Evolution is critical. If a business fails to adapt to a changing environment, it risks reduced relevance in the marketplace. In the worst case, extinction is the end result. Such fates can be suffered by entire industries, let alone the individual business that comprise them.
The restaurant industry is not immune from this dynamic. It is noteworthy, however, that our industry has earned a reputation for moving at a glacial pace compared to other sectors of the economy. But it has evolved nevertheless, and I believe most would agree that, in recent years, the pace of change has increased.
What have been the key drivers of change for our industry? I think it is fair to say that technology is front and center as a catalyst for change. Other factors can play into a brand’s desire to update their facilities and image, but when it comes to functional changes in systems, design, and footprint, technology is often the driving force. In today’s environment, digital technology, in particular, is a game changer.
The impact that technology has on restaurant design can be seen on two fronts. On the one hand, technology may change consumer behavior and attitudes in a way that impacts the use of restaurants (the most basic and everlasting example is the automobile). Restaurants are compelled to react to such changes. On the other hand, there is the opportunity for restaurants to innovate in a way that changes consumer behavior.
The quick-service restaurant segment, as a whole, was such a force, because through innovation in serving prepared meals faster and more affordably, it changed the eating habits of countless millions of people. There can be a bit of a “chicken or the egg” paradox at times when considering these two different fronts. For example, one might argue that it was the automobile that led to the birth and expansion of the quick-service category, while someone may say it was the innovation and use of technology within the quick-service category that led to dramatic changes in the consumer’s use of restaurants. In the modern era, digital technology has led to significant changes in the way consumers use restaurants … but more about that in a moment.
The quick-service restaurant segment itself is an interesting evolutionary tale. The earliest concepts were simple affairs, with walk-up windows being the primary service channels. Over time, dining rooms were added, and then the drive-thru, which major brands began to bring to the market in force during the 1970s. The technology used for the early drive-thru was reflective of the tech available at the time. I well remember the air-hose-activated chimes that signaled the arrival of a car at the menu board (the same type used at gas stations back then).
And who can forget the awful sound quality of the early intercom systems? They were the fodder for many late-night comedians. For many quick-service restaurants, it took quite some time before the share of business done through a drive-thru exceeded dine-in business. Certainly, improvements in the technology that supported drive-thru operations contributed to better efficiency, throughput, and customer satisfaction. Eventually, drive-thru sales eclipsed dine-in business by a considerable margin. Consumer demand for the convenience of the drive-thru in turn led to increased innovation.
One of the most unexpected spurs for changes in consumer behavior has been the pandemic. As I have written on past occasions, COVID-19 hastened a decline in dine-in business that was already underway. The change in consumer demands for off-premises channels of trade was immediate, and this created immediate challenges for operators. Brands were compelled to act faster and more creatively than ever before. Adjusting to the change in velocity across the channels of trade became a paramount consideration (not to mention the creation of new channels of trade for some brands). This has produced great innovation in a shorter period of time than we have seen in many years. (Fortunately for Firehouse Subs, our digital platforms for online ordering, third-party delivery, and our loyalty programs were robust prior to the pandemic, which hastened our return to positive comparable sales in less than three months after the start of the pandemic.)
As operators gain better understanding of the changes in behavior that appear to be long-lasting, we see it reflected in new restaurant designs, often dubbed the “restaurant of the future.” It is little surprise that we seem to see more brands than ever announcing such initiatives. As the months and years progress, we will all watch with great interest to see where the greatest successes are scored, and which aspects resonated the most with consumers. There is little doubt in my mind though that the biggest wins will be driven by technology.
There is one aspect of technology that is newer terrain for the restaurant industry: the digital realm. This is an area where the industry has an opening to lead. Digital tech offers the opportunity to enhance the guest experience and value proposition while simultaneously opening the door for greater restaurant productivity, efficiency, and profitability. It also amplifies our ability to market and promote. I dare say that digital technology has the potential to be the biggest game-changer for restaurants since the automobile. In the digital realm, the room for creativity and inventiveness is limited only by the imagination. Even for industry veterans like myself, who have lived through and experienced first-hand the implementation of most of the technological advances that have been applied to restaurants, this promises to be the most exciting period of innovation we have ever seen. I look forward with great anticipation to what the future has in store.
Don Fox is chief executive officer of Firehouse of America, LLC, in which he leads the strategic growth of Firehouse Subs. Under his leadership, the brand has grown to more than 1,190 restaurants in 46 states, Puerto Rico, Canada, and nontraditional locations. Fox sits on various boards of influence in the business and nonprofit communities. He is also a respected speaker, commentator, and published author. In 2013, Fox received the prestigious Silver Plate Award from the International Food Manufacturers Association.