What does the future hold for restaurants in 2021 and in a world post-Covid?
While it may be some time before we fully understand just how much impact this crisis has had on the industry some clear changes have already emerged. The coronavirus crisis has accelerated some trends that were already on the horizon which are likely to stick around. Here is a look at 3 such “trends” we expect to see more of in 2021 and beyond.
There’ll be fewer restaurants to choose from as many independents have closed
Pre-pandemic, many industry watchers would have suggested that the restaurant space was an increasingly crowded space. According to the National Restaurant Association (NRA) at the beginning of 2020 there was a little over 1 million+ restaurant locations in the United States. Out of this, seven in ten restaurants are owned by individual operators, most of whom are independent. Now, not even 12 months later we couldn’t be in a more different situation.
The restaurant business has been decimated by COVID-19. About 17% (and counting) of all U.S. restaurants have closed permanently or indefinitely. 40% of restaurant proprietors think they’ll probably be out of business by late spring of 2021. More unfortunate is that the closures are disproportionately independent concepts. Independents have been closing in droves which include some of the country’s oldest and most loved institutions. As a result, our choice of places to dine out will be reduced – in more than one way. It seems chains are taking advantage of the situation and are swooping in (as described in one article, like vultures) to fill the void left by closed restaurants.
But there is a silver lining to every story. New independents will arise out of the ashes and will learn to grow their establishment by focusing on sustainable operations with delivery, take-home, curbside pick-up, contactless payments and other enabling technology at the core of their business model.
Off-premise business will continue to prosper
From curbside pickup, to take-out, drive-thru and delivery, off-premise business will continue to prosper. Some speculate that the off-premise trend may slow after the pandemic ends. However, others suggest that COVID-19 has actually hastened the adoption of many of these options and demand for such services will proliferate. According to the restaurant industry publication QSR Magazine, since the pandemic began, 52% of customers surveyed had bought food at drive-in windows. 46% had used curbside pickup and 54% had called on one or more restaurant delivery services. Customers see off-premise dining options as not only a way they can minimize health risks but they also provide a higher level of convenience that many customers have come to expect. Similarly, restaurant owners like the efficiency and safety they provide.
And it would seem that there is some truth to the latter. Many QSR and fast-casual chains have announced new designs that lean more heavily into pick-up and curbside-to-go versus on-premise dining. Burger King and McDonald’s have already announced plans for future off-premise dining concepts. Chipotle and Starbucks have recently stepped up their drive-thru game, and smaller players like Shake Shack and Sweet green are following suit.
To accommodate delivery and takeout functions it is thought indoor dining is about to shrink. With a higher preference for off premise dining, business will look to reduce square footage of their dining areas and repurpose to facilitate and maximize off premise dining dollars.
Ghost kitchens will come to the fore
Ghost kitchens have been around for a couple of years. In 2015, Grubhub and Seamless were already operating about 10% of their New York City restaurants out of ghost kitchens, and digital-savvy restaurants have been turning to shared-use commercial kitchens for about a decade in a bid to reduce occupancy and overhead costs. Now due to the pandemic they are enjoying a huge boost.
With stay-at-home guidelines, many of the world’s restaurants had to shut. With no dine in traffic they were left with the choice to either temporarily close their doors, or offer delivery or take-out. Practically overnight traditional table service restaurants pivoted to simplify their menu and make it take-out accessible. And in the same breath they effectively turned their business into a ghost kitchen. Others turned to already established ghost kitchens in the market for some or all of their delivery orders. Regardless of the route taken, the concept paved the way for restaurants to continue their business even in strict lockdowns. For some, the model made it possible for them to survive the Covid-19 crisis.
Post pandemic, ghost kitchens will remain a popular option – they not only provide an invaluable channel for expansion to existing restaurants but can also help new restaurants get off the ground with lower risk.
While it’s difficult for restaurateurs try to make decisions surrounding dining and plan for the future when nobody knows what it holds, one thing is certain, consumers miss dining out and they will return. The caveat, “their behaviors have changed and they’re not changing back”.