Obstacles, Opportunity and the Road Ahead

According to global brand and kitchen solution provider Nestlé Professional, discipline and innovation keep foodservice forward facing.

Anyone who conjured a vision of how the industry’s recovery might play out most likely had the industry picking up pretty much where it left off when the hard stop happened. Sure, a few things might be switched up, but the fundamentals would be back in place and growth a given.

Well, not exactly. Bumps on the way to recovery complicate the process although they don’t stop the momentum and drive that will eventually lead to a new normal.

Pressure points remain but emerging as a bright spot is the idea that the industry can do more than prepare meals. During lockdown, operators landed on quick-thinking survival solutions. Many of these innovations remain in play, shaking up static notions of what the industry can be and switching up how it will continue to get bigger, better, stronger, and more tightly connected to its customers.

Lights in the Dark

Dark and ghost kitchens sprung from need, providing meals for consumers and revenue for operators. Will these virtual presences become permanent as the normalcy of restaurant dining returns?

Their upsides are obvious, lower start-up and fixed costs for the smaller space and, with no front-of-the-house teams required, less staffing needs. They also are ideal as lower-risk food labs to test-drive product launches and potential new brick-and-mortar brands.

With Gen Zs so far showing strong affinity for shopping online brands, a habit likely to be adopted by Alphas (those born between 2010 and 2024), dark kitchens are expected to become a permanent industry presence. Market researcher firm Euromonitor says that by 2030, the segment could be a $1 trillion-dollar global segment.

Whatever its trajectory, the business model will be refined as consumer needs dictate. A recently opened concept in Vancouver with more than a dozen dark kitchen partners sharing space also has a slick-looking storefront where customers can pick up or place orders.

Menu Shrinkage

Responding to supply chain disruptions, smaller kitchen staffs, and a drop-off in diners, many operations, including mega-giant McDonald’s, took a hard look at menus with an eye toward trimming excess. Turns out it hasn’t been such a bad move; as things revert back to normal, many expect to keep menus tightly focused.

Advantages of paring down menus:

  • Reduce the number of products
  • Decrease on-hand inventory
  • Cut down on waste
  • Simplify operations
  • Ease strain on kitchen staff
  • Allow cross-utilisation of ingredients

Delivering Success

In pre-lockdown days, restaurant food delivery was mostly a pizza game, at 8 percent a mere sliver of total industry sales. That changed overnight. When COVID hit, five years of food delivery growth happened within just five weeks, according to McKinsey & Co., a global consultancy.

With fees charged to both operators and customers, third-party delivery services are getting pinched, a situation that Datassential data shows may be hard to reverse. In a July 2022 study, 38 percent of consumers said either they have never used these services and don’t intend to or that, going forward, they will stop using them. Even Zs and Millennials, big users of the convenience, seem to be pulling back; 24 percent of Zs and 19 percent of Millennials said they will use them less. Further, 17 percent of Zs and 24 percent of Millennials say they have no plans to use them in the future.

Ordering directly from restaurants seems to be the potential victor, a win that will be made easier with seamless online ordering and payment capabilities.

Expect to see further convergence of restaurant food delivery with grocery items, liquor, office needs, and pet supplies with speed of service increasingly factored into these business models. Also: expect that supermarkets will up their meal-prep game, easily packing a fully prepared dinner for four amongst organic grapes, laundry detergent, paper towels, and Greek yogurt.

Daypart Shuffle

The foodservice world is built around three consistent dayparts, the bulk of traffic for each neatly confined to a few hours around morning, noon, and evening. Work-from-home schedules and significantly different dining patterns have tossed out by-the-clock consistency, paving the way for traffic that can ebb, flow, and spike in unexpected ways. High traffic for breakfast and lunch come later while dinner sees some earlier action. Lunch diners come in late, linger, and make a smooth segue to happy hour.

A bump up in traffic during off-peak hours such as mid-to-late afternoon is an operational coup. It can be encouraged by adjusting staff so that service remains attentive.