What Had the Most Impact on the Restaurant Industry in 2018 and Was There Anything That Surprised You?

Modern Restaurant Management (MRM) magazine asked restaurant and hospitalty industry insiders: What do you feel had the most impact in 2018 and was there anything that surprised you? Read on for their insights.

Gilbert Bailey, Xenial VP Analytics & Customer Engagement

We believe one of the things that has had the largest impact in 2018 is the voice of the employee. There’s a link between happy employees and customers. Restaurants are looking for ways to foster an open culture of growth and sharing among employees, so they feel invested in their roles and how they interact with customers. Furthermore, companies that are successful in customer engagement have 1.5x as many engaged employees as their competition. 

Alex Barrotti, TouchBistro Founder & CEO

I always knew online ordering apps would be important, but it surprised me that there are now so many. With ridesharing apps, there are two key players – Uber and Lyft. For a while, there was a mad dash to gain market acceptance by numerous wallet apps, but only two emerged – ApplePay and GooglePay. There are so many online ordering apps, there isn’t a clear winner. Expect to see a consolidation.

David Cantu, HotSchedules, Chief Customer Officer and Cofounder

Restaurant technology advances have driven an incredible amount of change within the industry, and in 2018 we continued to see an array of new solutions designed to help busy managers and their staff drive same-store sales growth and great guest experiences.

All this innovation, however, has created a cluttered technology environment for operators. In some cases, we've heard of brands maintaining between as few as eight and as many as 30 different systems. In 2019, it will be essential for restaurants to assess their tech stack and begin consolidating in order to drive operational efficiencies and free up managers' time for the more high-value priorities, like employee hiring and development and of course, driving great guest experiences. Ideally, restaurants will look at their eco-system, from HR, to finance, to marketing and operations and determine how those systems act independently and can be connected to act interdependently. 

By streamlining and connecting these platforms, operators can get back to what’s most important – exceeding guest expectations through outstanding food and service – and driving profitable growth in today’s ultra-competitive restaurant landscape.

Richard Fitzgerald,  CapitalSpring Co-Founder & Managing Partner

Delivery had the most impact on the restaurant industry in 2018. What surprised us most was that, despite early assumptions it would, delivery did not cannibalize take-out and dine-in business. In looking at data from all of the portfolio operators we work with, we mostly saw incrementality in regard to delivery sales.

Zach Goldstein, Thanx CEO and Founder

There's no question it was third-party delivery — but the surprise is just how many brands jumped into the fray without regard for sustainable margins or a plan for holding on to their best customers (restaurants risk being disaggregated by third-parties the same way travel agencies were when they lost control of their customers)

Gary Goodman, Yumpingo, CEO and Founder

The dispersion of data reached critical mass in 2018.

The industry has recognized that guest expectations of quality don’t change whether they’re dining off premise or in-house.

 We now know that the winners will be partners who consolidate data points into defined actions which can move a business forward, who unify and synthesize seemingly disparate data points gathered by today’s advanced technology. Take off-premise, which had the buzz going into 2018.

The industry has recognized that guest expectations of quality don’t change whether they’re dining off premise or in-house. Investments in infrastructure now require investments in quality execution. The only way to know how your restaurant is performing, and to improve as needed, is to survey your guests in real time. Utilizing ways to gather guest feedback, and then democratizing that insight for all staff is key.   

Manny Hilario, STK, President and CEO of The ONE Group

A number of developments impacted the industry in 2018 including technology advancements to help streamline back- and front-of-house, and delivery. For us, 2018 was about providing a wider variety of menu options and elevating the quality of those dishes for guests. For example, we found new ways to offer truly premium menu items like Wagyu steak at attractive price points.

RJ Horsley, SpotOn President 

There weren’t really any major surprises in 2018, at least not if you’ve been watching consumer trends over the past few years. The widespread use of mobile phones, apps, and the internet in general kept moving full-steam ahead. People have come to rely on mobile devices for almost everything, and restaurants that implemented their own innovative technological solutions were able to take advantage of that in a big way.

Larry Johnson, Fogo de Chão, CEO

Fierce competition, coupled with rising labor costs in 2018, demands that brands create value and unique experiences to entice guests to continue dining out. At Fogo, we have found that our churrascaria experience, and our streamlined staff model that allows our gauchos to play multiple roles butchering, grilling, and serving has helped us perform well despite some of the challenges other brands faced in 2018.

