What does the next decade or two hold in store for the restaurant industry? It may not be pretty. Slow growth, marketshare battles, fewer baby-boomers dining out, more penny-watching diners, a less well-educated and poorly trained workforce and a greater emphasis on sustainability and health could have a negative impact. On the other hand, more technological conveniences and higher-quality ingredients for those who can afford them could give restaurants a boost. That’s confusing, and all the more reason for consultants to peer into a crystal ball today.
“It’s unhealthy to live by a crystal ball unless you determine how to prosper on a diet of shattered glass,” warns Ryan Mathews, founder and CEO of Detroit-based Black Monk Consulting and a well-regarded futurist. “So many factors – plausibly projectable like demographics, or truly unforeseeable to the majority – can undermine even the most neatly tied together forecast or prediction.”
That said, he identifies the following trends that bear watching:
- Massive industry consolidation beginning in about five years and rapidly accelerating thereafter.
- An emphasis on smaller portions, more balanced and nutritious meals and ethnic fusion foods.
- Multiple operator formats, consciously designed to provide all or part of one full meal experience. For example, a soup vendor, salad vendor, entree provider and baker or confectioner.
Overall, Mathews foresees that governmental, insurance and medical industry pressure will push wellness and possibly lead to punitive economic sanctions for purveyors of high-fat, high-sugar products. “The ongoing retirement of baby-boomers from the workplace will also significantly reduce demand. Another factor will be the continued emergence of ethnic majorities, especially in urban areas, and the continued erosion of the middle class, particularly in rural America.”
According to Bonnie Riggs, restaurant industry analyst for the Chicago-based global information company The NPD Group, the forecast for the restaurant industry over the next decade “is not a very positive one. The industry is forecast to grow less than half a percent per year from now until 2022. That is not even keeping pace with population growth.”
Baby-boomers have kept the industry from declining for years, since those under 48 have cut back “dramatically” on restaurant patronage. “But as you get older,” Riggs notes, “your behaviour changes in terms of what you choose to eat when you go out to a restaurant.” Beyond that, the so-called new normal has turned consumers of all ages into more “cautious, controlled spenders”.
“The recession supposedly was over in June 2009 in the US, but consumers are not behaving accordingly. They don’t believe it, and furthermore neither do I,” Riggs continues. “But we’re looking at a slow-growth economy, and that has impacted consumers’ ability to spend. It’s going to be a battle for marketshare, there is no doubt about it.”
Here’s what to expect – and prepare for:
Vertical farming:
Watts Wacker, futurist, founder and director of consultancy, FirstMatter LLC in Westport, CT, has identified several trends the restaurant industry should heed. One is vertical farming, which will grow around the world. “A 12-storey building is the equivalent of 600 acres,” he notes. “You’re already starting to see the opportunity for chefs in higher-end restaurants to order the exact kinds of spices, vegetables and fruits they want, and then have them delivered three times a week. So there is going to be an upturn in the quality of ingredients.”
Tsvi Bisk, an independent Israeli-American futurist, social researcher and strategy planning consultant, likewise predicts that all the large fast-food franchises will, within a decade, be growing their own vegetables in regional vertical farms in order to guarantee uniformity in quality, freshness and reliable delivery. Upscale restaurants will have “more exotic foodstuffs, which have had to be imported until now, delivered from local urban vertical farms. Some will even brag about their in-house totally automated vegetable gardens, grown without pesticides, and ponds so fish can be sourced without damaging the oceans.”
De-skilling:
“We are seeing a loss of talent in the kitchen in terms of line cooks,” notes Sheila Bentley, the owner/operator of Magills Restaurants and Catering, a full-service, breakfast, lunch and dinner restaurant and catering company in Pasco, WA. “The majority of chain restaurants are using stations rather than lines, so each person knows how to cook just a few things rather than the full menu. Also, with many items being pre-cooked then microwaved by the “cook” at the restaurant, there isn’t much actual cooking being done. Eventually line cooks will be a thing of the past and we’ll be forced to re-think menus in station-cooking terms, or very specialised menus.”
Cheaper survives: Magills’ Bentley sees QSRs as “the wave of the future. We’ll all be doing it soon. It seems to be the only way to make money.” Though high-end restaurants will survive, mostly for special events, Americans’ “unwillingness to pay a lot for food will keep the atmosphere nice, but the menu pretty casual, that is cheap.”
Sustainability:
The next decade or two will see growth in locally-sourced food “with almost no waste coming from their facilities – real plates, even for fast food,” says Greg Christian FCSI, sustainable foodservice consultant, chef, CEO and founder of Chicago-based Beyond Green, which provides strategies and solutions for organisations interested in making the switch to more sustainable foodservice platforms. The driving forces will be environmental and economic – “the poor getting poorer.”
