The 2021 Prognosis for the Restaurant Industry
Recovery, Growth & Birth are all on the cards with inoculation against Covid-19 in full swing
As we prepare for a new year and the proverbial fresh start that it offers, we optimistically anticipate the road to recovery from the most unpropitious times that our industry and community have had to endure. Surely the situation we find ourselves in towards the (beginning of the) end of this pandemic, with vaccines being approved and administered, is one that instills confidence in a brighter future and the onset of a cycle of prosperity for the food & dining business.
2020 was a year that comprehensively tested the fabric of our existence, a fact exemplified by the number of restaurants that closed permanently, but it was not without its silver lining…
Whether that refers to the groundbreaking innovation in restaurant technology, radically new marketing & customer-engagement strategies, or a heart-warming increase in unity within the entire restaurant ecosystem, 2020 has been a year of ingenuity, adaptability and unprecedented change.
Of course, COVID-19 has also brought changes — in some cases probably permanent — that no amount of data analysis or savvy intuition could have predicted in 2019. These changes involve everything from the exponential growth of takeout and delivery to the blossoming of European-like outdoor dining areas, as well as the sad fact that many thousands of restaurants have been affected so much by the crisis that they have simply ceased to exist. These, for instance, are the saddest restaurant closings of 2020.
— Excerpt from our previous article; A Permanent Impression: Covid-19 and the Future of the Restaurant Industry
With that said, here’s our prognosis of what 2021 has in store:
Recovery
Towards the end of last year, we finally witnessed a few steps in the right direction with policy makers introducing the $900 billion pandemic relief bill that featured enhancements to the Paycheck Protection Program, Tax benefits, enhancements to other critical SBA lending programs, and more. While it was far from the RESTAURANTS Act that we had our hearts set on, any sort of stimulus was most definitely welcome. We had a lot to be proud of as an industry, weathering the absolute distress amicably, even admirably.
Looking at the timeline for resumption of ‘normal’ activity within the sector through the lens of data and analytics, the following report by McKinsey & Company is a perfect reference:
Of course complete recovery is bound to take a long time (some analysts even predict up to four whole years), but we are already headed in the right direction and innovation in our sector is more rapid than ever before! Which leads us to the next point.
Growth
You’re probably wondering: If we’re in the nascent stages of recovery, how is there still room for growth? Our response is straightforward—there is always scope for growth. Just think about the way restaurants responded to the numerous challenges that the pandemic manifested. Can that not be termed as rapid growth?
In some of our previous blogs, such as Contextual Innovation: How restaurants have adapted to prioritise health & The Contactless Conundrum we presented concepts such as the exponential increase in the use of QR-code based menus and billing systems, the emergence of contextual startup businesses that are focused towards diner safety and hygienic operations and the growth of delivery integrators, online ordering, delivery and takeaway as the primary mode of business transactions.
Technological innovation and an increased emphasis on personalisation are other facets that emerged and flourished. With solutions such as Moley’s Robotic Kitchen, foodtech apps and Mozo by MARSES Robotic Solutions, among several others that we have expounded in our writings, coupled with the National Restaurant Association’s reports which indicate that by building on existing social media marketing programs, operators will get more personal and localized, perhaps using geo-tracking and even facial recognition technology to anticipate customer needs and wants, we can safely assume that our industry is evolving and growing, even as it recovers.
Birth
Here we expound the emergence of alternate restaurant formats. The most obvious and commonly-observed of these is the addition and subsequent success of outdoor or curb-side dining in major cities. It was essentially a lifeline for the industry before the winter arrived, with tents, pods and greenhouses showcasing a refined alternative to merely setting up tables on the street. It seems inevitable that this form of dining (much like European café ensembles) is here to stay.
Next we focused on the Ghost or Cloud Kitchen:
In an industry where 60% of new entrants fail within the first year and nearly 80% don’t survive long enough to celebrate their fifth anniversary, it was inevitable that a data-centric approach would be the impetus that VC’s needed to step in and revitalise things. In the past few months, that’s exactly what we’ve witnessed. The most glaring example of this is the advent and subsequent meteoric success of Cloud kitchens.
Offering lower capital investments; there’s virtually no money spent on decor, you don’t need to shell out the bucks for a prime location or train a large serving staff for a food production facility where a plethora of restaurants rent space to prepare dishes from their delivery-optimised menus, as well as a sizeable advantage in terms of scalability, Cloud kitchens are indeed the hottest topic in food tech.
— Excerpt from The Big Picture
Industry experts speculate that ghost kitchens will operate much like food trucks of the past, enabling restaurateurs to experiment with novel ideas without having to found a full-blown establishment.
Cloud Kitchens, coupled with the third concept—Mobile or Digital Only Resturants—are what we are likely to see a lot more of in 2021. To detail what ‘digital only’ restaurant entails, we have used the example of Taco Bell’s Go Mobile concept:
The new Go Mobile restaurants will be specifically designed for mobile ordering and pick-up, the chain announced. Locations will be about half the size of a conventional Taco Bell restaurant, spanning just 1,325 square feet compared to 2,500 square feet on average.
The stores will also take a page out of Chipotle’s playbook (Chipotlanes) with a new drive-thru system specifically designed for mobile pick-up.
Taco Bell’s Go Mobile restaurants will have two drive-thru lanes: one conventional lane where customers can order on-site with “bellhops” operating mobile tablets, and one mobile pick-up lane where customers can get food they’ve ordered ahead via Taco Bell’s mobile app. Contactless curbside pick-up is additionally available to customers.
—Excerpt via Business Insider
Please reach out to aman@dashin.in for any feedback or clarifications regarding the content of this article.
