Challenging Times Ahead means opportunities for Resilient Brands
25th January 2019Share
Resilient Brands Will Shine in Challenging Times
This year is a transformational one for the restaurant industry. In 2018 we witnessed household brands negotiating company voluntary arrangements, the rapid expansion of deliveries and KFC infamously running out of chicken – so which key themes are set to emerge in 2019?
This is difficult to call because of the impact of Brexit and the disruption it could cause. Beyond the economics, two likely scenarios are a boost to patriotic product provenance – buy British – and a greater focus on team retention.
Whatever the Brexit outcome, the cost and availability of staff will continue to be a major issue. Consumers are becoming more intolerant of mediocrity and reliance by businesses on a relatively low-tenure, low-paid, low-skilled workforce is an unsustainable response.
A solution is a dual approach of winning the talent war by attracting, developing and retaining the best teams while developing the technological solutions to support appropriate elements of the guest journey and back-of-house production. In the more convenience sectors, digital solutions to order and payment processes are already being developed to remove service pinch points, but how does this translate into the more experiential segments?
In retail, trends are clearly the growth of online purchases due to convenience and cut in-store visits as consumers increasingly look for more experiential and entertainment occasions. The same trends are relevant to hospitality. Quick service and fast-casual concepts remain relevant for convenience-based occasions but casual dining concepts have a high dependence on social and special-visit occasions and, like retail stores, need to invest to create an enhanced guest experience.
The Propel Experiential Leisure Conference in November highlighted the new wave of experiential concepts entering the market. While still relatively niche, these venues are excellent examples of how to satisfy social-occasion requirements by offering guests a more interactive experience and, most importantly, creating conversation and memories for guests to share.
A recent visit to Flight Club in Bloomsbury, London, demonstrated how appealing these concepts can be. A game of darts was transformed into interactive fun by clever use of technology supported by a superbly presented food and drinks offer. A memorable evening was enhanced by a follow-up email from the venue the next day with a video attached showing highlights from our event. This is a stunning example of how new competition in the sector is raising the bar on how to host memorable social occasions.
The food delivery revolution shows no signs of stopping as it accelerates beyond an £8bn market with ongoing double-digit growth. Heavy investment by the aggregators continues to evolve the sector with the growth of virtual restaurant “dark kitchens” and technology innovation to automate delivery transportation.
The delivery industry claims this is an opportunity for the restaurant market to more effectively compete with in-home meal preparation. Generally, restaurant brands are now realising they need to be in this market and accepting additional operational complexity and lower profit margins. The challenge for many remains how to distinguish their brand in a value-added way compared with the intensity of commodity competitors.
A key trend is a shift from heavy meat-based meals. This has been subtly developing for years, evidenced by the popularity of “lighter” chicken, the success of brands such as Nando’s, KFC and Chick-fil-A, and the growth of Asian and salad concepts that depend less on meat. Now the trend is accelerating further, fuelled by a growing sensitivity to meat production and concerns surrounding health, diet, animal welfare and the environment, with vegetarian and vegan food moving towards mainstream acceptance.
Healthier eating also continues to be an important trend, especially for younger generations. Whatever the outcome of government desires to force foodservice to cap calories in meals, the general heightening of awareness and health concerns around obesity will in some way encourage a shift in consumer behaviour away from more extreme menu options.
The drinks mix is also shifting as consumer trends change. For younger generations, the habit of alcohol with a meal has become less relevant. Demand is growing for more premium “craft” drinks at the expense of mainstream ones.
There are many other trends to respond to – the development of digital strategy as social media platforms become the primary source of consumer information; food supply and cost inflation challenges; how millennials adapt their restaurant requirements as they become the next generation of families; developing consumer interest in product sourcing and sustainability; the ongoing consumer appeal of freshness; and the seasonal evolution of new craft flavours and product trends.
What is assured is the restaurant industry is in a period of rapid evolution. At a time when the daily business challenges can be easily dominated by surviving the short-term economic and political uncertainty, there is a need for businesses to additionally remain responsive and tuned to the evolving consumer needs and trends that will determine the longer-term relevance and appeal of their business in the market.