What to expect in the quick-service segment in 2013

Everyone and their cousin has a prediction about what trends will shape the restaurant industry in 2013. We are no different.

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Without much ado then, here is QSRweb.com's prognostication for the New Year (in no logical order):

  1. Hispanic and millennial marketing messaging will make seismic gains in brands' budgets. This will include bilingual campaigns, websites, mobile apps, etc., and a greater focus on millennial-friendly programming such as Funny or Die, Comedy Central and MTV.
  2. Mobile technologies will continue to accelerate at a wild pace, with QR codes, augmented reality, robust apps and gaming components requiring more marketing dollars. Also, the mobile payments industry is expected to account for $670 billion worth of global transactions by 2015, and the fast-paced QSR segment is well positioned to capitalize. In 2012, brands such as Tim Hortons, Dunkin' Donuts, Starbucks, KFC and Taco Bell began implementing the platform, while others such as Burger King and Subway rolled out tests. Expect this to take off across the segment, including at smaller chains.
  3. Competition will be even more intense than it was in 2012, when brands such as Wendy's, Burger King and Arby's made notable turnaround progress. Players from other segments will add even more pressure in 2013; particularly the growing fast casual segment (Panera, for example, is adding more drive-thrus), the evolving c-store segment and from casual chains adopting smaller, express models (such as Shoney's and IHOP).
  4. Digital menu boards will become the rule rather than the exception, as the technology's cost starts to come down, and as chains prepare for the Obamacare provision that mandates the display of nutritional information.
  5. Barbell menus will become a necessity. As QSR tries to keep up with the fast-growing fast casual segment, it will need to innovate with higher quality (and higher priced) menu offerings. However, the segment will also step up its value promotions to attract cost-conscious consumers in a somewhat stagnant economy. Wendy's, for example, plans to focus on its "Right Price, Right Size" program in 2013, with core menu items priced at 99 cents. And, as Howard Penney, a restaurant analyst at Hedgeye Risk Management, recently tweeted: "The discounting in the QSR space is getting very aggressive."
  6. Online and social media marketing will continue to pick up. Expect brands to crowdsource their social network for menu ideas, use fan photos and quotes for marketing messages, jump into newer channels such as Pinterest and Instagram, and pick up the frequency of social promotions (Dunkin' Donuts, for example, has Twitter contests nearly every month). NPD Group reported that 6 percent of restaurant visits in Q1 2012 were influenced by online marketing, with that influence expected to increase. NPD Analyst Bonnie Riggs said, "It's no longer a question of if online marketing should be a part of a restaurant operator's overall marketing plan; it's a must-have." 
  7. Customer convenience demands will require some new operational efforts. Services such as catering and delivery will increase, double drive-thrus and hand-held order-takers will become ubiquitous, and restaurants will add more hours. Also, remodels will accelerate to include lounge seating, flatscreen TVs and WiFi. For example, Burger King Delivery has expanded into five states in less than a year. Cold Stone Creamery just added a catering program. Dunkin' Donuts has added free WiFi for its guests. And McDonald's is experimenting with a late-night (post 12 a.m.) breakfast daypart.
  8. New global markets will be conquered. Cinnabon just entered Libya, for example. McDonald's and Burger King found a supply chain solution to take their brands to Siberia. In 2013, McDonald's is also planning to open its first vegetarian outlet in the hills near the Vaishno Devi, a holy Hindu temple in Jammu & Kashmir, India. 
  9. Protests over low wages (and the right to form a union) in the restaurant industry will spread into markets beyond New York and Chicago. This movement is just getting started, and we anticipate it to pick up speed in 2013 as the minimum wage rate remains stagnant.
  10. On the menu:
  • Coffee/specialty beverage competition will intensify, with new hot, cold and single-serve innovations continuously rolling out.
  • Children's menus will continue to evolve into guiltless indulgences.
  • Bread will be a major focus (e.g. Cousins' Subs' pretzel bread, Subway's flatbread, Wendy's exploration of a pretzel roll and a cheddar/jalapeno bun).
  • The breakfast daypart will continue to grow at a staggering pace, especially as more brands — such as Wendy's, Good Times and Taco Bell — jump in.
  • The snack daypart — between lunch and dinner — will also continue to expand, as more chains introduce bite-size options, sharable items and specialty beverages. Taco Bell, for instance, recently announced that it will market a "Happier Hour" in the New Year, focused entirely on snacks.

See also: Top 2012 (non-menu) stories for the QSR segment and 2012 QSR menu trends were all over the map.

Photo provided by ChristmasStockImages.com.

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