High-end restaurants, which he calls “arrogant places”, will suffer. “The top 1% will be the only ones with money.”
“The next 10 years in hospitality are going to be about two big things,” predicts Chris Tripoli FCSI, the principal of A’la Carte Foodservice Consulting Group in Houston, TX. The first is energy-environment concerns, and the second concerns the balance between increased technology and service. Tripoli recently developed a future concept for a nationwide contest. It took second place and featured at the New York International Hotel, Motel + Restaurant Show in November (see page 101).
Mind data:
“Businesses now have an increasing wealth of data at their disposal about subconscious and involuntary stimuli that lead to food consumption and result from it,” notes Erica Orange, vice president of Weiner, Edrich, Brown, Inc, a futurist consulting firm in New York City. “For instance, we are seeing the increasing prevalence of sensory manipulation, neuro-imaging, neuro-marketing and neuro-economics. In the future manipulating customers based on the psychology of their food consumption could become big business.”
3D printing:
This technology is “revolutionising the food world,”Orange believes. “3D printing could also eventually help tackle the world’s growing demand for meat. Bio-printed meats (using animal muscle tissue cells) could not only be cheaper, quicker and more ethically-acceptable, but they could alleviate the agricultural pressures associated with traditional meat production.”
Tackling waste:
Steps will be taken to save much of the food that now goes to waste, according to D Michel Judkiewicz, secretary general European Industrial Research Management Association (EIRMA) and Managing Director of Brussels-based consulting firm XLand SPRL. “In the developed world a whole lot of food is wasted at the end of the supply chain due to limit dates for consumption that are too stringent and a lack of resources and will to find ways of recouping unsold and still-good food for people with insufficient means.”
Food that fits in:
Arlene Spiegel, president of Arlene Spiegel & Associates in New York City, identifies “a major shift in the way consumers think about satisfying their hunger. Traditional three-meals-a-day habits are being exchanged for eating throughout the day. People are eating ‘healthy/energy’ bars on subways and buses on the way to and from school, work, the gym. As life gets busier, food needs to fit in and be accessible.” Restaurant consultants, she adds, “need to be involved and savvy in technology, dining behaviours, lifestyle trends and specific psychographics of a given population before creating systems
and concepts”.
Nutrients:
Wacker sees consumers embracing micronutrients. “It’s what I like to call vibrational food; food that enhances people’s energy.” Related to that will be what he terms “a big attack on anything with preservatives. The fast-food industry is at odds with that at the moment. They are going to have to figure out how they are going to play with that.”
Individualisation:
Another future trend, says Wacker, will be individualised menus. “You will be able to know exactly what your body needs – the combination of proteins, carbohydrates – at the specific moment you are hungry.” Also, look out for diet by blood type. “We will see people selecting what they eat based on understanding their blood types,” he says. “Most people can’t even tell you what their blood type is today, but within 20 years I think that’s going to change.”
Protracted decline:
Barry Minkin, futurist, global management consultant and author of Future-in-Sight: The 100 Most Important Global Business Trends, sees the global economy “in a protracted decline through 2025”. The restaurant industry worldwide is a mature market “with little room to grow, with prime locations taken”. In addition he reckons:
- Distribution control will become even more important.
- Higher promotion expenditures, such as coupons [will be] needed to compete.
- There will be faster shakeouts of restaurants.
- We will see growth of food truck and food court offerings.
- There will be a decline of traditional dinner houses.
- Price counts, as competition increases.
- Restaurants will proliferate in non-traditional outlets such as department stores.
- We’ll see a growth of small, low-overhead, immigrant-owned, ethnic restaurants.
How then should consultants and operators begin preparing today for these changes?
“In many cases it may already be too late,” says Ryan Mathews. “The illusion that the future is nothing more, or less, than a linear projection of the present forward through time is a mass delusion in the foodservice industry.”
The equipment manufacturer’s view
Dr Markus Glück, executive manager, Rational USA
“There is a strong emphasis on smaller portions and healthier meal options these days. However, this standard must be achieved while saving on production costs. The market will shift as baby-boomers grow out of the dining-out trend and consumers become more careful with their spending. Outlets offering ‘take-out’ and supermarkets offering prepared foods will benefit most from this shift.
“The challenge to operators is to deliver quality product in an efficient way. Products like the combi-oven can save space in kitchens by conducting two fundamental culinary processes in one unit. The modern trend has the combi as a necessary staple and we believe this will be the future model for American kitchens across the board.”
Howard Reill
