Foodable's 2019 Predictions for the Restaurant Industry

Predictions are always a love-hate thing for me each year, it means I have to look deep into the industry and into my past 20+ years of reporting, indexing and analyzing with the leading foodservice operators in the world. Sometimes this analysis reveals the good times to come for the industry and sometimes it does not.

Last year, six out of eight of my predictions were right, most of which were easy to consider, but if you think about the timing in 2017 to detect these market shifts you have to be somewhat of a fortune teller and very lucky to get these right.

I was right on with plant-based menu items taking off, coffee trends ramping up infusions and even the beverage industry taking a hit in spirits, wine, and beer, the most troubling was the 8 percent overall drop in the industry prediction that turned out to be pretty accurate at 7.8 percent, according to our Foodable Labs data.  

2017 was not a great year for many, but the few emerging brands that excel did so in double-digit fashion.  

Unfortunately, I don't think this can continue. The bigger concern I have for 2019 is the overall health of our industry. Closings will continue like always but we will see some closures of brands we may have thought to be bulletproof just a few years ago.

Without further ado, let’s move on to my 2019 Predictions

Check the video above for more of my commentary on these predictions, but this will give a quick read on where I think the restaurant industry is going in 2019.

Plant-based is on a maverick of a wave that I don't see slowing down anytime soon, in fact, my recommendation to any protein producer is diversification and to double down on quality and animal welfare.

Facebook is in real trouble with the foodservice and foodie crowd with continued falling engagement levels to that of 2014. I don't see this turning around for the platform at all and the move to Instagram ads and destroying that platform may be their only hope before the feds scoop in with regulation.

I fear the ultimate breach will occur with foodservice, If I were Starbucks, I would Fort Knox that mobile app before we see a big hit on what could affect as many as 1 billion consumers. Big tech will continue to get pushback from consumers and though 2019 won't be the year for deregulation 2020 will be a campaign trail mantra for sure.

Airbnb, Amazon, and Uber will all reach a new level of innovation in food, and not in the ways you might think.

Amazon will take a new role as a ghost restaurant operator, Airbnb will take up restaurant reservations, and Uber will have to go head to head with the industry to win out in the delivery game

The emerging 150 brands will continue their trek on obliviating the competition. Watch out for a few of them that will dominate in the regional game like never before.

And unfortunately, the small craft beer makers will start to fall with a downturn in drinking trends and craft beer consumption falling. We will instead see a new landscape of how craft brewers will go to market, let the brew mergers begin.

Like every year, some of my predictions are outside the box and thinking in ways that others don't. What I have found is that if you follow consumer science, technology, and food you have some insights to a crossover matrix that starts to provide early indicators to trends that go unnoticed even in today's always on social media barrage of information.

If you're in the business, this will either be your best or worst year in the last decade. Think of it like this– to quote one of my favorite sayings by Louis Pasteur, “Chance favors the prepared mind” see ya on the backside.

Are you a Chef? You Should be Looking at These Opportunities in 2019

Are you a Chef? You Should be Looking at These Opportunities in 2019

Call it innovation, call it being ahead on trends. Either way, there are untapped opportunities to grow business, impact sales, and develop as a professional.

What’s next for the astute chef that is looking to build fiscal strength and operational mastery?

Delivery is its own segment

Menu engineering that accounts for the booming delivery segment is emerging. But not all dishes do well when they grow legs; Delicate fried items, for instance, get soggy before they make it home. Some dishes, on the other hand, are marvels of transportation efficiency. More of these items are making their way onto menus because these dishes travel best.

Why? Unless you have been unplugged for the last few years, you can’t help but notice that delivery is big, with over 8% growth in the segment projected for 2019. Third party transportation operators are ubiquitous and those with disposable income - yes, millennials - are all abuzz about good delivery options.

Read More

Ghost Kitchens, Abandoning Third-Party Delivery Partners and More Challenges Operators Will Face in 2019

Shutterstock

Shutterstock

While there is a lot of discussion surrounding cannabis within the restaurant space in addition to new spotlights on fermentation, craft ‘tea bars’, farm-to-table (2.0,) breakfast day-parts, and plant-based food – there are also some ‘trends’ we should expect to see from the operations side as we celebrate the beginning of 2019.

Each individual venue, whether it is a restaurant, bar, cafe, food truck, or lounge etc. has their own distinct problems to solve, but the one constant among successful operators that we see today is their ability to adapt to change.

This means adapting to a change in consumer behavior, cost structure, supply chain dynamics, labor dynamics, and their hyper-local market & competition, to name a few.

Striving to manage the ‘unknown’ within these categories, however, can be quite scary for many new or seasoned, independent restaurateurs.

