DISRUPTION TO ACCELERATION
Early Predictions for Hospitality, Food, & Beverage Trends
The very weighty word “unprecedented” has become one that most of us say at least once a day. We are experiencing a collective trauma that is impacting our daily lives, our finances, and ultimately our sense of security. It is a “disruption” beyond our control. Surprisingly, identifying it as such actually gives us a bit of a roadmap forward.
There have been at least three major disruptions in the 21st century. September 11th and all of the subsequent terrorist attacks worldwide, the 2008 global recession and now, COVID-19. What we have learned from these past disruptions is that these events accelerated things that were already in motion. We’re never going to go back to how things were before, but we can look at what shifts in our industry were already taking hold and use this to identify how we chart our path forward accordingly.
WE’RE DEFINITELY NOT IN KANSAS ANYMORE
Last November, we published our 2020 Trend Report, “We’re Not in Kansas Anymore: The New Hospitality Landscape.” We had no idea how accurate this title would become. When this crisis began, our team looked back at this labor of love with a bit of trepidation, expecting a completely irrelevant report. What we noticed, however, was that for many of our observations and predictions, quite the opposite was true. The biggest shifts we had observed at the end of 2019 seem to be even more prevalent. At the beginning of April, we published an article on our site with some of our initial thoughts on how this pandemic would impact what we’ll be eating and drinking after we’re past the stay-in-place. Below, we’ve revised some of those initial predictions and expanded on some of them a bit more. We hope this is useful to you as we all begin to imagine the future beyond this socially distanced present.
Restaurants Get Creative with Delivery and Carryout
For the past several years, restaurant operators have mostly had a negative relationship with consumers’ increased demand for delivery. Most restaurant kitchens aren’t built for the operational needs of delivery, the fees charged by delivery companies don’t match up with current margins and most restaurant food doesn’t travel well. The idea of transporting a carefully curated in-person experience in a delivery box is at best uninspiring to most chefs and restaurateurs.
Stay-in-place has forced operators to reconsider these feelings and take a fresh look at how to tackle the only revenue streams that are available -- carryout and delivery. While many are doing it as a stop-gap measure, we are starting to see a few emerge with more profitable models. We predict more operators will reevaluate their approach and find ways to make these profit centers work for their particular brand.
Savvy operators are not asking “How can we do delivery and carryout?” Rather, they are asking, “How can we make it possible for guests to experience what we offer at home?”
Re-framing the question opens a world of possibilities, many of which we’ve seen restaurants exploring with family meals, meal kits, house made signature products, retail general stores, and more. Good examples of this range from family sized, make your own taco or pizza kits, take-and-bake lasagna, bottling your restaurant’s signature salad dressing, selling house-made bread retail (custom bags of flour!), etc. Identify what your restaurant is known for, and examine how to recreate some of that experience at home.
(For a deeper dive check out, "Sending Your Restaurant Brand Home"
We think this diversification is especially important as we enter the next phase of this crisis, where stay-in-place will be lifted but concerns about disease and social distancing remain.
(For a look at some of the new operating models we’ve seen, check out “Turning on a Dime.”)
Restaurant Brands Examine Their Online Experience
An April 1 brief from Bain & Company, How to Come Out Stronger from the Covid-19 Crisis: Accelerate Simple and Digital, identified several key areas where the COVID-19 crisis is accelerating our digital future. One of those accelerations related to movement patterns: “Movement patterns have flipped. Previously, customers were on the go and enterprises stayed still. Now, customers are housebound and enterprises must find ways to reach them.”
This is true more than ever for restaurants. This marks a necessary shift in thinking for restaurants, which are inherently an in-person experience. Restaurants will begin to view their website and social media channels not only as their most important marketing tool, but as the first point of guest contact. It is no longer the person greeting guests at the door that sets the tone for the experience, rather it is their first online interaction.
It is no longer the person greeting guests at the door that sets the tone for the experience, rather it is their first online interaction.
Multiple Concepts for Multiple Revenue Streams
Even prior to the pandemic, we saw alternate uses of restaurant spaces during the day, particularly in markets where lunch business had declined, take hold. Restaurants operating as co-working spaces or grab and go during the day and converting to full service at night. Alternate revenue streams will be essential to new business models.
