Article

5 ways restaurants can keep up with industry changes

Restaurants must be constantly evolving if they are to maintain, grow and in some cases reclaim their market share.

December 30, 2015

By John Weber, CEO, LRS

If there’s one constant in business, it’s change. The restaurant industry is no exception with its changing cuisines, advancing technology, new kitchen techniques and the constant evolution of customer attitudes and expectations.

The growth of the fast casual restaurant segment over the past 10 years demonstrates its extreme adaptability. Indeed, the ability to change along with customer preferences seems coded in its DNA.

Whether it’s fast casual, quick service or full service, each segment’s ability to adapt can determine its profitability and even its survival. A casual restaurant with outdated kitchen equipment can’t keep up with the demand for quicker service. And a fast food establishment without Wi-Fi or self-service kiosks won’t succeed against the increasing amount of competitors that do.

Restaurants must be constantly evolving if they are to maintain, grow and in some cases reclaim their market share. But how?

1. Adapt to new consumer expectations

Diners are increasingly gravitating toward restaurants that offer quality choices in a social atmosphere without the fuss of fine dining. This is the “sweet spot” where fast casual thrives, and is a large contributor to why that segment to continues to gain market share.

To compare, the quick service restaurant segment still has the largest customer base, but its growth has been stagnant in recent years. To remain relevant, QSRs have turned their focus to improving the quality of the entire dine-in experience.

Many establishments are adding fresher, more customizable menu options, and are focusing on creating a more inviting, less hurried dining atmosphere.

2. Bring the speed

One thing quick service has in its favor: Speed of service. The appeal of the fast food model lies in it’s near-immediacy, catering to customers with busy schedules and limited time. However, today’s consumers are beginning to expect a little more out of their dining experience, no longer wanting to sacrifice food quality and atmosphere for convenience. The pace hasn’t changed, but the expectation has. FCRs come in neatly in the middle and combine all of the desired attributes, delivering quality, variety and a casual atmosphere at speeds rivaling that of quick service.

On the opposite side of the spectrum, the casual dining segment already excels in the quality of both food and service. To lure customers back in this case means improving speed of service, from the time a guest arrives to the time they depart. To accomplish this, many casual dining restaurants are offering speedier carry-out options and implementing processes for faster, more efficient service and guest management

3. Follow the cause

While the need for speed will continue, so will the need for a sense of community. Yes, customers are busier than ever, but they still want to feel that they are contributing to the greater good.

Diners in all segments worry about the affects of additives and GMO foods and in turn, are demanding healthier menu choices and transparency about ingredients. Customers are also increasingly keen on supporting local and sustainable farming and are willing to pay extra for such items.

Besides these “healthy” causes, restaurant operators can get a boost by supporting charities and research, as well as local and national and international aid organizations. This makes patrons feel like they are contributing to something, even if their support is indirect.

4. Advance efficiency through technology

Of course, the digital revolution will continue. Soon, almost every QSR and FCR will have a mobile-friendly website or a mobile app. These must provide more than just a convenient ordering experience. They’ll also offer electronic payments and content to keep customers engaged while they wait. FSRs will have to add these, too, as well as the “pick up” and “drive by” services that mobile users expect.

But technology goes beyond the customer’s experience. Solutions like waitlist, table, kitchen and inventory management add productivity and efficiency. These systems will use smart devices to collect and store data on about the entire operation – everything from customer wait time, order delivery speed, even the supply of ingredients on-hand. Then “big data” analytics will undercover operational insights to further increase efficiency.

5. All segments — FCR, QSR and FSR — must evolve

The restaurant world is changing. FCRs may have certain advantages over QSRs and FSRs today, but even they must keep evolving as customer sentiments change. At least fast casual, still in its youth, has this flexibility in its genes.

QSR operators have to address the expectations of a higher quality dining experience. This means better-quality ingredients, customizable menu offerings and a more inviting dining room.

FSRs need to turn their focus to overall speed of service. This doesn’t mean eliminating their traditional menu and service. Instead, they should offer quicker alternatives for on-the-go customers. They’ll also have to add more online ordering and pick up service.

All segments need to pay more attention to consumers’ desire to contribute to community. This could be local sourcing of ingredients, funding cancer research or helping disaster victims. Restaurants that share customers' beliefs are more likely to attract and keep their business.

Technology adoption will continue a major factor in satisfying customer expectations and increasing productivities. Mobile and online ordering will put control in the customers’ hands. And new smart devices and operational systems will improve guest service and streamline operations.

How will restaurants fare over the next 10 years, as diners’ expectations and technology continue to change? It all depends on their ability to adapt.