Marketing to Gen Z Key Themes at Restaurant Show
the restaurant industry gathered in Chicago last month at the National
Restaurant Association Show for a closer look at the latest culinary
trends. Major themes included automation, marketing to Gen Z, and plant-based
coronavirus pandemic has, of course, amplified the challenges of hiring and
retaining restaurant workers. As a result, in Chicago technology providers
offered up multiple ways to improve customer experience and increase
event panel, speakers from Lenovo, Deloitte Digital, NVIDIA,
RadiusAI, attn.ive, and Vistry discussed how artificial
intelligence (AI) and neuro-linguistic programming (NLP) can be used to
modernize the customer experience. "With AI, any automation capability you can
do in physical space, you can automate" such as a drive-thru where the robotics
arm can grab a cup of coffee and deliver it to a customer, said Deloitte
Digital executive Mahesh Chandramouli.
"AI is not a science experiment. It is tangible value to you guys."
companies at the show touted robots' ease of use, increased productivity, and
reliability. The multi-cuisine robotic chef from Nala Robotics uses AI
and machine learning to learn to cook nearly any cuisine.
Middleby's booth, meanwhile, featured L2F's
FryBot that uses automation to streamline and improve safety in
deep-frying. Numerous companies including Segway Robotics and Pringle
Robotics offered autonomous serving robots that can serve and bus dishes.
At PepsiCo's booth, Bear Robotics partnered with PepsiCo to
feature Servi Blue robots that can work a 9-hour shift and log 19 miles.
AI, Inc. launched
its SoundHound for Restaurants voice assistant automated phone ordering
system that uses conversational AI technology to answer phone calls with zero
wait time and handle multiple calls at the same time.
restaurants are courting Gen Z (those born between 1997 and 2012) as this
cohort of consumers likes to eat out and sets culinary trends for others.
Coca-Cola Co.'s 2021 DINE360 study, Gen Z makes more restaurant trips
than any other generation, with 22% of Gen Z visiting restaurants 4-6 times per
digitally-native generation is more apt to place their takeout order through
restaurants' mobile apps than other generations and is more likely to use
drive-thru and delivery. Gen Z also values food indulgence and is more likely
to choose beverages viewed as treats, such as iced coffee.
patrons can buy made-to-order coffees (iced and hot) through Coca-Cola's new Costa
Smart Café. The autonomous machine is designed to create over 100 drinks
before human help is needed.
Botrista's DrinkBot creates consistently
crafted cold beverages such as smoothies for Gen Z consumers through the use of
an algorithmic dispensing technology.
Snackpass is a mobile order pickup app designed
to bring repeat business to QSRs through its loyalty program and social
features. Snackpass allows users to see what their friends are ordering, place
group orders, and gift meal credits to friends.
One of Gen
Z's favorite drinks is bubble tea. At the show, bubble tea specialists Possmei
International and Bossen exhibited their full range of teas, tapioca
pearls and popping boba juice balls. Pecan Deluxe Candy Co., meanwhile,
introduced Popping Boba as "flavors that pop" with an edible transparent shell.
Pocas International Corp. featured ready-to-drink Taiwan Classic Bubble
Tea in a canned format. Food Institute Focus
or Dining Rooms? QSRs, Casual Dining Going Different Routes
stands and early hamburger joints had one thing in common besides fries and
colas: They were walk up counters where customers would place their orders and
stroll off with food to be consumed either in a car, along the street, or at
home. There was no indoor seating.
may be returning – with a twist: it looks like fast-food restaurants will be
relying more heavily on the drive-thru.
At the same
time, casual dining establishments are coming up with strategies to get diners
to return to the indoor experience.
shifted consumer behaviors while a tight labor market and rising real estate
prices have forced restaurants to streamline operations.
Bell Leads Innovation
Taco Bell announced its new restaurant design
– dubbed Defy – earlier this month in Brooklyn Park, Minnesota, a purple,
two-story building catering to drive-thru customers. Food will be delivered by
a vertical lift system to customers who order through an app or through the
traditional drive-thru process.
"It is a
creative, technological solution for a faster, contactless experience for as
many Taco Bell fans as possible and is poised to be the future of quick-service
dining," said Lee Engler, co-founder and CEO of Border Foods, a Taco Bell
franchisee headquartered in Minnesota.
Taco Bell is
not alone. Portillo's is testing a drive-thru-only location in Joliet,
Illinois, Jimmy John's opened its first drive-thru-only site in Florida
earlier this year, and coffee-and-doughnut chain Tim Horton's has
developed a drive-thru only prototype, Restaurant Business reported
(June 8). Full Story
downsizes it's 3,300-square-foot eateries to just 1,000 square feet with a
walk-up window and no indoor seating. Wingstop is not only eliminating
indoor seating but cash too, and Chipotle is going one better,
eliminating the counter.
