top of page

What are the top trends affecting restaurant investment?

Updated: Aug 22, 2019

Earlier this month a large delegation of British restaurateurs, investors, landlords and consultants crossed the North Sea to attend the sixth annual Global Restaurant Investment Forum, joining 400 leaders from 43 countries around the world. The event is one of the few truly global events in our sector, with a line-up of speakers covering every major region of the world and content spanning the Americas, APAC and EMEA. It was the fifth time I had joined the event, as a speaker and emcee, this time with colleagues from Think Hospitality also taking to the stage.

The event has the distinct angle of being focused on investment rather than operations, which provides a vastly different viewpoint. It becomes far more focused on creating value, the trends that have an impact on investment decisions, and the business of hospitality. At the end of each day I have the unenviable task of distilling the views and presentations of 30 speakers into ten minutes of takeaways. On day one it was even more of a challenge to keep the attention of an almost packed audience as I had to follow the iconic and abundantly charismatic Marco Pierre White.

Here are the key trends affecting restaurant investment that emerged from the event.

Convenience versus experience

Regarding eating out of home trends, there is continued divergence between convenience and experience. On one hand grab-and-go, delivery and small-format kiosk operations continue to drive considerable investment, with fast food and fast casual the hospitality market’s quick-growing segments. Conversely, at the same time experiential-based dining and leisure activities are leading the way as footfall drivers, albeit with much higher barriers to entry. Food halls are becoming a culmination of both elements in one location, being another titan trend spreading throughout the world. While individual outlet styles and concepts came under considerable scrutiny during the event, with a number having their fad or novelty status questioned, it’s clear to see the overall trend sticking around for the long term – begging the question, how much more will it erode the full-service model?

Transformative technology

Consultants at the event shared many examples of robotics when revealing their visions of the future, using the case studies of Boston MIT’s restaurant Spyce and Eatsa in San Francisco – which is reportedly having problems – alongside several restaurants in Japan that feature Star Wars-inspired robots delivering meals to table. The view that this could be our sector’s future was met with scepticism from restaurateurs and other leaders in the room. There seems to be general acceptance this type of technology will play a considerable role in transforming the sector, particularly around removing manual and repetitive tasks, but it’s unlikely to replace the human element in the short to medium term. Instead, we will see technology come to the fore with regards to enhancing the guest journey, potentially changing the pricing strategy of some restaurants with surge-based models (like the travel industry) and, for all our sakes, let’s hope we finally streamline the payment pain-point in a meaningful way. Voice and 5G are the two technological developments to watch out for in the next few years, with voice-activated equipment and customer ordering likely to take hold, while 5G will enable better implementation of beacon and sensor-based technology, giving operators more access to real-time data. 

Non-traditional growth opportunities

In the past, growing a restaurant brand was all about expanding and opening new sites, improving brand visibility. With many traditional investors seeing the well-publicised failures of big brands in the US and UK, there is scepticism this will be the model for the future. Instead, we will see slower, more controlled scaling accompanied by other brand and revenue-building initiatives. Many alternative-format and non-traditional growth options were introduced during the event to negate, supplement or reduce the need for traditional investment options. These included the low entry point created by food halls, with much of the fit-out provided; dark or cloud kitchens where operators can sell via a delivery-only platform, reducing teams and overheads; membership clubs and shared workspaces contracting out or partnering with entrepreneurs on their food options; hotel owners increasingly turning to external restaurateurs to operate their assets; experiential leisure outlets with food spaces to let; supper clubs; street food markets; and digital-based subscription lunch models. What’s fascinating to see is it’s not only startups or entrepreneurs playing in this space – Wagamama is launching its own grab-and-go brand, Azzurri Group launched fast-casual pizza concept Radio Alice, and many brands including YO! Sushi are operating in food hall concepts such as Boxpark. 

People challenges

No matter where speakers or delegates in the room were from, the people challenge was both real and prolific. In less economically developed parts of the world where the cost of labour is lower, the employment challenge is about training and skills, while in more economically developed areas the challenges are recruitment and retention. There is a need to champion hospitality as a career of choice, with changing views towards economic migration in some regions having a direct impact. There was much talk about the positives of our industry, such as the low barriers to entry for entrepreneurs and the ability for quick promotion, but speakers repeatedly talked about a need to promote hospitality as a career of choice, improve our workplaces and start building models where we can pay higher wages. Further to the earlier mention of technology, it was suggested we should invest in technological development to reduce the need for manual and repetitive tasks, letting people concentrate on the human factor and highly skilled tasks. No matter where you are in the world, leaders see people as the most important factor to successfully operating hospitality businesses. Many are trying to overcome this challenge by looking at labour-light models, focusing on simplicity of operation.

Putting the planet first

Consumers are increasingly aware of the world we live in and how their actions have an impact on the planet. They want to know what businesses are doing to protect the planet and enhance the lives of the people they employ. For the most part business leaders are sitting up and listening, with several schemes and initiatives highlighted at the forum, from reducing food waste and improving the culture in kitchens to better sourcing of products and moving to plastic-free alternatives throughout the supply chain. Chef Raymond Blanc, speaking on behalf of the Sustainable Restaurant Association, told the audience there were no excuses for not doing “what is right”. He highlighted the opportunity technology presents in this transformation but also commended the work of many in the sector – highlighting even the largest players such as McDonald’s were making big strides. Sustainability shouldn’t be a side scheme for press purposes but truly embedded in businesses. Many initiatives can reduce costs with the right upfront investment.

First published in Propel Friday opinion.


bottom of page