As of last year, the U.S. restaurant industry has grown to over 1 million locations, generating an estimated $863 billion dollars in sales. The over 300-year old U.S. industry seems to be in a near-constant state of change, driven by macro and microeconomic forces, technological advancements, changes in the food supply, and changes in the customer experience driven by the all-important customers themselves.
Forbes magazine describes customer experience as the “…cumulative impact of multiple touchpoints over the course of a customer’s interaction with an organization.” Today, the restaurant industry faces many disruptive forces that are impacting those touchpoints. A complete list of disruptors would be very long indeed, so I have attempted to list the most impactful into four buckets:
1. Customer’s Need for Convenience
Customers today, more than ever before, have a greater need (and demand) for convenience. The industry is answering this need with solutions like third-party delivery. Companies such as Uber Eats and Grubhub are allowing guests to order from a wide range of restaurants, that previously didn’t offer a delivery option. An April 2019 survey conducted by Technomic for the National Restaurant Association found that 60% of restaurant sales were now off-premises, meaning delivery, takeout, and drive-thru. While the dine-in business is shrinking, customers are also expecting that experience to be more convenient. The industry is answering with the ability for customers to place orders ahead of time using their mobile devices, or in-restaurant, using kiosks.
Today, the customer’s use of technology is integrated into everything they do, and brands should endeavor to ensure that virtual interactions are as seamless and comfortable to the customer as using their own mobile device. While consumer-facing technology has advanced, and the bar is as high as ever, advances in non-consumer facing technology, such as robotic cooking, are now additional options that brands need to strongly consider. This new technology has the potential to positively impact the customer experience by providing greater consistency of product, and faster service times. One word of caution where technology is concerned though: make sure you’re doing what’s right for your specific customer’s experience, and that you’re not simply trying to keep up with direct competitors or the industry.
3. Evolution of American Dining Trends
Customers today are not only expecting convenience and intuitive technology to be integrated into their dining experience, they’re also looking for their tastes, wants, and needs to be catered to in fine detail. Whether it’s driven by dietary or religious needs, or simply lifestyle choices, the contemporary restaurant customer experience is about choices. Some of the ways these customer needs are being met include greater availability of plant-based proteins, menus for vegans or vegetarians, and additional detail and clarity around the food itself, including provenance, and nutritional information. The current state of consumer-facing technology allows restaurants to offer their customers the ability to customize their food easily, and more and more, customers have come to expect this level of customization.
4. The Human Element
While restaurants are increasingly taking advantage of technological advancements in robotics, and other labor displacing options, today there is still a human component in the industry that is unlikely to go away completely. And just like the customer experience changes demanded by the customers themselves, employees who interact with those customers are more demanding, and in shorter supply today, than ever before. The U.S. Department of Labor says that this labor shortage will last until 2050. Human interaction is also a consideration, as many millennial customers prefer not to engage in direct human interaction as part of their restaurant experience, regardless of where that experience takes place. Those desires need to be contemplated within your operational plan. Considering your employee experience to be as important as your customer experience is a good place to be if you’re going to be competitive within the industry. A poor employee experience rarely leads to great customer experience.
Addressing and Capitalizing on the Consumer Experience Opportunity:
There are a number of recent articles talking about the coming “Retail Apocalypse,” and restaurant trade publications have announced numerous bankruptcies within the industry in just the past several weeks. Personally, I do not see this as an impending collapse of the restaurant industry, rather a macro change in how customers want to eat and engage with brands; a repositioning of the customer experience itself. Successful brands will find ways to move to where the business is, as well as position themselves to react quickly to future shifts in the most agile way possible. Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent that survives, it is the one that is most adaptable to change.” I believe this is also true for businesses within the restaurant industry. Since the industry is rapidly segmenting into off-premises and on-premises businesses, it’s important that organizations look at their customer experience through those lenses, and work to better both opportunities.
The Off-Premises Opportunity:
As previously mentioned, this segment accounts for as much as 60% of the business and is likely to continue to increase for the next several years. Many brands have quickly moved to grab part of this growing segment; however, many have done so very opportunistically, and without taking the time to think through the customer experience. There is a huge opportunity for brands that look at the off-premises customer experience in as much detail as they do their on-premises, and truly deliver an experience instead of just a meal solution. A recent study by a leading market research firm found that 62% of customers who receive a bad food delivery experience often blame both the restaurant and the delivery company.
The On-Premises Opportunity:
While this segment is shrinking, it’s still a critical part of the business, and I believe it’s no coincidence that brands such as Chick-fil-a, and In-N-Out Burger, that are synonymous with executing a great in-restaurant customer experience, are outperforming the industry. When looking at their in-restaurant experience, brands must look at how they can deliver a customer experience that caters to the customers’ needs previously mentioned, and also deliver an experience that excites all five senses. A Harvard Business Researcher by the name of Michael Luca found that a 1-star increase in a restaurant’s Yelp rating correlated to a 5-9% increase in revenue, so ensuring your customer experience is at its highest level possible, consistently, should be the goal.
The last and perhaps most important piece of advice I would have, regardless of the customer experience being on or off-premises, is to ensure you’re really listening to your customers. It may seem overly simple, but they will, and are, telling you their wants and needs. With nearly 80% of the U.S. population on social media today, tools like sentiment analysis through machine learning can aggregate these customer comments into actionable items. You just need to listen, and then follow through.
James Walker, CFE, is a top restaurant industry expert with a specialty in rebranding and repositioning iconic American comfort food brands. He is an industry-leading authority in restaurant technology and delivery channels, and he specializing in mergers & acquisitions, domestic and international development, operations, franchising, and new product development.
With more than 30 years of broad-based, senior level, management experience in the hospitality and retail industries, Walker has served as President, Chief Development Officer, as well as in Senior Operations and New Product Development positions, for brands such as Baja Fresh®, Cinnabon®, Johnny Rockets® and Subway®. As the North American Vice President for Subway®, Walker oversaw their 28,000 restaurants in the U.S. and Canada. He has conducted business in more than 65 international markets, including such emerging markets as Saudi Arabia, Tunisia, Pakistan and Mongolia.
“Food is the only art form that you experience with all your senses, and you must experience to live.” – James Walker