Millions of dining venues had to close their doors during the novel coronavirus lockdown. Many are still struggling to recover their losses and stay afloat. In a recent survey, more than half of restaurant owners said it might take them a year or longer to return to "normal." The same source reports that about 40% of dining venues cannot operate at full capacity.
Restaurants from around the world are facing unique challenges following the COVID-19 crisis. For example, a 2021 survey found that more than 70% of consumers intended to keep cooking at home after the pandemic ended. Some wanted to build their savings or eat healthier, while others discovered their passion for cooking. The changes in consumers' preferences and buying habits and the restrictions enforced by governments are affecting the restaurant industry.
The growing competition doesn’t make things easier. Plus, many restaurants are struggling to attract and retain staff while keeping up with the rising costs.
Another aspect to consider is the shift to remote work. Nearly 60% of Americans are now working from home all or most of the time. As a result, about 54% tend to dine out less often than before the pandemic, while 47% prefer to have lunch at home, reports CNN Business.
Given these aspects, it's hard to tell where the restaurant industry stands in 2022 and what will happen over the next few years. But, for most operators, the only option is to think outside the box and adapt to the ever-changing market. A lot of fancy restaurants in Memphis and rooftop restaurants in Nashville are now offering door-to-door food delivery service through a hospitality app after the pandemic, by taking all safety measures, so that customers do not have to come out of their houses.
The past two years have dramatically impacted consumer behavior and the restaurant industry.
While most venues no longer require proof of vaccination, consumers are still reluctant to dine out. Additionally, the Omicron variant poses further challenges. Bloomberg reports that restaurant sales dropped by a staggering 98% in December 2021.
On the positive side, this sector is showing signs of recovery. For example, fast-casual restaurants in the U.S. generated about $4,680 per day in the first three months of 2022—a 22% increase compared to the same period last year.
The Covid-19 crisis has also given rise to several trends with significant implications for the restaurant industry. Third-party delivery apps, loyalty programs, and digital menus are just a few. On top of that, restaurant operators can leverage data analytics to dig deeper into the customer journey and offer personalized experiences.
Not surprisingly, digital innovation could be the solution to business growth in a post-pandemic era.
Since many old trends and systems are no longer relevant, restaurants have a new, fresh opportunity to reinvent themselves. At the same time, it's important to address existing problems, such as the labor shortage and rising costs.
Want to find out more? Let's look at some key areas restaurant managers must address to remain competitive and thrive.
Rather than scramble to accommodate food delivery by any means necessary, restaurant operators can focus on building a delivery-first, low-contact model that allows for long-term growth.
Take Domino's, for example. The popular fast-food chain offers contactless deliveries to customers. Clients can pay for their orders and leave tips in advance. Customers can easily manage the whole process through Domino's mobile app.
Third-party delivery services can make expanding your reach and increasing sales easier. Plus, customers can enjoy their favorite foods while maintaining social distance.
A 2020 report by Technomic and Uber Eats found 92% of restaurants used such services during the lockdown. Nearly 85% of operators say third-party delivery apps helped them reach new customers. Other findings include:
Most operators also said third-party delivery services helped reduce food waste. On top of that, they generated enough revenue to pay their employees and avoid layoffs.
All in all, this business model is here to stay. Supermarkets, restaurants, clothing retailers, and even drugstores offer contactless delivery to protect their customers and ensure a seamless shopping experience.
Food safety has always been a priority for restaurant operators, but it has become even more important over the past two years.
A recent report indicates that psychological distress, a long-term consequence of the pandemic, influences consumers' preventive health behaviors, including dining habits. Most people prioritize food and restaurant safety and take preventative measures when eating out in these unprecedented times. As a result, more than 25% of restaurateurs implemented new food safety practices, reports Technomic.
In 2020, Mars surveyed 1,750 consumers to determine how they felt about food safety during the Covid-19 crisis. Most respondents said food safety is one of the most important global issues, and 82% wanted to learn more about it.
Without a doubt, food safety is top of mind for consumers.
As a restaurant manager, it's your responsibility to address this by investing in appropriate processes and technologies. Preventive measures can make all the difference, such as maintaining a clean work environment, using separate cutting boards for meat and veggies, and keeping track of food recalls.
