneficence, or “active kindness,” as one of four unstoppable waves changing the world.
The benefits for restaurants are obvious. A study released by Hill+Knowlton Strategies during SXSW confirmed what many already knew: 85 percent of consumers would be more likely to buy a product from a fast food restaurant that’s pursuing initiatives such as antibiotic-free chicken and cage-free eggs, and almost as many would be willing to pay more for it.
But doing good comes with challenges. Explaining the bumps on Chick-fil-A’s path to menuing antibiotic-free chicken by 2019, CMO Jon Bridges said “scaling for good” takes a lot of time for a chain of size. Its efforts must go from the CEOs of its chicken suppliers down to the family farmers who grow the chickens. “We wanted to take our suppliers with us, so we had to give them time to go with us,” Bridges said.
Chick-fil-A justified the investment of time and money, Bridges said, because as a leader, it wanted to lead. But companies may not always get credit for their good will. According to the H+K research, only 4 percent of consumers think QSRs are improving the healthfulness of the food they serve because company leadership thinks it’s the right thing to do.
4. Cars will disrupt everything
Asked what industry is most ripe for disruption in the next two years, entrepreneur and early-stage investor Ted Serbinski outlined the case for transportation. “We see a trillion-dollar opportunity in the automotive industry,” he told the crowd inside the McDonald’s Lounge at SXSW, which included startup companies.
Transportation and mobility have lots of different angles now and in the future. That may be as part of the transaction, in the instance of Apple CarPlay or a connected-car initiative Visa is partnering on with Honda, discussed at the tech conference.
Or it may be how businesses deliver their product to customers. Domino’s recently began running commercials touting its DXP delivery-focused car. UberEats’ whole model is developed around toting a limited menu of items from restaurants in drivers’ cars for delivery within minutes.
And the advances aren’t just on the consumer side, speakers said. How businesses ship products within the organization or from one to the other also is expected to evolve, so companies will need to think holistically.
5. A different kind of health threat
A new wave of tech products is putting the power of checking for contaminants or allergens (such as gluten) in consumers’ hands, a boon for sure for people with allergies.
But in an environment where Yelp reviews go beyond how the food tastes, and gross-out photos go viral faster than pretty food porn, restaurateurs need to be particularly conscious about their "free-from" claims. Although such devices typically can read only packaged foods, restaurants that use such products as ingredients may be vulnerable. Plus, restaurant-food readers may not be far off.
Some manufacturers have issued do’s and don’ts for consumers using the devices, because “we don’t want people pointing fingers at restaurants,” said one such representative during a SXSW breakout. Whether consumers will follow those recommendations is the question.
6. Tracking with a conscience
Another tidbit from futurist Kelly’s “unstoppable forces” general session: “Anything that can be tracked, will be tracked.” While the prospect may give some consumers the willies, restaurant companies already are looking for new and greater ways to leverage the information they collect from consumers, and contact lists came up in multiple panels about payment and customer engagement.
Kelly added that while we can’t stop tracking, we can civilize it with “coveillance,” a transparent mutual agreement that allows for watching the watchers.
7. Customers will define your brand
The benefits to offering customization and personalization are clear: Customers are demanding it, it’s fun, it empowers them with a sense of choice and control, they can express themselves, and the list goes on.
But as more customers put their own stamp on a company’s iconic burger or drink, operators are wrestling with how to retain the identity of their brand and its core items. “It puts a lot of pressure on the brand people and brand owners to decide what the brand at its heart stands for,” Silvia Lagnado, McDonald’s global chief marketing officer, said to fellow marketers.
“The days of us deciding what the brand stands for is gone. The consumer will decide what we stand for, but you [the brand] still project your values and your points of view, and then you co-create.”
8. AI + humans = hospitality
Ok, yes—futurists have been predicting robots’ takeover since the Stone Age, it seems. But speakers at SXSW are sure artificial intelligence’s time has come.
Offered futurist Kelly about the inevitability: “Next 10,000 startups = take X, add AI.”
Robots will take humans’ jobs, but it will be the ones we were ashamed we ever did—jobs around productivity, leaving room for humans to focus on creativity.
The human complement to technology was a common theme. Investor Levchin named “human-assisted AI” as another unstoppable wave changing the world.
And explaining McDonald’s test of cashless payments through Google Hands Free, McDonald’s Vander Ploeg stressed the human side: “There’s still interaction with customers.” Crew members ask customers for their initials and confirm their identity against a picture that pops up in the POS, forcing eye contact. “It might actually humanize it a bit more,” she added.