Restaurants will see pared down menus, more digitalization in 2021

23 December 2020 Consulting.us
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Technomic, a Chicago-based management consultancy focusing on the foodservice industry, in a recent report highlighted several likely trends for the beleaguered industry next year – including pared down menus and further digitalization.

This has been the most challenging year ever for a number of industries, and one of the hardest hit has been the foodservice industry – which includes full-service restaurants, fast food outlets, caterers, and school and hospital cafeterias.

More than 110,000 restaurants (or one in six eateries) in the US have closed permanently or long-term this year, according to a December survey from the National Restaurant Association. Full-service restaurants have been particularly devastated by lockdowns and changing customer behavior, with almost 90% reporting revenue declines. The average revenue decline for full-service restaurants has been a whopping 36%.

Restaurants are also contending with higher labor and food costs during the pandemic, with fifty-nine percent of operators saying their total labor costs as a percentage of sales were higher than they were pre-pandemic.

Restaurants will see pared down menus, more digitalization in 2021

Those restaurants that haven’t shuttered face grim prospects. Thirty-seven percent say it’s unlikely their restaurant will still be in business in six months if there are no additional government relief packages, according to the National Restaurant Association survey.

Despite a vaccine on the horizon, widespread distribution is many months away. Meanwhile, the degree to which consumers will continue to avoid restaurants afterwards is tough to peg. Reports across industries consistently trumpet the idea of lingering effects on consumer patterns of consumption, outside of the real prospect of a long, hard recession that may further depress spending on eating out, among other categories. The idea of “pent-up demand” and a rapid timeline are the perhaps overly optimistic flipside of the pandemic coin.

Amid the difficulty of accurate forecasting for the industry, sector specialist Technomic noted several trends that were likely to present themselves throughout 2021.

Menu cleansing is one trend, with a reduction in SKUs and a focus on core items. One of the higher profile examples of this has been Taco Bell’s extensive paring back of its menu this year. Technomic also expects more items focusing healthy options at foodservice outlets, including leafy greens, non-dairy milk, and plant-based proteins.

There will also be continuing investment into digital differentiation. Leading firms have been developing drive-thrus using AI and digital voice assistants and putting in place technologies to enable seamless contactless transactions. On the other hand, previous restaurant concept trends that emphasized social interaction and experiential and sensory appeal will continue to be placed on the back-burner in lieu of environments emphasizing distancing, off-premise initiatives, and sanitation.

Consumers, especially younger ones, will continue to demand deeper transparency on fairness and inclusion in 2021. This will result in more efforts to highlight diversity in marketing, hiring, recruitment, and leadership, as well as heightened exploration of Caribbean and African cuisines, according to Technomic.

The consulting firm also expects better-off companies to take advantage of prime buying opportunities for real estate and brands.

As for how the industry will fare in 2021, Technomic projects that the foodservice industry will see lower sales than in 2019, despite what it calls a “positive outlook for the industry” punctuated by “strong growth over the next 12 months.”