Here at THINK Hospitality Group HQ we’ve spent the void between Christmas and New Year wisely, thinking to the future. Here in this article our partners give their predictions for 2020, from increased competition from the retail sector, mass adoption of customer technology and brands upping their game when it comes to environmental impact.
Here are our six predictions for the restaurant and bar sector for 2020;
1. Environmental concerns impacting consumer choices
During 2019 we saw the plant free movement become mainstream, not just through the increase in veganism, but also a shift to eating less meat from a greater proportion of the population. The “Greta Effect” will help to make 2020 the year that consumers act with their feet and wallets, aiming to make a real difference.
Plant free is only part of the conversation however, cookbook publishers have a raft of new wave "sustainable" cookery books in the pipeline for this year (e.g. on using your leftovers, reducing food waste and creating weekly planet friendly menus for your family.) This will see the rise of sustainable gastronomy, where consumers will be asking “How can we change and adapt what we are doing in the kitchen to help stop climate change and nature emergency.”
There’ll be more discussions on the environmental impact of fad ingredients (e.g. avocados, nut butters and soya) and the long term, non-reversible devastation of rain forests and other natural ecosystems.
Angela Malik predicts that with even more awareness and further education, consumers will increasingly question the environmental practices of the places they dine out or order in from – ultimately, expecting more.
2. Competition in the most unlikely of places
The face of retail is changing and quickly. Here in the UK we have seen a plethora of major retail brands enter CVA’s during 2019 and the property market is tough. Boxing Day reinforced the changing dynamic of the British high street, with footfall down by 10.6 per cent on the same period a year ago, making it the biggest decline of any Boxing Day since 2010.
The same can be seen in many places around the world as e-commerce and changing consumer behaviour impact physical stores. In New York, it was reported that 11 of Manhattan’s 17 major retail corridors experience year-on-year drops in asking rents and India’s sluggish economy saw a 35% activity drop in retail leasing during 2019.
The pressure is on to keep attracting consumers to spaces through placemaking and giving multiple reasons to visit. When coupled with the need to fill underutilised space, the result is retailers looking to food and beverage and experiential leisure as an answer.
Over the past few years we’ve seen major supermarkets up their game on food to go, department stores give over more of their footage to food halls, bookshops adding coffeeshops and fashion brands bringing bars into their stores.
Michael Ingemann predicts that during 2020 we’ll see even more of this type of development, with increased competition from retailers diversifying their proposition.
3. Going head to head with the gig-economy
Living in the bubble that has been Brexit in the UK, it’s easy to blame the lack of candidates on the effects of departing EU workers. Through our work around the world, we see that a crisis is emerging to find and retain great employees. Earlier in 2019 we heard of restaurants in Amsterdam closing due to staffing shortages and in December, Ireland eased its rules around work permits for chefs to solve a national shortage.
It’s fair to surmise that the gig-economy is taking many of the part-time and casual workers who would have traditionally considered hospitality. This is big business and growing too, in Britain the gig-economy has more than doubled in size over the past three years, accounting for 4.7 million workers, while in the US over 7% of all workers are expected to be working in the gig-economy by 2021.
This pressure on the workforce is forcing change in our sector, from deskilling kitchens to offering better pay and improved working conditions.
James Hacon predicts that during 2020 companies will work even harder at becoming great employers and increasingly turn to marginalised groups to fill the recruiting gaps: training of young people from disadvantaged backgrounds and homeless etc. We’ll also see the first trials of major brands offering gig-economy type employment options, with greater flexibility – which will be fascinating to watch.
4. Pay to dwell
Since 2007 there has been a 159% rise in remote working in the USA and it is estimated that by 2030 nearly 50% of the UK workforce with work remotely. It is the way of the world and likely to increase further as it aligns so closely to what people want. In a report recently published by the Best Places to Work Institute, of the top ranked companies, 60% of them actively promote remote working.
This change in the way people work is resulting in a changing dynamic for the hospitality sector, not least a challenging time for contract caterers and less after work drinking. A negative for some sub-sectors is creating a boom in others. For hotels and members clubs remote working has brought new customers, but not necessarily more revenue, with long dwell times and low spend. Over the past few years we’ve seen many attempts for hotels to maximise revenue from this source, through the implementation of co-working spaces and memberships, but still lobbies are full with laptop tapping workers not necessarily paying their way. Citzen M paved the way for paying to dwell in 2019, by charging a fee to use space and wifi in their hotel properties.
Heleri Rande predicts that in 2020 we’ll see more of these pay-to-use solutions, developed for busy lobby spaces. This will be accompanied by even more developments of co-working spaces in hotels. We also predict that this will be the year rural pubs and bars will investigate the remote worker opportunity.
5. Mass adoption of customer technology
Back in 2015 we saw McDonalds start the roll out of its kiosks. Last year saw the business spend big on two technology acquisitions; Dynamic Yield and Apprente voice assistant. Some reports suggest the company sees increases of up to 30% in order value and reduces costs of labour.
Coupled with the sector wide increase in online ordering and delivery, it’s clear that consumers are increasingly becoming used to using technology to transact.
With recruitment being tough and the minimum wage on the rise, James Hacon predicts that 2020 will be the year where smaller brands will see the benefit of investing in roll out of customer technology focused on pre-ordering or in-store digital ordering to reduce labour, collect more customer data and drive up average spend.
6. Food delivery comes of age
Food delivery has been the top trend of the past five years, with some figures suggesting that the market has grown up to 20% in the US. It’s hard to argue when you see firms like Deliveroo reporting its sales surged by 72% last year, albeit with growing losses.
2019 has certainly seen movement in this aggregator market with continued consolidation, going into the new year we’ve seen a battle of two competing interests to acquire or merge with Just Eat. Meanwhile Deliveroo has itself tied up in challenges with the CMA around Amazon’s sizeable investment.
But what about the restaurants? The past few years has seen almost every brand jump on this runaway train, seeing it as an add-on to bolster business, with few really committing to it with the long-term in mind.
Michael Ingemann predicts that in 2020 more brands will take a more strategic approach to the delivery opportunity with an increase in dedicated senior leaders appointed to head up this revenue stream, improved proposition dedicated to delivery and a more active approach to operationally delivering the service efficiently and profitably. This may lead to more companies taking delivery in house, split their business between providers and in turn see reductions in commission levels.
It’ll be interesting to see which of our predictions will turn to reality; we’ll be keep a close eye out, that’s for sure! If you’d like to read more about the future of the restaurant sector, you may be interested in downloading our free Restaurant of the Future paper.
This article was developed between four of our partners; Angela Malik, Heleri Rande, James Hacon & Michael Ingemann. Follow this link to find out more about the THINK Hospitality Group team.