Gert Kopera, Executive Vice President of Global Restaurants at Hakkasan Group

As brick and mortar retailers are facing increasing challenges from the internet, malls are looking for creative ways to attract people onto their properties. Restaurants, including fine-dining, are increasingly being used as anchors for new and refurbished malls. For example, Yauatcha opened at The Galleria in Houston, TX. In New York City, the Time Warner Center houses Momofuku Noodle Bar, an approachable outpost of distinguished restaurant brands. 

The significant increase in the number of pop-up restaurants is a positive surprise. This movement goes hand-in-hand with the higher end, mall dining trend mentioned earlier. For example, South Korea is a world-leader in mall design, especially for dining in malls. Food courts are often made up of small, generic kitchens, occupied by frequently changing, individual operators – more like home cooking than a commercial venture. This concept offers customers the chance to try new cuisines with a low barrier of entry and it offers up-and-coming chefs and restaurateurs the opportunity to test the potential success of their culinary offerings before committing to the substantial expense of opening a restaurant. I expect this pop-up trend to continue in 2019 as well.

Steven Kramer, CEO and President, WorkJam

I believe that the number of restaurant chains to get rid of their “no-poach policy” will only continue to rise and, as a result, new strategies for reducing turnover and retaining knowledgeable employees will be needed.

 Owners should take this opportunity to improve employee engagement through the use of technology to implement transformative communication, agile scheduling, experiential learning, and tailored recognition. Creating meaningful and strategic digital relationships with employees can have a profound effect on engagement, operational efficiency, and customer experience. 

Brad Parker, CEO of Parker Restaurant Group

What I saw trending in 2018 was social dining experiences. We are seeing fewer concepts focus on a one-on-one experience (like a date night) and many more concepts that encourage group dining. Restaurants are becoming way more social. Restaurants and bars used to provide completely separate experiences for guests, whereas restaurants today are becoming hybrids of the two. This has also led to an increase in restaurants pushing brunch dining on the weekends. Bottom line is that anything social is what diners are starting to look for.

I think 2019 will be a big year for tech changes in dining. We will start to see more tablet ordering with servers and even ways for guests to order from their smart phones to their own tables. This will increase the quality of service because we live in a time where people want immediate satisfaction. For example, if you want to go on a date, swipe right on Tinder. You want food at your home? Click a few buttons and boom, Grubhub has you covered. These mentalities are spilling over in to the casual dining industry and we will see this grow over the next couple of years.

Ray Reddy, CEO and co-founder of Ritual

In 2018 we saw a great uptick in restaurants and coffee shops sourcing local, high-quality products as consumers are becoming more conscious about the quality of the products and meals they are ordering. 

However, along with higher quality products comes increased costs in an industry where margins are already razor thin. It will be interesting to see how companies navigate this balance in 2019.

Rajat Suri, Presto, Founder and CEO

Labor costs will continue to rise as new gig economy services like Uber and Lyft constrain the restaurant labor pool and ballot initiatives at the state and municipal levels get passed. It would not be surprising to see a Democrat-led Congress pass a $15 minimum wage and eliminate tip credit, given mass public support for this policy.

The Amazon wage hike to $15 per hour minimum wage was surprising and will have a massive impact it will have across the entire labor pool, much of it yet to be felt. Other companies are already following suit, and it is a matter of time before restaurants need to get there for public sentiment purposes if not just to be able to retain their staff.  I believe restaurants do not yet realize how big a threat to their operations this is going to be, and how important it is to get a plan in place today to survive tomorrow. 

Tina Swanson, Restaurant Technologies Vice President of Customer Experience

This last year saw a large focus this past year on technology and automation both in the front to enhance the customer experience and back of the house to save time, money and add convenience.

We foresee automated services and technology continuing to drive the restaurant industry in 2019, especially as operators continue to face a challenging labor environment. Looking ahead, we believe more and more restaurant owners and chains are trying to find ways to streamline some day-to-day activities through outsourcing or automation services, so they can continue to operate at the highest level possible with fewer staff and less turnover.

Mike Vichich, Wisely Cofounder, CEO

Off-premise was the breakout trend in 2018 with the rise of third-party delivery service providers, and restaurants scrambled to figure out what they could do to capitalize.

The largest surprise is how fast restaurant operators offered delivery as a knee-jerk, without a cohesive strategy. Consequently, there remains a massive opportunity for brands who are able to understand how their guests use their restaurants (e.g., delivery during the week, dine-in on weekend) and target personalized messages based on guest behavior. 

In our discussions with restaurant operators across the country, we continue to hear one constant – third party delivery. Operators are excited by the additional revenue channel and access to new customers, but the challenges of managing multiple new partners, and their individual hardware and software systems create an operational headache.