With COVID-19 placing a spotlight on the need for restaurants to adapt to a changing landscape, just how owners, operators, and companies should approach this challenge remains up for debate.
Issues related to health and safety, labor, and the supply chain have been ubiquitous, with no clear course of action. And while some of these hurdles are unique to a pandemic climate, problems like staffing shortages and shifting consumer preference were boiling up well before. COVID was simply the catalyst.
And if restaurants learned anything from the past 20 months, it’s that technology will be at the root of the solution.
Carl Orsbourn’s and Meredith Sandland’s new book, Delivering the Digital Restaurant, makes the case that the disruption experienced by retail stores (the shift from in-person to online shopping that led to industry giants like Sears declaring bankruptcy), is knocking at the door of the restaurant sector.
“The reality is the consumer has changed,” Sandland says. “The consumer wants different things and the consumer has been exposed to different ways of behaving, across various verticals, and now that’s going to continue in restaurants.”
Sandland, who in the last 20 years worked in consulting, corporate strategy, and restaurant development, points to her time spent as Chief Development Officer at Yum! Brands’ Taco Bell as the pivotal moment when she realized the necessity for change was already here.
After coming onboard, Sandland took on the challenge of new unit development amid the nation’s 2008 real estate collapse. Seeing an industry nosedive close-up made her rethink her approach.
“I thought to myself, why are we putting all of these new units next to malls when no one goes to malls anymore?” Sandland says. “It planted a seed in my mind about how the world was changing. When we were launching the Taco Bell Urban Cantina my head of architecture and I looked at each other and said, ‘Why are we trying to put restaurants in the world’s most expensive real estate in Manhattan when 40 percent of the sale are going out the door via delivery?’”
Realizations like this are what drove Sandland’s interests toward more efficient restaurant concepts and a better understanding of what a profitable off-premises business model looks like. The need for better models outside the four walls is integral to the future of dining and this was evident before the pandemic, she says. Restaurants across the country had noticed a decline in on-premises consumption in favor of the ease and comfort off-premises supplied to customers.
The question facing restaurants now, though, is how do you make drastic changes off a traditional base?
One way, Orsbourn says, is understanding the arena you’re playing in. Owners and operators must have a solid grasp on what it is their customers want and what the capabilities of their businesses are.
Take third-party delivery. The rise and prevalence of aggregators such as Grubhub and DoorDash has been undeniable. But it hasn’t always unfolded smoothly. Data and profitability remain hot-button topics, and lawsuits have picked up over fee caps in recent months. Orsbourn says it’s not all negative, however.
“We don’t advocate for third-party or first-party as separate entities,” Orsbourn says. “We say the overall ecosystem together is really important because of the amount of marketing and because of the reach that the DoorDashes and Uber Eats of the world have. They can actually provide their fantastic tools for customer acquisition to get those who maybe haven’t heard of a specific restaurant in the door.”
Few businesses have the marketing reach of aggregator giants, and even if they do, reaching so many new customers can get expensive. Marketing costs, research into guest acquisition, and the chance that none of it will actually land you a profitable share are all reasons why Orsbourn says using existing platforms to get the restaurant’s name out there can be good business.
Once you’ve acquired new customers, he says, you can start to steer them toward the first-party platform and avoid the steep fees.
“The goal is to develop a system that can draw the customer into an even better interface with the actual independent restaurant,” Orsbourn says. “And whether that be through the packaging, whether that be through the dialogue they build through digital channels like subscribed email lists—that really is the piece where it's not either or, it's a case of saying use the third parties for what they're good for and then build an even better experience through the first-party channel.”
Another factor restaurants are going to have to consider in the future is how they are constructed, he says. Increased spatial efficiency in all facets of the restaurant.
Is there adequate space for delivery and pickup? Is the kitchen capable of meeting demand without being oversized? Does the cost of renting or owning the building exceed what’s necessary? Orsbourn also suggests restaurants will have to debate operating multiple concepts out of the same kitchen space.
“We're no longer limited by the turn times and the number of tables in everyone's restaurant, it's actually about the throughput rate of dishes from the kitchen,” he says. “Part of the challenge of the restaurant menu design of the past is that you create this menu to try and give everyone what they want. And now, because we are in a world of virtual brands where you can actually appeal to micro-niches, the opportunity for restaurants to be able to promote not just their base offering, but actually other concepts that are coming out of their kitchen to service those micro-niches, is a huge opportunity.”
Although there will most certainly be a continued focus on fortifying digital capabilities, Orsbourn and Sandland believe on-premises business isn’t going anywhere.
“Humans are social animals,” Sandland says. “We love going to restaurants, especially Americans. I just don’t see that changing. I still want that experience, and that experience is only going to get better as everyone starts to innovate to compete for the times when people do go out.”
“I think [the hospitality aspect of dining out] is going to improve,” Orsbourn adds. “I actually think the service that you’ll get at a restaurant will be better. Because the frequency of going out might be a bit lower, restaurants are going to have the time invested in creating it to be the wonderful occasion people expect.”