Business said McDonald's
and Del Taco also are planning drive-thru-only concepts, and Subway
is taking the unique step of testing vending machines as part of a broader
"grab-and-go" strategy to use existing locations as bases for sales in multiple
Fernandez, R&D chef with The Culinary Edge, warned fast-food outlets
to think twice before making drastic overhauls.
telling that chains like Chipotle and Starbucks, known for years for their lack
of a drive-thru, have begun to position themselves with this new style, and
speed of service," he said.
"In a recent
restaurant consumer insights survey performed by Revenue Management Solutions,
80% of respondents visited a drive-thru at least once weekly during Q1 of 2022,
down slightly from 86% in Q4 of 2021," Fernandez added. "This, compared to 74%
of respondents dining-in at least once, up from 70% in Q4 of 2021. Higher gas
prices have historically had a negative impact on drive-thru sales and that is
continuing to show moving into 2022 but can't be pinned as the only cause."
for Casual Establishments
Worster, vertical lead for restaurants and senior performance strategy manager
at VDX.tv, said it's encouraging that casual dining establishments are
doubling down on bringing customers inside.
line is that casual dining brands should not look to mimic fast-casual
competitors that have done away with their dining rooms and instead should be
leaning into the quality of their service and their rotating food and drink
options that fast-casual brands cannot replicate due to their smaller footprint,"
announced it would
try to lure late-night diners back inside with a half-price promotion on
appetizers. Last month, the casual dining chain announced a $5 cocktail
promotion. Both promotions are in-store only.
Grill & Bar is
attempting to draw diners by shuffling its menu, adding new dishes and giving
consumers the option of ordering a non-alcoholic drink, appetizer and entrée,
starting at $10.99.
focus on overall guest experience, the whole package, and differentiate their
food offering from drive-thru, will have the advantage in the dine-in space.
But they will have to be creative to succeed," Fernandez said.
co-founder and executive chairman at the restaurant discovery app Seated,
said if a recession hits, dine-in restaurants may benefit.
dining was created to offer the full-service restaurant experience at a much
lower cost, a luxury that could be enjoyed by the mass market weekly or
monthly," Peabody said. "Nearly 12 years of a bull market and expansionary
policy have led to that luxury being overshadowed by other more expensive
"We may be
returning to a time when the average family considers a weekly night out at
Chili's to be a luxury," he added. Food Institute Focus
How Severely Will Inflation Impact Small Restaurants?
Half of all
small business owners and nearly three-quarters of restaurateurs fear inflation
will drive them out of business this year, the Alignable Small
Business Inflation Poll indicates.
mom-and-pop diners and the small, family-run restaurants that were, and are
running just above cost. Inflation and increasing costs are cutting their
already tight margins to the bone, and they'll be the first to disappear when
things really start to bite," James Watts, CEO of Own The Grill, told
The Food Institute.
Vergidis, founder of the multi-restaurant platform pointofsale.cloud,
said restaurants that offer limited menus would likely be most affected.
example, the price of wings has soared recently. It's difficult not to pass
those costs to your customers if your restaurant is selling primarily wings,"
Vergidis said. "Of course, the answer in those cases is product substitution,
but it creates a lot of stress when restaurants have spent a lot of time
marketing themselves as one thing and then having to tell customers that they
no longer carry that item, or the price has increased significantly."
prices are running more than 8% above last year, with away-from-home food
prices approaching 11%, the May Consumer Price Index showed. Real disposable
income increased just 0.1% in April.
is consumers eating at home more.
for labor, wheat, flour, proteins and vegetables all are squeezing restaurant
owners. Add in supply chain issues that make some ingredients harder to get and
a tight labor market, and you have a situation where staying afloat becomes all
can't afford to go out to eat and the wages that restaurants pay aren't enough
to live on, and with no customers, there are no tips," Watts said. "No one can
afford to work in restaurants, and no one can afford to eat in restaurants."
pandemic, government assistance helped some restaurateurs. In April, the National
Restaurant Association asked Congress to adopt the Small Business COVID
Relief Act of 2022, which included $40 billion for the restaurant
revitalization fund, noting restaurant industry growth in the first quarter was
the smallest since 2020.
looming threat of another [Covid] variant and growing challenges of inflation
for both operators and consumers, the economic boost [the fund] could provide
for ... 177,000 restaurants would reach far into our communities," Sean Kennedy,
executive vice president of Public Affairs for the National Restaurant
Association, said in a press release.
bill died in the Senate May 19, with Republicans balking at Democrats' plans to
treat the funds as emergency spending. Just 101,000 of the 278,000 restaurants
that applied for funding from the original $28.6 billion emergency fund
actually received funding relief.
