Who needs another six months to declare the major restaurant trends of 2019, a year likely to be remembered more for “Game of Thrones” than any taut drama unfolding in the food and beverage business? Yet it, too, could boast of fire-breathers, cutthroat competition and keen, bloody action.
Here are a few likely inclusions from the promo reel:
Chick-fil-A becomes the yardstick
Once upon a time, the most-watched (and copied) concepts in the business were arguably Chipotle and Starbucks. Now it’s the quirky chicken chain that’s setting the pace and turning heads with its astounding results.
On first flush, Chick-fil-A is an anti-innovator. It still closes on Sundays. It has yet to add a faux chicken product. It’s not updated its employment practices to entice prospective hires with BMWs, five months of parental leave or paid sabbaticals. Significantly, it’s not shirking a Christian background that’s kept the chain embroiled in controversy.
But close observers note the brand goes to considerable lengths to avoid stagnation. It’s experimenting with ghost kitchens and delivery-only stores. It continues to innovate “clean” menu items. Media reports in the chain’s hometown of Atlanta say the company bought a 50-acre plot outside of the city. Yet Chick-fil-A won’t say why, or how it intends to use the land.
But the reason eyes are fixed on the brand is its phenomenal sales growth. In five years, the chain’s systemwide sales have grown by $5.1 billion, hitting $10.2 billion in 2018, according to Technomic. That’s more than the total intake of Chipotle.
My colleague Jonathan Maze usually gets things wrong, but he may have hit the rule-proving exception with his assertion that Chick-fil-A, not Burger King or Wendy’s, is McDonald’s keenest competitor.
Meet the opportunists
A decade ago, ownership patterns were disrupted by private equity’s charge into the business. While Brinker International, Bloomin’ Brands and other portfolio companies were shedding brands, investors such as Sun Capital and Roark were building sizable stables through acquisitions.
Now a new type of chain buyer is on the prowl. Seeing opportunities in brands that need a cane to stay upright, they’re collecting distressed operations at a rapid clip. They’re the industry’s equivalent of garage-sale shoppers, buying up what others might regard as junk with confidence they’re walking away with a true find at an astonishing price.
Consider that MTY Food Group, a little-known operation five years ago, now lists 78 brands in its portfolio, including Papa Murphy’s, the 1,300-unit brand it acquired in May for about $190 million.
West Coast Capital is now a major force in the Asian market with a portfolio that includes Pei Wei Asian Diner, Pick Up Stix, Leeann Chin and Mandarin Express.
They join opportunists such as Elite Restaurant Group (Daphne’s, Slater’s 50/50, Patxi’s Pizza), Food Management Partners (Ryan’s, HomeTown Buffet) and High Bluff Capital (Quiznos, Taco Del Mar).
The menu trend of the year, hands down, has to be the industry’s embrace of faux meat options. The list of concepts adding what are probably the best-known meat swap-outs, the Impossible and Beyond Meat burgers, is longer than the roster of Democratic presidential candidates.
But those are just the marquee examples. BJ’s Restaurants offers a line of fake chicken options. Lazy Dog Cafe’s new summer menu includes falafel tacos. New to the menu of 11-unit Original ChopShop are two “beet-centric” selections. Bahama Breeze is featuring a vegetable plate. Del Taco sold about 2 million tacos made with Beyond Meat’s faux ground beef.
All told, the number of restaurants featuring meat substitutes has risen so far this year by 26.4%, and sales of the fakes have soared 268%, according to purchasing cooperative Dining Alliance.
Still, the trend is hitting some speed bumps. For one thing, chains dreaming of joining the parade are hesitant because supplies of many meat replacements are limited. Shortages have stung Red Robin, White Castle and Dave & Buster’s, among others. The tight supply has pushed up the price of meat analogues by 29%, according to Dining Alliance.
Plus, scoffers still abound, from Taco Bell to Shake Shack.
While flexitarians pick seeds out of their teeth, nostalgia continues to fan the comfort-food trend. The newest evidence is the widespread addition in 2019 of creamsicles and their derivatives—the treats that combine orange sherbet and vanilla ice cream into a tart, milky delight.
Dairy Queen was an early entrant with its Dreamsicle, a cone of soft vanilla ice cream with an orange outer coating. Other converts include Dunkin’, with a creamsicle addition to its Coolatta cold drink line, and its sister concept, Baskin-Robbins, with a creamsicle milkshake. By Chloe offered a version in smoothie form. Even Coca-Cola has added topspin, introducing an Orange Vanilla Coke in February.
Most cheered and jeered development: Delivery
Sending orders to consumers’ homes is either the industry’s salvation or growing cancer, depending on whose assessment you solicit.
There’s no denying that sales of meals for home or office consumption are booming. Delivery sales totaled just under $35 billion in 2017, according to Technomic, and growth has likely accelerated since then. Just the portion generated by third-party services such as Uber Eats and DoorDash hit $9.8 billion, the researcher says.
But the impact on the bottom line is still a topic for spirited discussion. Outback Steakhouse parent Bloomin’ Brands says it’s cracked the code: Delivery is both incremental and profitable, executives attest. The service has also expanded the sales and customer pool of Wingstop, according to CEO Charlie Morrison.
One of the prominent holdouts, Chili’s Grill & Bar, says it’s sufficiently confident of a net gain that it’s taking a systemwide plunge into delivery after a lengthy assessment. Dunkin’ is also expanding delivery to all units.
Yet it’s doubtful that strong performers such as Olive Garden and Texas Roadhouse will drop their resistance and add delivery anytime soon. It leaves many operators in a dilemma: Do I jump aboard this bandwagon, or figure it’s just a matter of time until the wheels fall off?
Next 'silver bullet': Catering
The industry is far more united in its assessment of another form off-premise business that’s taking off: catering, or what amounts to the delivery of large orders.
Chains of all stripes and sizes have been charging into that market, from Red Robin to Bloomin’. “We see this as an opportunity to tap into a new guest occasion and category, as well as another important way to grow our average check and profitability,” BJ’s Restaurants CEO Greg Trojan told investors in April.
Meanwhile, earlier converts are tweaking their programs to cast a wider net. Olive Garden, for instance, is now accepting next-day orders until 5 p.m., instead of the 24-hour lead time it formerly required. The $100 minimum has been dropped to $75, which puts that form of delivery within reach of couples, according to parent Darden Restaurants.
Chipotle has similarly lowered its minimums.
The question is how big that market can become. Technomic has estimated the current size at $60 billion, with an annual growth rate of 6%, or roughly double the gait of the industry’s overall growth rate.
How big of an opportunity will catering become for restaurants in 2019? Check back with us in six months.