Readers of any publication that covers the restaurant industry of late have seen a number of new prototypes and ideas that all seem quite futuristic. In Minnesota, for instance, there is a Taco Bell with four drive-thru lanes and elevators that send food down to the customers below. The chain’s president discusses the idea almost like a kid at Christmas, noting that it will cut the drive-thru service times in half.
At Chick-fil-A, the brand has a shiny new concept for a mobile-order drive-thru. Companies as unique as Schlotzsky’s and Tim Hortons are devising small new prototypes that ditch seats altogether, or reduce them considerably. Inside the restaurants, we see robots that make fries and tortilla chips and flip burgers. Artificial intelligence, meanwhile, is increasingly taking customers’ orders at the drive-thru or at least suggesting a drink with that.
All of this is seemingly aimed at a business that is increasingly focused on speed and convenience. Nobody wants to stop and eat their dinner, anymore, and so everything has to be optimized so operators can produce and serve food as quickly and cheaply as possible.
So why can’t I get a reservation on a Friday night?
Demand for experiential dining, where customers visit unique places so they can spend time with one another, remains as strong as it’s ever been. Despite concerns about inflation and an ongoing COVID pandemic, people remain eager to dine at cool restaurants. If everybody just wants takeout, why are these non-takeout-focused restaurants so busy?
The answer is simple. There are increasingly two industries. One of them is increasingly focused on manufacturing, where speed and efficiency are vital and robots will play a greater role in the operation. The other is what we would consider a traditional restaurant where you sit and get served and the only technology is designed largely to delight or it is mostly out of sight.
Those concepts in the middle, including experience-focused fast-casuals and speed-focused full-service restaurants, could struggle going forward.
The bifurcation of the restaurant industry is hardly a new concept. We were speaking about it before the pandemic, when experiential concepts like Punch Bowl Social were thriving alongside takeout and tech-focused chains such as Sweetgreen. The pandemic has accelerated this.
Consumers shifted a lot of their visits during the pandemic toward drive-thrus, delivery, mobile order and curbside service. Restaurant companies have worked to make their businesses more efficient in the process. As the pandemic has given way to a shortage of labor, companies realized this technology was necessary to enable them to do more with less. Efficiency became vital. And customers grew more accustomed to these service models geared toward the pandemic and largely kept using them, even as dining rooms reopened.
But, as the economy has opened up, consumers have flocked to more experience-focused chains. Steak chains have thrived. So have higher-end concepts. The top-performing restaurant chain last year was the steak chain STK and its same-store sales are an ungodly 75% higher than they were before the pandemic.
To be sure, a weak economy could cost much of this business over the next couple of years. Expensive restaurants could take a hit from a recessionary environment and who knows what might happen if we get a stagflation event.
And some full-service business has thrived in part because consumers were simply relieved to dine out, anywhere, after two years being cooped up in the house ordering delivery. It’s certainly possible that the industry will slowly normalize and things will be fine.
And there are clearly some risks associated with this rapid shift from one type of concept to the other. Starbucks, for instance, was designed to be a “third place” for its customers to sit and spend some time and has struggled as it has become more of a traditional manufacturing operation.
Still, restaurant chains that are in the middle, including experience-focused fast-casual or lower-end casual dining, could struggle to keep pace with their cousins on either side of them. Their best bet is to pick one side or the other.