177,000 without aid, the federal government essentially picked winners and
losers, among direct competitors, based on chance, not need," the NRA said.
longest time, the restaurant success formula had been to keep food costs at
30%, and labor costs at another 30%, leaving 40% on the table for fixed costs
and profit," Vergidis said. "Looking at it from this perspective, it becomes
clear where the pressure is, and it leads to some interesting decisions for
operators. The choices are re-engineer the menu, use technology to bring down
labor costs, and when nothing else will do, increase the cost to the consumer."
Food Institute Focus
- Wingstop is considering raising its own
chickens. The wing chain recently said that it's actively exploring acquiring
or building its own "poultry complex" within the next three years to mitigate
pricing volatility in its core commodity, reported Restaurant Business
(May 17). Full Story
- Chili's will soon start offering restaurant
training to military members. It will be the first restaurant company to take
part in SkillBridge, a program backed by the Department of Defense
and the National Restaurant Association Educational Foundation, reported
Restaurant Business (May 19). Full Story
- Arby's launched the Wagyu Steakhouse Burger,
the first time it has had a burger on its menu, reported Restaurant Business
(May 23). Full Story
- Wow Bao
launched a rewards
program for its network of 600+ virtual restaurants powered by Paytronix and
DoorDash, reported Nation's Restaurant News (May 24). Full Story
Cheesecake Factory Inc. announced it will transition 75% of its pork supply to gestation
crate-free production by the end of 2022, reported Meat + Poultry (May
24). Full Story
will sell its
Evolution Fresh line of juices to Bolthouse Farms Inc., with
the deal expected to close later in 2022, reported The Wall Street Journal (May
24). Full Story
- Wing Zone
is partnering with Miso
Robotics to make Flippy 2 a part of the chain's standard build for
all future restaurant locations. Wing Zone is the first fast-casual brand in
the world to spec food robotics into its operations at this level. Full Story
Pizza signed a
multi-unit agreement to open six stores in Lubbock, Texas. Full Story
Grill expanded into
Nevada with an eight-store development deal. Full Story
Brands announced the
acquisition of Nestle Toll House Café by Chip from Crest Foods
for an undisclosed amount and will begin rebranding the dessert shops as Great
American Cookies, which FAT Brands also owns, reported Nation's
Restaurant News (May 25). Full Story
- Subway is changing its franchising
strategy. The sandwich chain, which has been shedding locations, wants more
drive-thrus, non-traditional locations and bigger franchisees, reported Restaurant
Business (May 26). Full Story
- Meanwhile, Subway
has been testing vending machines as part of a broader "grab and go" strategy,
reported Restaurant Business (June 13). Full Story
investors voted in
favor of a proposal calling for an independent civil-rights audit, going
against the company's recommendation, according to preliminary vote totals. The
fast-food chain joins the ranks of other large businesses facing a wave of
shareholder scrutiny regarding their environmental, social and governance
stances, reported Bloomberg (May 26). Full Story
- Jack in
the Box continued to
struggle with labor issues in the second quarter, with about half of
company-owned unit dining rooms remaining closed because of staffing issues,
reported Nation's Restaurant News (May 26). Full Story
- Denny's has joined the Pathways Black
Franchise Ownership program, reported Nation's Restaurant News (June
15). Full Story
- KFC partnered with musician Jack
Harlow for a custom meal available at KFC restaurants nationwide. Full Story
- New Chipotle
Mexican Grill restaurants will very likely include a drive-thru Chipotlane
or walk-up window to speed throughput and add convenience. Now the fast-casual
chain is looking at converting existing units to drive sales with these
margin-boosting features, reported Nation's Restaurant News (June 15). Full Story
Hortons is offering
two new models of its restaurants, including a 900-square-foot drive-thru-only
version, reported Nation's Restaurant News (June 6). Full Story
a vegan fast-food chain, signed an agreement to open 40 new locations in
Ontario. Full Story
on the Move:
- Zaxby's announced that Mike Mettler has been
named chief development officer, while former interim Chief Digital &
Technology Officer Mike Nettles has been elevated to the position long-term. Full Story
- Lukas Schmid
has been promoted to vice president of manufacturing at Panera Bread,
reported Food Business News (May 27). Full Story
Pizza named Ed
Yancey as chief development officer. Full Story
- JBS USA
appointed Karla Thieman as senior vice president of public policy and
government affairs, reported Meat + Poultry (June 7). Full Story
Charlesworth has been promoted to the role of global president and chief
operating officer at Krispy Kreme, reported Nation's Restaurant News
(June 8). Full Story