When virus-induced panic buying began, restaurants realized they could support their community and attract revenue by selling items they had access to that regular consumers didn’t, including specialty pantry items, unique bottles of wine, eggs, meats, seafood, flour/yeast, farm boxes, specialty goods, flowers, and even toilet paper.
We think this trend will be pushed forward as restaurateurs look to understand, explore and maximize these multiple revenue streams and uses for their restaurant space.
(Well, maybe not the toilet paper, but specialty food & beverage products, farm fresh produce, and other goods that were previously part of the robust farm to table supply chain which may have less restaurants to serve going forward.)
Give Me Some Space (and a Seat Outside)
Updated operational and sanitation guidelines have started to be released and will vary from state to state. While some of these measures will be more prevalent in the short term, temporary precautions have a way of becoming part of our lives. It’s very difficult to back out of cautious behavior. (The evolution of airport security over the past 20 years is a good example of this. Technology, convenience and a perception of less risk have very slowly impacted the changes in travel.) It is fair to assume “temporary” measures that will be enforced while risk remains. More space between tables, contactless payment, plexiglass barriers and even masks may be a part of our lives for quite some time. Additionally, outdoor seating, while always appealing, may become even more coveted. Cities may allow restaurants to expand onto sidewalks, which could be a major help to smaller urban restaurants. European cities have begun to explore this already. Bar layouts in particular will also be impacted by this, perhaps with more groups of soft seating and different logistics for ordering.
Taking Better Care of the Essential
The last two to three years have really brought all the inequalities and social justice issues embedded in the hospitality industry to light. It began with reverberations from the #metoo movement and an industry acknowledging - and trying to change - its storied history of anxiety, stress and drug use. COVID-19 has now shined a spotlight for the broader public on the challenges that our industry has faced relating to providing sick leave and health insurance to employees. As operators essentially build business models from scratch, we believe we’ll see these issues addressed as a priority -- and even more importantly, hope that we’ll also see support and and understanding from guests as to how these things impact the cost of a meal.
The Return of the Staycation
Over 50% of American travelers agree that staycations may replace typical summer vacations this year and 40% are saying they may avoid airlines and travel by car instead, focusing on local and regional travel. (According to a Destination Analysts, Inc. with survey data from April 17 - 19.) While the urge to escape grows the longer people are at home, many are concerned about personal safety and well-being. This provides opportunity for boutique hotels and outdoor getaways with regional drive-markets.
At least in the immediate future, hotels can entice guests with value-driven special offers, which include flexible cancellation policies. Value, safety and cleanliness will be key deciding factors in the short term. Consumers will also be more likely to return to brands they trust. Hotels will have a bit of an advantage over alternatives like Airbnb where cleanliness is dependent upon the host, although this is something that Airbnb is working to address right now with policies related to waiting periods between stays.
Say Goodbye to the Buffet … and the Salad Bar.. and the Lobby Coffee
As concerns about spread of germs will likely remain for some time, we anticipate the elimination of self-serve models including buffets, salad bars, and complimentary coffee in common areas. Meeting breaks will take a more individualized approach with pre-ordered meals or boxed options, while grocery stores and institutional food service providers will also have to look to new solutions. Bulk foods and refillable containers may also take a pause or we’ll see new, touchless, dispensing mechanisms.
Show, Don’t Tell.
Operators used to spend considerable time and effort ensuring that guests didn’t have too detailed of a look into behind the scenes cleaning activities. In this new world, quite the opposite will be true. Hilton, Marriott and AirBnb have all announced new cleaning initiatives, with components that will not likely be temporary. Partnerships with brands like with Lysol and the Mayo Clinic are meant to provide guests with a sense of security and trust. Cleaning shifts will be scheduled throughout during the day, in order to be more consistent and visible to guests. We’re also seeing practical measures that guests will notice, less pillows, bare nightstands, more disposables -- all meant to signal that there is less that has been touched by another guest. Virtual check-ins and increased use of mobile devices taking the place of keys and remote controls are all ways that hotels will show guests their increased focus on cleanliness. This level of “cleanliness theatre” will apply to restaurants as well.
