10 Emerging Restaurant Trends to Watch

CHICAGO -- Technomic’s newly released Top 500 Chain Restaurant Report for 2017 uncovered several industry trends that are greatly influencing foodservice. The annual report kicked off with 10 key themes and highlights, which revealed the trends that took root in 2016 and are now guiding shifts in growth at restaurants this year.

Analysts touched on a wide spectrum of developments, from operational challenges related to labor, to slowing sales and traffic, changes in consumer definitions of health, and flavor trends that are continuing to gain a foothold.

While Technomic’s flagship study is geared toward the restaurant-chain market, there are lessons for the retail space, especially as convenience-store menus continue to expand and c-store foodservice customers are increasing their visitation.

Here are 10 trends to watch in coming months ...

Not surprising, the biggest slowdown in 2016 came from the full-service restaurant (FSR) segment, dropping from 4% sales growth to 1.4%. Of the top five largest full-service players, three had negative sales and the remaining two saw sales slow. Many of these segment leaders are reworking their brands to gain back traffic in 2017.

Within full service, it is worth noting that two segments have positive sales growth: polished casual (up 4.3%) and fine dining (up 4.9%).

Over the past year, the fast-casual segment posted single-digit sales growth instead of its usual double digits, moving from an 11.8% increase down to 8.0% in 2016. Segment struggles include greater competition and the inability to always deliver the original value proposition associated with fast casual. Food-safety issues from segment heavyweight Chipotle are also contributing to a weakened performance by fast casual.

Some of Technomic's fast-casual menu categories are continuing to show strong sales growth, however, including the specialty, chicken and Asian/noodle categories.

Overall, the Top 500 restaurant chain segment saw solid performance in 2015, with total sales up 5.2% and total units up 1.9%. However, 2016 saw sales drop to 3.6% and unit growth fall to 1.7%. This signals decelerated same-store-sales growth at restaurants.

Factors that could be contributing to lagging same-store sales include declining check averages and reduced foot traffic, particularly in light of more affordable grocery prices that make dining out seem less appealing.

As minimum wages increased across the country and the labor pool tightened in the past year, restaurant operators are faced with the challenge of finding ways to offset higher costs without driving away customers. This continues to prove especially tough for operators trying to hold down menu prices.

Federal immigration enforcement will not only continue to create labor uncertainty but could also trickle down to affect commodity prices, which will likely have further cost repercussions for restaurant operators.

Last year, full-service operators started to rethink the way they do business by heavily promoting takeaway, delivery and catering services in response to a consumer shift away from dine-in occasions. The Cheesecake Factory, Red Robin and Applebee’s are just some of the brands that began offering or testing delivery in 2016.

This type of service format is increasingly becoming an option for FSR consumers in 2017. The growing strength of the trend means that full-service operators will have to further adapt their operations to satisfy the value and convenience needs of consumers and recoup lost traffic.

Consumer definitions of clean eating are now mostly focused on the absence of additives and the humane treatment of animals. Operators are taking note by spotlighting clean-label buzzwords such as antibiotic-free, GMO-free and preservative-free, while cage-free and grass-fed are among the leading animal welfare claims on the menu.

Beyond clean-eating labels, other health-driven trends that are building momentum include the use of natural sweeteners and real ingredients.

Plant-based dining turned more mainstream in 2016, and the movement toward meat-free dishes continues to gain steam. The use of new meatless options that provide a taste and texture akin to meat is encouraging diners to go meatless without the fear of missing out on flavor. A root-to-stem movement is leading more chefs to use all aspects of produce on the menu to help eliminate food waste.

While veggie innovation remains at the heart of the meatless movement, jackfruit and other fruits are also taking a central role on the plate.

As Sriracha continues to transition into a mainstream ingredient, operators are looking to new global markets for the next big ethnic flavor. Enter ghost pepper from India, sambal from Southeast Asia, gochujang from Korea and harissa from North Africa.

This shift beyond Sriracha shows more willingness from consumers to try flavors, ingredients and dishes from specific countries and even regional variances within countries.

New chicken-focused restaurants feature better-for-you and premium takes on the American favorite, while established Top 500 chains are following suit with craveable chicken launches. Culinary innovation is centering on chicken tenders, fried chicken, chicken sandwiches and grilled chicken, while buttermilk is in the spotlight as an ingredient in biscuits, either as a side or breakfast sandwich base.

Operators are also taking advantage of chicken as a platform for a variety of flavors. Noteworthy flavor pairings include chicken with honey, harissa or ghost pepper.

While millennials remain a key demographic for restaurants, starting last year, Technomic saw more operators showing interest in learning the habits and preferences of Gen Z. Although this cohort is years from coming into its full spending power, operator efforts to build brand loyalty and create lifelong customers are already underway.

Convenience by way of takeout and delivery, affordability, trending technology and customization are some attributes that Gen Zers seek in their foodservice occasions.