As restaurants work overtime to deal with soaring costs, ongoing labor shortages and growing economic uncertainty, many are pushing the limits of what used to be their competitive space to extend their brand and get in front of new potential customers.
Who among us hasn’t ordered food through a convenient mobile application, with menu choices ranging from not just quick-serve or fast-casual restaurants, but convenience stores as well? Further, who hasn’t seen a long-standing restaurant provide a new, interesting service, such as Subway selling its pre-made sandwiches in non-traditional locations – the trusted vending machine?
These are just two examples of how restaurant chains are blurring the lines with non-traditional competitors.
Channel blurring, the concept of offering your branded items through a non-traditional outlet or introducing new methods of filling customer needs, is here to stay. And why not? Done right, it can be one of the best opportunities for restaurant brands to increase patronage and get hungry consumers to try their food and beverages and come back for more.
As restaurants embrace technology, work to avoid encroaching competition and search for ways to expand their customer base, we’re likely to see more and more innovative ways that brands are blurring traditional lines to get in front of new customers.
The following trends show how brands are taking advantage of this growing movement.
Dark Kitchens See the Light
Dark kitchens – also known as ghost/cloud kitchens or virtual restaurants – produce food for takeout or delivery with no dine-in or customer-facing areas. They understandably started to rise in popularity during the pandemic when thousands of restaurants had to temporarily shutter their doors as stay-in-place measures took place. Post-pandemic, they offer new and established brands the ability to build a customer base without the cost of a customer-facing location and all the complexities a storefront generates.
According to Statista, dark kitchens’ global market size in 2021 exceeded $56.71 billion and is only expected to increase. By 2027, the market research organization projects ghost kitchens’ worldwide market size to reach $112.53 billion.
Why the immense rise?
This channel-blurring opportunity opens the door to new customers, bringing a swell of benefits for the participating businesses that would have otherwise not partnered. Yet, despite Statista predictions, National Restaurant Association’s 2023 State of the Industry Report revealed about one-third of restaurant operators say ghost kitchens will decline.
Reasons include operational challenges, permitting difficulties, failure to generate sales, insufficient delivery volume per location, higher fees and food arriving at the wrong temperature.
Wendy’s, for example, recently announced it would scale back plans of opening 700 ghost kitchens to between 100-150 by the end of 2025. The company said it placed more value in investing in growing its brick-and-mortar locations.
It’s Cool to be Climate-Kind
As we all know, today’s consumers aren’t the same as they were a decade ago. With Millennials and Gen Z customers, in particular, wanting to be heard on sustainability-minded and green-living topics, the door is open for additional services for restaurant brands.
Taco Bell is listening and has partnered with ChargeNet Stations to provide electrical vehicle (EV) charging stations to environmentally conscious California diners who own such cars.
The company is catering to changing customer needs and preferences and positioning itself as socially responsible and sustainable. By adding EV charging stations, Taco Bell aims to differentiate its brand from competitors and attract customers looking for a convenient, sustainable place to enjoy a meal while charging their vehicles.
Such a strategy – providing food and EV stations – aligns with the company’s brand image and mission to provide value to customers and contribute to the company’s bottom line.
Whether installing on-premises EV stations or providing another product or service, restaurant chains need to find crafty ways to attract customers since it’s no secret gas stations and convenience stores (c-stores) are taking a larger piece of the quick-serve-restaurant (QSR) pie.
C-Store Meets Restaurant
As the popularity of prepared food at c-stores grows, it’s common to see these stores offer ready-made items that provide shoppers an alternative to QSRs. Our Convenience Store Trends Report found 76 percent of consumers surveyed have purchased prepared food from a c-store.
It makes sense since shoppers can save time by purchasing gas, food and other items in one stop.
A 7-Eleven franchisee in Florida introduced a new concept blending a 7-Eleven store with a Fusion Fresh restaurant that offers made-to-order menu items and delivery. The location even offers a cold brew and tea bar, along with Slurpees, Big Gulps and a car wash.
As c-stores like this increase their offerings and get in on the channel-blurring trend, they take business away from QSRs – another reason for restaurants to consider fighting back by adding items or services outside the norm.
When Needing a Helping Hand
Channel blurring can be advantageous to restaurants in a fiercely competitive environment. Increased customer convenience. Improved employee experience in a tight labor environment. Product differentiation.
Often, though, brands don’t know where to start. Or they don’t know how to measure the impact of channel blurring initiatives quickly and accurately. A data-driven, voice-of-customer (VOC) program can provide insights into what new offerings would resonate with patrons and improve their overall experience. Or what types of non-traditional partnerships might make the most sense. Companies can benefit from the expertise of a third-party provider, well-versed in operational audits, VOC programs and the ins and outs of channel blurring.=
Consider an organization that delivers the insights you need fast and provides industry-recognized research on such timely topics.
Adding a splash of innovation to your offerings doesn’t have to be a daunting task. Understanding your audience’s demands can create the customer experience they didn’t know they needed.