Operators must innovate to adapt efficiently to the ever-changing external & internal economic conditions – something that is incredibly important, and is arguably more important than ever, as we shift focus into this New Year.

Let’s have a look at the most critical changes operators should be adapting to:

Third-Party Delivery Pushback

There’s no question, delivery, and off-premise dining has disrupted and caused havoc on much of the restaurant industry over the past couple of years – and more so in 2018. The economic models and regulations surrounding third-party applications have recently come under scrutiny by consumers, restaurateurs, governments, and even the delivery drivers themselves.

While delivery and off-premise dining as a revenue channel shows no signs of slowing down – expect independent restaurant operators to change focus and develop their own strategy (online ordering + delivery) to effectively control costs and improve profitability (no more 20-30% commissions) while protecting their brand (through better quality control and customer service) and keeping that invaluable consumer data in-house.

Shutterstock

Shutterstock

The Rise of Ghost Kitchens

While independent operators are adjusting to the change in delivery logistics and off-premise dining – they also need to keep in mind another ‘disruptor’ that is starting to emerge. It is what’s referred to as the "ghost kitchen."

These ‘restaurants’ (we use that term loosely) are delivery only and have no typical restaurant venue; where guests can walk in, sit at a table or even pick-up their own takeaway order.

What’s the business model? Their food is only accessible online or through a mobile app, and is exclusive via home delivery.

Thanks to the data that has been made available now to tech giants such as Amazon and the leading third-party delivery platforms (UberEats, Foodora, Skip the Dishes etc.) – expect to see more of these ghost kitchens serving unique dishes with flexible menu options that they know guests will be eager to buy and pay more for due to its level of convenience.

Smaller Foot Prints

Coinciding with the increase in delivery, off-premise dining, and on-demand consumers, expect to see both traditional restaurant start-ups and even already established brands looking to operate out of a smaller footprint.

To maximize a small space that will also drive a high-profit percentage per square foot, restaurateurs need to truly understand their concept inside and out. Operators need to create a variety of financial scenarios and menu choices (and sizes) and determine the absolute minimum needed to execute the concept in terms of space and financial projections.

Smaller spaces utilize minimal expenses in rent, staffing, and other fixed costs - however, smaller spaces often bring in a smaller portion of customers in relation to its size. This is where the right balance in menu prices, menu options, productivity, and the understanding of one’s concept, demographics, and potential flow of traffic throughout its dayparts, is crucial; whether dine-in, take-out and/or delivery.

Shutterstock

Shutterstock

Tablet Hell

How many restaurants are operating with the view of a cockpit at its point-of-sale? It seems every data provider, mobile ordering system, and POS solution provider needs to have their own tablet or screen, creating a nightmare for both front-line staff and management alike.

To ease operations as we roll into 2019 – expect to see further partnerships and all-in-one solution providers to hit the scene, consolidating all of the technology into one, easy-to-use platform.

As we know, communication is fundamentally important in the restaurant space, so it only makes sense that operators should be looking to combine their accounting, inventory, sales reports, labor management, vendor management, online ordering, catering, and delivery logistic communications into one database.

Every operation has a different way of doing business with different uses for data. That being said, while having consumer & restaurant data might seem like the goal, finding ways to turn analytics into actionable items for a restaurant should actually be the mindset; something that needs to be a focus in 2019 to remain scalable, sustainable, profitable, memorable, and consistent!

Labor Consolidation

With smaller spaces in addition to the ongoing changes in how we operate today, and not to mention the always increasing wage structure within the industry – it only makes sense for operators to consolidate their labor. This doesn’t mean burning out employees or giving them more tasks then they can handle. It means finding ways to maximize efficiencies.

As you can see so far, smaller is becoming better. With the increase of open concept kitchens in the smaller foot-print restaurants, why can’t cooks cross-over to be service staff when the meal is ready? Why can’t mixologists and bartenders help out in the kitchen and also close out food orders?

Expect to see more of a blended FOH & BOH operations or a ‘one-house’ approach in cross-training to control labor costs, lower turnover, and maximize efficiency.

Shutterstock

Shutterstock

With all of this said, are dine-in restaurants or your neighborhood pub a thing of the past? Not necessarily, if the operators create differentiation and memorable experiences while they focus on their own branding.

Restaurants today have to compete with supermarkets, food halls, food trucks, meal kits, ghost kitchens, and other third-party applications. The time is now for operators to innovate and adapt to the ever-changing external & internal conditions of this cut-throat industry.

It is possible to be profitable with a strategic mix of dine-in, take-out, delivery, and catering revenue channels if they’re in fact - open to change!