Trust will be key and who better to trust than friends and family that live in that market. Endorsements from locals will be important and hotels should focus how they can build brand trust and transparency. Marketing to locals will support “staycation” revenue, but in addition to these efforts, we anticipate hotels to focus on community building activities that will lead to those very valuable recommendations.
As people are getting more comfortable with video conferencing, we are seeing more conventions and events going virtual or adding virtual components. Conventions provide the opportunity for in-person connection and engagement, so we don’t think they are going to go away in the long-term, but we do think that live-streaming speakers and chats from the outside into events will become more prevalent as people adjust to the technology and learn how to maximize it. We also expect tiered pricing models in the future with opportunities to attend either in-person or virtually. This also means that all hotels will need to be fully equipped with meeting rooms for video conferencing.
Shelf stable products like rice and pasta have been flying off the shelves. Plus, extra time at home means ambitious cooking projects become a way to take an adventure, with edible rewards. People are tackling sourdough bread, handmade pasta, and all sorts of baked goods. For many cultures, carbs are comfort. Prior to the outbreak, we anticipated that sourdough bread and Detroit style pizza would be popular this year. We expect those to carry forward - along with a renewed dedication to other fermented breads and artisanal pasta as chefs play and perfect recipes at home.
Cross Cultural Comfort Foods
In times of distress, people generally seek out comfort foods. Historically in the US, this would have meant a return to meatloaf, mashed potatoes, stews, braises, fried or roasted chicken, oozy cheeseburgers, and grilled cheese sandwiches, which we fully expect to see.
Over the past few years, however, we have seen cross-cultural cuisine taking new form as Americans adopt flavors from immigrant communities and as chefs pay tribute to their mixed race upbringings. The idea of “authentic cuisine” has lost its traditional meaning, so we think it's reasonable that we will also see a lot more comforting dishes with now familiar flavors. Pre-COVID-19, we saw a rise in Italian-Japanese pasta and ramen (itameshi), porridge (from Chinese congee to nordic savory grain bowls), and American BBQ interwoven with Asian dumplings, tacos and Vietnamese sandwiches.
Superfoods Expand with Super Speed
At the end of last year, we noted a strong focus on “wellness” impacting a number of aspects of the industry. We see this expanding even more in light of COVID-19 with people looking to foods with immunity and other health benefits. In 2019, we saw attention shift from pure nutritional benefits (vitamins) to functional foods that supposedly enhance performance. Products across the spectrum from breakfast foods to snack bars to cocktails are enhanced with prebiotics (digestive aids) and adaptogens (stress reducers: ex. ayurvedic herbs, medicinal mushrooms).
Sharing Is No Longer Caring
As concerns about the spread of germs are likely to continue, we anticipate that restaurants will rethink share plates. Small individual plates or items available “by the piece” will replace most of the communal experience of share plates. Dips and appetizer platters will be served individually, or perhaps not at all; while ever-popular fries and chicken wings may be served in individual fryer baskets, served by the portion.
Cans Continue their “Can-Do” Attitude
Cans convinced us all of their convenience and true potential as the virus has forced us all to pack our pantries. Canned cocktails were already on the rise prior to stay-at-home regulations, and sheltering in place only increased the demand for ready-made-drinks at hand. Even when we can venture out again, these convenient cocktails will have entered into our routines.
Cocktail Delivery Will Stay...At Least For Now
Our team is mixed on when, where, and how lawmakers will reverse back on alcohol delivery laws, and we do expect this to vary state by state, but cocktail delivery is proving a hit providing some much needed revenue for restaurants, and giving consumers more ways to interact with their favorite places, even at home. Now, as we have proven successful methods of delivery and provided an important financial opportunity for restaurants, we believe that regulations will be put in place allowing for smart ways of delivering.
As the path forward for restaurants unfolds, much will depend on the length of time this crisis continues. This has been the greatest disruption to our industry that any of us have ever seen in our lifetimes, and probably also of that of our parents as well. Many business models have to be altered fundamentally to be able to succeed in this new landscape. We will see further disruption as new successful models emerge and old ones die, but this also brings new opportunities for reinvention and acceleration of forces already in motion.