For example, the U.S. Food and Drug Administration (FDA) recommends storing raw foods away from cooked meals to avoid cross-contamination. In addition, ask your employees to wear gloves when handling ready-to-eat foods and use insulated bags for deliveries.
Most restaurants nowadays spend thousands on influencer marketing and other advertising services, but their business models haven't changed much over the past few years. As a result, operators need to keep up with the latest market trends to remain competitive and relevant.
One way to do that is to invest in self-service technology, such as self-ordering kiosks, multi-touch screens, and digital menus. For instance, Lightspeed and other apps enable customers to send their orders directly to the kitchen and pay upfront via a digital interface.
Such services allow for QR code payments and offline payments, and some use facial recognition or other technologies to personalize the customer experience. Plus, they offer multiple subscription plans that may include things like outdoor kiosks, restaurant POS systems, and drive-thru line-busting tablets.
The most obvious advantage of self-service technology is it eliminates or reduces the need for servers and cashiers, leading to cost savings. At the same time, it streamlines the customer experience and may improve guest satisfaction.
This business model can also reduce order errors and waiting times, making it easier for customers to get what they need when they need it. On top of that, it enables social distancing and creates a more relaxed environment.
Self-service technology presents a strategic opportunity for restaurants to transform the dining experience rather than simply responding to the challenges brought by the pandemic. It facilitates customer segmentation and allows for a more personalized experience from a marketing perspective.
Modern technologies like digital menus and third-party delivery apps have proven invaluable during the pandemic. These services allow food businesses to stay afloat and can also be used to address the restaurant labor crisis.
Self-service ordering systems, for instance, may help decrease labor costs and drive sales while reducing the need for extra staff.
Third-party delivery platforms, on the other hand, enable restaurants to continue operating even when their doors are closed to the public. Just think about the growing number of delivery-only restaurants, or ghost kitchens, which no longer rely on waiters, cashiers, hosts, or hostesses.
Business Insider reports seven out of 10 restaurant operators don't have enough employees to keep the business running. Millions of workers have either been fired or resigned because of the low pay and lack of growth opportunities, among other reasons.
Fast-food chains and traditional restaurants alike are seeking ways to tackle these challenges. McDonald’s and Chipotle have raised their wages, says the U.S. Chamber of Commerce. Other food service businesses have reduced their operating hours or switched to self-service kiosks to overcome staff shortages.
If you're short on staff, focus on employee retention rather than hiring new people. Bringing in new employees is more expensive and time-consuming than retaining the ones you already have, with the average cost per hire being over $4,400.
For example, you can start by offering employees the chance to develop their skills or learn new skills that could lead to higher-paying roles.
Online training programs, winery tours, and team-building events are excellent choices. You may also plan weekly or monthly activities that include wine tastings, abstract thinking exercises, peer review programs, or mentorship opportunities. If you own two or more venues, consider holding friendly competitions between them.
Don't be afraid to think outside the box and try something new. For example, if you want to sell more wine, plan a winery tour for your staff or enroll them in sommelier classes.
Last but not least, go ahead and experiment with new business models to stay ahead of the competition. Ask yourself: What will the restaurant of the future look like? What do customers expect when entering your venue or placing orders online?
The lines between at-home and restaurant dining are blurred. We live in a post-pandemic era marked by technological advances—and that requires a shift in mindset. Restaurant operators can capitalize on these trends by shifting to hybrid foodservice models that include tableside service, carry-out and delivery, meal kits, contactless payments, and more.
A good example is Chipotle, which opened its first digital-only restaurant in 2020. Unlike its other venues, the new location offers pick-up and delivery only. This new business model allowed the company to expand its reach and cut costs.
In 2019, Chipotle launched several drive-thrus, or Chipotlanes, to give customers more flexibility. Two years later, the company had 250 Chipotlanes nationwide.
With that being said, food service businesses need to reinvent themselves in the light of the pandemic and beyond. This reinvention may require investing in new technologies, building multiple revenue streams, embracing an omnichannel approach, or expanding their services.
What matters most is to keep an open mind and make small but impactful changes that align with your brand and meet consumers' needs.