After an up-and-down year, what can the restaurant industry expect in 2017?
For convenience stores, there’s plenty of food for thought. Like restaurants, c-stores are challenged by labor and wage implications, they’re eyeing opportunities to strengthen customer-facing technology platforms and they’re considering the disruptive threat from Amazon and other next-generation foodservice retailers.
The foodservice experts from Technomic were joined by the editors of Restaurant Business in a spirited debate of which forces will flag, which will arise and how those currents will shape the restaurant market in the new year.
Here are the trends they foresee as the influences likely to prevail after the rollercoaster ride of 2016.
1. Morning grub goes globetrotting
Ethnic experimentation at breakfast and brunch is moving beyond Mexican and Sriracha. While some operators are testing the waters by adding interesting international sauces or spices to traditional American morning eats, others are diving in with unusual global morning dishes or riffs that translate well to American palates. North African/Middle Eastern shakshuka, Georgian khachapuri and portable street foods like Chinese jianbing are just a few new ethnic options exciting taste buds in the morning.
2. Sin is in
The widespread legalization of marijuana is quickly becoming more than a pipe dream, with more and more states looking to legalize recreational use of weed. The investment community is already assessing how grass might make restaurants’ fortunes a little greener, either by boosting tourism or permitting THC's use as an ingredient. But that’s not the only indulgence likely to figure into 2017 menus. More consumers are welcoming once-taboo fats back into their diet. Butter, lard and tallow enhance taste and fit into the new, natural definition of healthy.
3. Automating the Experience
Technology will continue to transform restaurant service, as both labor restrictions and consumer demands for customization, convenience and novelty drive automation. More chains will use kiosks and touchscreens, as well as chatbots and artificial intelligence to take orders through platforms from social media to smart TVs. With brands like Domino’s and Chipotle already testing drone delivery, it’s only a matter of time until this amenity becomes more widespread. Next up: Online reservation services will allow customers to choose their own seats, perhaps paying a premium, just as they do on airplanes.
4. It's playing in Peoria
Native sons and daughters, along with chefs who proved their chops in dining meccas like New York City and Los Angeles, are turning second- and third-tier cities into dining destinations. They’re getting topspin from the revitalization of long-depressed neighborhoods (think Riverhead, N.Y., and Detroit), low rents, blossoming food cultures and the ability to use pop-ups as low-cost trial ventures. James Beard Awards have recently gone to restaurants in Baltimore; Cleveland; St. Louis; St. Paul; Pittsburgh; Birmingham, Ala.; and the Portland of either coast.
5. Middle managers as endangered species
Restaurants’ labor challenges will be dramatically elevated by the new federal overtime regulations. One likely casualty: the middle manager whose salary falls between the old overtime threshold of $23,660 and the new trigger of $47,476. To level costs, some restaurants are recasting the assistants as hourlies. Others are calculating how duties can be shifted to the GM, who likely hits the exemption level. Either way, a rung on the career ladder could be removed.
6. Fluid pricing comes to restaurants
Operators have a wealth of consumer purchase data at their fingertips, and they’re starting to use digital and in-app menus to change the bill of fare—and prices—more often. As a result, restaurants will turn to dynamic pricing to provide of-the-moment deals on overstocked items, charge higher prices at peak times and even adjust prices by location.
7. Distributors face digital disruptors
Traditional foodservice distributors are facing pressure to modernize operations or risk losing business. Much of this strain stems from strong growth of third-party online sellers like Amazon and Webstaurant, which offer such operator benefits as greater pricing flexibility, convenient and speedy ordering and delivery, and broader product variety. As digital disruptors threaten to steal significant share, especially in the nonfoods category, expect traditional supply sources to embrace more online technologies and for e-commerce firms to amp up sales of perishable foods.