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2021 Food Service and Hospitality Industry Top Trends

by | Dec 21, 2020 | Awards and Recognition, blog, Business, Holidays, Industry News, National Restaurant Consultants, Trends | 0 comments

Sparklers display of 2021

Since 2014, National Restaurant Consultants (NRC) has been publishing Top Industry Trends for the coming year. No doubt that 2020 will go down with multiple descriptions and outcomes. The food service and hospitality industry faced monumental obstacles due to the COVID-19 pandemic. Not all facets of the industry were affected equally. Restaurants that faired very well included pizza delivery, drive-thru, and restaurant concepts with carry-out and delivery in place prior to March 2020. Our restaurant consulting team spent most of the spring of 2020 providing pro-bona support to hundreds of restaurants across the country, and we created a “reopening” template that was utilized by thousands and published in multiple national periodicals. We also began producing daily and then weekly videos to provide “NRC Helpful Moments”, and now one hundred advice videos are available through our blog. We want to thank the dozens of food service operators and professionals for their unique and individual perspectives in making these videos. We received more than 400,000 views, leaving us humbled and grateful for the response but mostly proud to serve the industry we know and love.

In November 2020, Restaurant Business, the industry trade periodical, noted industry data experts Technomic° expectations that the industry may not fully recover until 2023, possibly even longer for full-service restaurants. We are more optimistic and know our industry to be resilient and creative—and consumers have a huge pent-up demand for dining out. Restaurant Business also suggested that the industry will adjust “toward more off-premises focused and digitally-enhanced efforts”. We concur with this observation and our enthusiasm for a bright future for the food service and hospitality industry is unwavering.

Though the National Restaurant Association, published by the Fox News Network, stated, “Prior to the pandemic, eating and drinking establishments in the US employed 12 million of the nearly 16 million total foodservice workforce. Eating and drinking places have lost over 2.3 million jobs since the outbreak,” we believe that the industry is poised to adjust accordingly. There are new avenues and strategies to consider, and this ingenuity drives our trend predictions for 2021. 

Here is a “baker’s dozen (13)” of our top industry trends for 2021.

