There is a difference between new developments in the restaurant and hospitality industry, and developments in other industries—specifically, technology—that are applied to the restaurant and hospitality industry. With the digital age still climbing and the aftermath of the COVID-19 pandemic, many restaurants have implemented changes and new technologies to accommodate customers, regulations, and general expectations.
But what new, inspiring development has come out of the restaurant industry lately? Nation’s Restaurant News (NRN) suggests that the last great innovation was the fast-casual surge over 20 years ago. “Chipotle’s first store opened in 1993. Several brands were tinkering with something like fast casual throughout the 1990s. The segment formalized just before 2000 when industry groups specializing in fast casual came on the scene, and industry analysts started tracking them…No substantial innovation to the restaurant business model has occurred since.”
The NRN article reminds us that fast-casual dining was a new idea, starting small, and then formalized in the 90s. When large interest groups and investors took hold of the innovation, fast casual dining exploded across the United States and changed the consumer’s dining out experience. Rather than “either or”, fast-casual dining gave customers a new, balanced experience. This was innovative, whereas recent digital implications on dining-out experiences are not. “Other segment ideas — like fast fine or fine casual — are minor revisions to existing business models. Fast fine is fast casual, with possibly higher prices for nicer food or a better ambiance, but nothing else has changed.”
But this doesn’t mean that technology can’t instigate the next great restaurant industry innovation. “The consumer continues to evolve, technology continues to evolve, and our environment — commodity prices, real estate prices, labor prices — continues to evolve,” NRN experts write. “We believe the next big restaurant category is approaching, combining ghost kitchens, virtual brands, digital engagement, delivery fulfillment, electric cooking, intelligent software automation, and hardware robotics. Toiling away in 2023, much like Chipotle was back in 1993, are dozens, perhaps hundreds, of restaurants we call ‘Digitally Native Restaurants.’” And just like the fast-casual boom, experts believe that Digitally Native Restaurants will rapidly take-off soon.
As NRN breaks down, in order to quantify as an industry innovation, a project must differentiate in three different areas: “How it brings value to guests, how it engages with guests, and how it allocates its P&L to create value for guests and make money for itself.” And experts believe that Digitally Native Restaurants can do this—and that it’s happening already. “Look at the number of existing restaurants throttling or charging exorbitant prices through marketplace channels. Restaurant executives are demonstrating through their actions that they are deprioritizing the customers that use those channels. As Digitally Native Restaurants serve the demand for delivery efficiently and effectively, they will become the high-growth concept of the restaurant industry.”
This is particularly true with delivery optimization, and NRN explores the evolution of pizza delivery as a model. “To become as deliverable as pizza is, Digitally Native Restaurants will create digital engagement that is easier for the consumer and the restaurant.”
For restaurants owner-operators feeling overwhelmed at the digitization of the industry, it can be a crucial shift of thinking to consider some of these new technologies as industry innovations rather than trendy, generational expectations. Technology isn’t just an implied shift in the restaurant industry, but may be used to alter the landscape of the industry altogether, just as fast-casual dining did a couple decades ago.
“The transformations will continue,” notes Richard Weil, principal and owner of National Restaurant Consultants (NRC). “Across demographics, consumer intellect has evolved. Technology—smart phones, apps, key word searches, and reviews—has impacted how today’s consumers make dining decisions. It is important to stay at the forefront, and this has operators thinking differently. But that’s a good thing—the next wave of technology will sustain the trend curve.”
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