From the rise of mobile delivery apps to the challenges of labor inflation, the restaurant industry weathered dynamic market changes in 2018 — driving the rise of "ghost restaurants," delivery and catering formats and eye-catching benefits packages. But what are the trends to watch for this year?
According to analysts interviewed by Restaurant Dive, the impact of these movements — along with evolving consumer expectations for menu solutions, dining experience and convenience — will intensify in 2019. To overcome these obstacles and stand out from competitors, experts predict that restaurants will double down on digital offerings and continue to experiment with new brick-and-mortar configurations for quick-service formats.
"For the restaurant sector as a whole, we don't expect much growth in [2019]," David Portalatin, vice president and food industry analyst at the NPD Group, told Restaurant Dive. "But you will see individuals succeed because they're taking part in digital strategies, [new] meal solutions...and experience differentiation."
Here are the six trends expected to spark major restaurant storylines in 2019.
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Delivery disruption
Though only 2.8 million (or about 5%) of the 61 million restaurant orders made annually occur online today, according to NPD Group research, this channel's potential has spurred investments from restaurants across categories. And while this digital push is shaping everything from point-of-sale systems — such as McDonald's and Wendy’s rollout of self-service kiosks — to reservation processes, delivery is arguably experiencing the most powerful transformation.
"One of the fundamental truths of how we eat in America today is that we increasingly want to consume our food at home — 50% of dinner meals purchased from a restaurant are actually consumed at home," Portalatin said.
A host of mobile food delivery apps such as DoorDash, Postmates and Uber Eats have cropped up to meet this consumer demand for fast, frictionless meal solutions. These apps are also meeting diners where they're already at — according to a report from BRP Consulting and Windstream Enterprises, mobile devices facilitated or supplemented 38% of dining experiences, whether that be through pre-ordering, checking reviews or sharing pictures online of their meal.
These changing diner demands and accompanying technologies bring significant growth opportunities to restaurant operators, with digital sales estimated to spike from 6% of overall sales in 2017 to 30% by 2025, per the report. This change is also impacting brick-and-mortar formats.
"We're already starting to see virtual kitchens pop up that are delivery only … where you can place your banner purely in the domain of a Grubhub or Uber Eats or DoorDash … and there is no front of the house. And so the cost implications of operating that model when you don't have to worry about prime real estate or expensive overhead ... and all those kinds of things really have the potential to transform the restaurant industry,” Portalatin said.
But these "ghost restaurant" formats — a concept Chick-fil-A is testingto meet consumer demand for convenience and preserve its quality of service at traditional formats — make up only a very small percentage of the marketplace, William Blair analyst Sharon Zackfia said. They also pose some significant challenges for new entrants.
"The reason why I think it's going to be difficult to have a pure digital restaurant experience is that there's no brand awareness. If you go into DoorDash and you're scrolling through 300 restaurants, why do you order from [my restaurant] if you don't know who I am and you've never been in one of my locations?" Zackfia said. "I still think a brick-and-mortar presence and that experiential dynamic will be important. We're seeing that still in retail even after 30 years of the internet."
Still, experts feel that expanding digital touch points and honing online strategies are no longer a bonus for restaurants, but a necessity.
"Restaurants who are leaders in engaging their customers digitally ... using digital apps or third-party services to facilitate delivery orders ... have an opportunity to grow in the coming year," Portalatin said.