  1. To-Go/Curbside/Carryout – As much as 75% of revenue for many operators pivoted in varying degrees. We expect this will level off once restaurants fully have 100% dine-in capacity but believe that may not happen until the end of Q2 2021, in many large urban populations. The forecast post dining room openings, we believe, will remain at about 35%, including third-party delivery. This trend requires operators understand all costs, including the delivery fees and packaging. We strongly recommend re-engineering menus and pricing, coming out of 2020. This includes reviewing top-purchased items, portion sizes, menu pricing, and product specification. (Many of the trends noted below relate back to this particular point.) 
  2. New packaging. 2020’s sudden need for carry-out and delivery solutions has put pressure (and growth!) on the non-food manufacturing community. Consumers who previously may have refused Styrofoam made exceptions early-on; but there is a rising demand once more for sustainable packaging, despite increases in carry-out and delivery. The non-food manufacturing community is being put to task to continue to provide thoughtful, meaningful, and most importantly, good quality, price-competitive packaging. Research and development continue to work to assure that cold foods stay cold and hot foods stay hot, which will be necessary to support the continued growth of the new carry-out and delivery demand.  
  3. Carry-out Beverages. Beginning with Ohio, now many other states have passed permanent legislation allowing alcoholic beverages on to-go menus. Many states passed this legislation with sunset provisions to expire during 2021; however, many local restaurant associations and independent operators are pushing to make the law permanent. This additional source of revenue is a huge benefit for to-go operators, with responsible and appropriate compliance and administration. Operators should identify new and improved sealed packaging to promote “to go” alcoholic beverages and ensure their staff adheres to new protocol regarding alcohol sales and packaging. Product offerings should include signature beverages that fully complement the existing menu. Mocktails will also continue to grow in popularity and half price bottles of wine to go replaces a great revenue option versus popular “cork and go” dine in take away options.
  4. Technology. The industry will continue improvements in contactless menus, cashless/contactless payments, and online ordering that can be updated in real time, including menu updates and product availability. Contactless menus should provide enhancement opportunities, be updated often, and feature new and even limited time menu offer items. Communicating with guests in real time will further carry-out and delivery business. Operators must not only have a web site presence that links to social media platforms, but this type of communication must coordinate with new menu items and menu item availability in real time. Utilized properly, social media is an excellent tool to feature daily specials and limited time offers. Restaurants utilizing menu engineering to feature high-margin and profitable items will see great results. Technology will continue to feed the creative side of the industry, and we may see additional out-of-the-box concepts emerge. One example is an incredibly unique technology called “skull mapping”, used to create a special moment that enhances guests’ experiences. New technology for limited service operators that will literally utilized a “GEO Code locator” as to where patrons are seating will reduce service staff requirements and improve the overall guest experience.  This type of technology will also be utilized in fast casual restaurant settings as well.
  5. Customer Reviews and Technology. Technological improvements open the two-way street as some operators are converting guest testimonials converting to video. New technology now allows for your customer reviews and guest testimonials from your website, Facebook, or Instagram accounts to be converted to video-like testimonials, providing a “wow” factor that directs attention to your best reviews. This inexpensive platform can be managed by the operator and is a great cost-effective trend. Our restaurant consultants can network for you to begin this excellent platform.
  6. Third-party delivery. While many governmental jurisdictions coming out of 2020 have either permanently or partially provided third-party delivery fee caps, we will see this expand into many more metro markets. According to The NPD Group, delivery represents an 11% share of restaurant industry transactions, up from about 3% only two years ago. In October 2020, delivery orders increased 125% compared to a year ago. When the pandemic first hit, delivery became a crucial revenue channel and lifeline for many restaurants, especially full-service restaurants. But with commission fees hovering around 30% to 35%, many restaurants complained that they were losing money from each delivery transaction. These third-party delivery caps should sustain legal challenges, and third-party delivery companies and operators will find even greater acceptance and utilization by users across generations. Many operators have discovered that third-party delivery platforms that integrate with their POS systems realize full-cost recovery compared to dine-in service. The trend will continue to evolve in 2021 and beyond, and operators should review their third-party agreements.  Consumers will continue to seek and use delivery platforms for both convenience and safety reasons well beyond the pandemic.
  7. AirBnB for restaurants?  This is a trend that we believe is worth noting. Kitch is an online marketplace connecting food businesses with underutilized kitchens during downtime (think AirBnB for the kitchen space market). Kitch networks operators with excess capacity in their kitchens, and has received positive 2020 reviews, even prior to the pandemic. Kitch is working with a variety of businesses, ranging from hotel owners, asset managers, landlords, restaurateurs, and management companies looking to be creative in utilizing kitchen space. It markets operators’, would-be ghost kitchen operators’ (see below), and even food truck operators’ professional kitchen space, proving to be a win-win for operators, tenants, and landlords. The Kitch marketplace identifies kitchens across the country in prime locations that offer both short- and long-term flexible agreements without significant buildout costs.
  8. Ghost Kitchens. In the same vein, many operators converted to virtual restaurants with ghost kitchens during 2020. We expect this trend will continue as, what began as a new concept in 2017, has truly evolved in 2020. Even large-chain restaurant operations have converted their excess capacity operations to ghost kitchens such as Chilis® “Just Wings” concept.  With technology and third-party delivery, ghost kitchens continue to become more relevant. Creative operators have found ways to convert part of their operations to ghost kitchens with different menu options, featuring core menu items from the dine-in portion of their menu. This new trend finds savings in overhead costs, staff pay, and food waste.
  9. Real Estate Play. Considering trends 7 and 8 above, real estate and landlord agreements will be a major topic in 2021. Many operators may be faced with back-end repayment programs from any negotiated lease reduction in 2020. Additionally, big box shopping centers will most likely continue to suffer as online shopping is the new normal. Landlords are tasked with either leasing, re-leasing, or even developing lease space. Lease hold improvements along with lease rates are all on the table in 2021 and beyond. In many cases, food service operators that can demonstrate a good business plan, that includes a 1-3-5-year financial forecast coming out of 2020, should be able to successfully reduce their lease rates, least terms, and quite possibly updated TI for new improvements or longer terms that will attract and retain customers. Our restaurant consultants can assist in presenting these business plans to landlords and investors.
  10. Cleanliness and sanitation. The sanitation standards of 2020 will likely be the new normal—it cannot go backwards. Operators must continue to push hand-washing, provide hand sanitizer, continually disinfect surfaces, and even provide contactless menus. The emphasis should be placed on both the well-being of guest and staff. Additionally, certifying your staffs with food service certifications will not only add to your staff’s skills set and knowledge, but demonstrates to health department, your staff as well as the public your commitment to dining safety.  To lwarn more about additional certification training for you and your staff see this link:  www.ifsea.org  You can find a detailed outline of sanitation standards and communication in our restaurant consultants’ reopening template. 
  11. Flavors and food trends. While many of our trends are focused on adjusted operations, food trends will continue to play an important role in 2021. In December 2020, the NPD group study published the SupplyTrack® database, showing product purchases for spices and high flavor profile foods for food service operators from 2017 through 2019 have increased by double digits. This trend, beginning in late 2019, is expected to continue through the new year and beyond, including Asian influences, curries, and chile peppers of all heat levels, from mild to Aleppo or Habaneros. 
  12. Need for Capital. It is believed that Congress will support additional funding for the restaurant industry and small businesses in general. While waiting for information about the timeline and support available, operators can prepare to apply by organizing documented information from 2020, including business impact from the pandemic and related economic changes. Prepared reports should also include a forecast and business plan for 2021, with a detailed proposal for dollars requested. This may be required whether applying for support funds, loans, grants, or requests for loan forgiveness. Organize your 941 filings from 2020 and work with your bookkeeper and accounting team to complete the Q4 2020 941 and 940 as these documents may be key in obtaining additional funding.  
  13. Supply Chain and Table-Top Offerings. In 2020, the supply chain was drastically impacted from supplies to fresh foods, further processed products, ingredients, and other staples. While there has been some rebound, the effects will be felt into 2021. 2020 brought record price points on such products as cheese, beef, and non-food items, like cleaning products and PPE. However, tabletop offerings (condiments) are only being utilized on an “asked for” basis and could reduce the demand and costs. Considering offering a single-serving version of these items.  Your distributors will continue to be a valued source of information now and in the future.

Finally, during 2020, National Restaurant Consultants received one of the top rankings in the US by AGS, a nationally acclaimed research company for restaurant consulting companies. We truly are proud and thank so many from the industry that provided feedback to AGS as part of their review and research. Here is to a better and brighter 2021!

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