Similar to how Philadelphia was rebuilding after a catastrophic fire in 1730, the restaurant industry has been dealing with its own inferno in the form of the coronavirus, ongoing labor issues, and changing consumer habits.
In 1736, Benjamin Franklin warned the people of Philadelphia, “An ounce of prevention is worth a pound of cure.” Although the line was intended to remind Philadelphians to practice fire prevention, the phrase has grown into a universally applied lesson that holds up almost 300 years later.
You might be wondering why I’m mentioning a line uttered by a guy who died 233 years ago but stay with me. Similar to how Philadelphia was rebuilding after a catastrophic fire in 1730, the restaurant industry has been dealing with its own inferno in the form of the coronavirus, ongoing labor issues, and changing consumer habits.
In the immediate aftermath of the shutdown last March, many concepts quickly learned that they weren’t prepared for anything close to what we ended up experiencing. Unfortunately, what was shaping up to be a great 2020 on paper quickly fell apart, along with the neatly laid technology roadmaps associated with them. Five-year plans were discarded as the innovation timeline contracted from years to months and sometimes weeks.
Necessity is the Mother of Invention
With dine-in no longer an option at the start of the pandemic, digital ordering took on a new life. The segment had been growing in recent years, thanks to changing guest habits, and was spurred on by the desperate need for brands to keep the lights on. According to The NPD Group, digital orders for carryout rose 130% for the year ending in March 2021, compared to the year before. Orders for delivery saw a similar spike, rising by more than 140% over the same period.
Digital ordering wasn’t relegated only to only a couple of segments, either. Full-service restaurants were hit especially hard by the pandemic during the first few months but were buoyed by increased online orders. For the year ending March 31, digital orders from full-service restaurants increased to 16% for the year ending in March, compared to only 10% the prior year.
It doesn’t stop there. Full-service restaurants may have seen a modest increase in digital order share, but when NPD dug into that number, they realized the segment saw a nearly 240% growth in digital orders over the previous year. Quick-service restaurants weren’t left behind. They took the lion’s share of digital orders (86%) and saw 111% growth year-over-year.
For concepts like First Watch, where servers and cooks were operating with tickets moved along on trollies and shouted orders from the cooks, the impact was immediate. Not long after the shutdown occurred, the brand launched a digital ordering system that went gangbusters almost instantly. Locations that were reporting days where they only took in a few hundred dollars were reporting hundreds of tickets, generating revenue at a time when others struggled.
Although most industry experts agree that there will be some cool down of digital orders over the next couple of years, the option is here to stay. In many cases, it adds an additional revenue stream that gets food into the mouths of hungry guests who increasingly demand convenience.
The Resurgence of QR Codes
The QR code has been around since 1994 but saw a resurgence in popularity over the last year. When pressed with finding a contactless way to get menus into guests’ hands, restaurants turned to QR codes. Most phones are equipped to read the matrix style codes, and they can point to any website imaginable, making them a simple go-to for any brand.
The codes have proven beneficial for guests, too. According to a 2020 survey, nearly 40% of people had scanned a QR code while dining at a restaurant over the previous six months. By containing everything guests need within the QR code, including menus, payments, and receipts, guests don’t have to interact as much with their servers while still receiving excellent service.
Although the jury still seems to be out on whether paper menus are a thing of the past, there is a contingent of guests who like the simple, tech-driven approach to eating out. It’s also important to keep in mind that while some restaurants have gravitated toward one-time-use menus – which is fine in the short term – the environmental and physical costs associated with printing hundreds of menus add up quickly. And don’t even think about adding or removing items after ordering 1,000 menu copies.
QR codes are easy to create, simple to use, and most people are tech-savvy enough to understand them within a couple seconds of seeing them. In fact, for the cost of printing out 1,000 disposable menus, you could implement a software solution to help you generate and leverage QR codes for every table in your restaurant. It also makes it faster and more efficient to make changes to one webpage compared to scribbling to items or handwriting new ones. Lastly, they let operators and owners seamlessly create unique QR codes using their brand’s colors, shapes, and other elements.
These codes can be combined with data from your cloud-based POS system and back-office software to run promotions, track inventory, create limited-time offers (LTOs), and more.
Ghost Kitchens Emerge from the Shadows
In a surprise to no one, brands threw a lot of things at the wall to see what would stick. However, one of the most innovative ideas to come to the forefront is the ghost kitchen. These virtual restaurants usually don’t have storefronts but can operate from the same kitchens as well-known brands.
For innovative brands that want to experiment with new cuisines, new locations, or twists on already popular items, ghost kitchens fit the bill. Easy to launch, easy to kill, and designed to operate with as little space as possible, ghost kitchens largely rely on delivery and takeout to get food out of the kitchen and into their guests’ hands. They also tend to be very digital-forward, living and dying based on the power of their online presence.
Large brands through the quick-service and fast-casual segments have used ghost kitchens to branch out and serve demographics that may be open to trying new things. For example, Pasqually’s Pizza & Wings was an offshoot of the famed mouse-themed birthday party destination, Chuck E. Cheese, while Hoots is backed by Hooters, Thigh Stop is supported by Wingstop, and large-scale casual dining chains like Applebee’s, Cracker Barrel, and Bloomin’ Brands have launched their own side projects.
Entirely new, turnkey style brands have also jumped into the fray, including George Lopez Tacos, a Nextbite concept created by comedian George Lopez, and MrBeast Burger, a 600-location virtual concept launched by YouTube personality MrBeast and backed by Virtual Dining Concepts. There are no physical locations for these businesses. Instead, they piggyback on existing restaurants and operate out of the same kitchen. Orders can only be taken on their brand apps or through third-party delivery platforms and are only available for delivery.
For most brands, the allure of taking a popular concept and stripping it down to its bare-bones is an easy way to expand into new markets without the risk and cost associated with building a full brick-and-mortar location. It also has a positive impact on smaller concepts, including independent operators scattered across the United States. Wow Bao, which serves Asian street food, has teamed up with hundreds of small businesses to deliver bao to areas it typically wouldn’t reach. With every dark kitchen location, Wow Bao is working with a restaurant operator to generate much-needed revenue and keep the lights on.
Implementation Today, Innovation Tomorrow
Even after being dealt a terrible hand and suffering through a temporarily shuttered industry, brands dove headfirst into the technological revolution. Not because they necessarily wanted to, but out of the simple need to survive.
However, the sudden increase in tech shouldn’t be seen as a one-time growth spurt that fades. Technology doesn’t stop, and the brands that are at the forefront today may not necessarily be there tomorrow. Those who didn’t see the future and plan accordingly are the same brands that shut their doors and never opened them again.
The stakes are too high to sit on the sidelines and wait for the future to come to you. Investing in the right technology today gives you the chance to create modern and exciting guest experiences while safeguarding for whatever tomorrow brings.
Keep an eye on the future. Just like Ben Franklin noted nearly three centuries ago, preparation today beats catastrophe tomorrow. And just because today’s solutions address today’s problems doesn’t mean they will apply forever.
Other Recent Articles
How Restaurants Can Combat Food Supply Issues
If you’re looking for a perfect storm of how supply and demand have left us all struggling, look no further than the humble chicken wing.
What is Menu Engineering?
Simply put, menu engineering is the art of determining how profitable and popular menu items are at your restaurant.
How QR Codes Improve Restaurant Operations
Though quick response (QR) codes have been around for decades, the pandemic has created the need for a contactless way of interacting with customers that is speedy, accessible, and convenient.