What can the restaurant industry expect in 2018?
2017 brought new waves to the forefront of the restaurant industry, as expansive menus were streamlined, off-premise operations gained strength and restaurant acquisitions kicked into overdrive. Here’s what RB’s editors think will change the tides in 2018.
A new term to replace 'restaurant'
The restaurant industry has no problem coming up with new verbiage to define some modern twist on a segment or menu category (just look at “fast fine,” “polished casual” and all the other Frankenstein terms of recent years). So, it wouldn’t be a surprise should some alternative term arise for “a business establishment where meals or refreshments may be purchased,” which is how Merriam-Webster describes the operation formerly known as a restaurant.
Is “restaurant” still fitting now that four walls, seats and even kitchens aren’t required? Do convenience stores and grocery stores now get to call themselves “restaurants” if they sell meals and refreshments? If not, you can bet the industry will cook up a different moniker to do the job.
A diversity reckoning?
In 2014, RB posed the question, “[Are] Black CEOs disappearing?” Back then, there were six African-American chief executives among the restaurant industry’s publicly traded companies at a time when only seven held a ranking in the Fortune 500. Today, there are just four black CEOs in the Fortune 500 (which will be three when American Express’ Ken Chenault steps down as planned in early ’18). And five of the six restaurant CEOs referenced in 2014—Clarence Otis Jr. of Darden, Steven A. Davis of Bob Evans, Don Thompson of McDonald’s, James White of Jamba Juice and, most recently, Alwyn Lewis of Potbelly—are gone from their jobs. Only Lenny Comma remains at Jack in the Box.
Although it’s lonely at the tippy top for African-Americans, notable moves have happened in the C-suite. For example, Starbucks’ appointment of Sam’s Club CEO Rosalind Brewer to its COO position. As we wrote back then, diversity throughout an organization, including at the highest levels, is a driving force for innovation, employee retention, customer engagement, financial performance and more. As restaurants strive for all of those results, having an inclusive workforce and leadership is an important piece of the pie.
The meal-kit bubble bursts
Like dinner-assembly places a dozen years ago, meal-kit providers are going to peak soon. There will be some consolidation, and some complete closures, and the financing will move elsewhere. Their target customers have already tried them, and many have found it’s easier—and much cheaper—just to shop at the store or online for the ingredients and then use the recipes they liked. A few may be left, after the bubble bursts—those with the best value and experience, and those that are specialized for certain diets.
Someone will open a “treat yo self” concept. This brand will proudly boast about its indulgent ingredients: butter, sugar, animal fats, well-marbled red meat and more. Sure, the menu will display the required “nutrition” information. But the customers won’t care, because they’ll be there for the cheesy, gooey, greasy deliciousness.
Pasta fast casuals rise to prominence
Watch out, Fazoli’s—leaders have begun seeking to make their own mark on the pasta fast-casual segment. Mark Ladner’s Pasta Flyer opened in New York City late last fall and Giada De Laurentiis is looking to open a pasta fast-casual chain after testing a similar concept through a pop-up dinner in October. With big names such as these hopping on pasta fast-casual bandwagon, more could follow this year.
As the customization trend matures, the move toward the hyper-personal will power forward. Individualized nutrition will get more play at some concepts, as consumers continue to look beyond a one-size-fits-all approach to eating and wellness. Ingredients purported to enhance mental and physical function will take center stage, particularly at growing health-focused fast casuals. But it may not be too long before the butter coffee buzz cools off.
Signs of the times
Restaurants tout guest experience captains and the like—on hand to guide customers through a tech-fueled, self-serve experience—as the future of hospitality in an automated world. But these staffers have a decidedly low-tech partner in this equation: signage. Wordsmiths should prepare to dust off their resumes, as restaurants look to spell out, literally, what customers need to know on a sign or on a self-ordering screen. Successful signage means guests have fewer questions, allowing these customer-focused staffers to concentrate more on enhancing the experience and less on showing people how to work a kiosk. Well-informed customers also may mean restaurants need fewer dedicated guides—a potential cost saver.
Doubling down on IT
As operators continue to mine data for consumer insights and try to keep their businesses safe from data hacking, IT will play a more prominent role in the coming year as chains look to build up their IT departments. Jersey Mike’s is considering adding top-notch employees to its IT team to keep up with tech superstars such as Cava and BJ’s Restaurants.
The restaurant industry is cyclical, like most businesses. When customer traffic starts to slow, as it is now, companies focus on improving operations in existing stores and strengthening the things that made them successes in the first place. We’ll see more moves like Jack in the Box’s sale of Qdoba, Burger King’s emphasis on flame-grilling and Chili’s reprising its baby-back ribs jingle. Act surprised if TGI Fridays starts counting down like it’s New Year’s Eve every week or Carl’s Jr. takes salads off the menu.
A service revolution
The industry has seen a revolution in food quality and transparency. Many consumers can now taste the difference between a fresh locally laid egg and one that’s been in the cooler for a while. It’s time that service undergoes the same treatment. Many servers are well trained and obviously knowledgeable. But in a time when restaurant occasions are a commodity and the employee pool is shallow, waitstaff and order takers who can curate an experience or tailor their service to the customers’ mood will be a competitive advantage.