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No Rest for Restaurants: As Business Slows, Trends Quicken

COVID-19 hit restaurants hard. Harder than any other American industry, according to the National Restaurant Association. Some respite comes from curbside pickup and home delivery, which puts restaurants in the top half of industries that successfully made the shift to digital in the last few months. The downturn remains steep, but what are picking up, however, are restaurant trends.

Toward the end of 2019, we compiled a list of the five trends we thought would be most important in the restaurant sector in 2020. Rather than negate our predictions, COVID-19 appears to be hastening their fruition. Below is a list of those five trends with their original titles and a description of how COVID-19 is making them more relevant than ever.

5 Restaurant Trends Accelerated by Covid-19

From Dinner Parties to Third Parties

“Ghost kitchens” are shared by multiple restaurant brands preparing food for delivery. The term didn’t emerge as a result of COVID-19, but restrictions around onsite dining mean it couldn’t be more apt in the current environment.

Third-party delivery aggregators were increasingly being employed to handle growing demands for food delivery before dining out became restricted. Curbside pickup, either pre-ordered or through curbside commerce on mobile devices, is booming. For now, this is helping restaurants tide themselves over. Further out, as delivery continues to grow beyond COVID-19 and consumers retain some new habits, restaurants risk margin erosion and surrendering consumer data to the third-parties taking the orders. Both these concerns emerged before COVID-19. The difference now is that it’s not only the most forward-looking restaurants that are paying attention.

Cybersecurity Moves to the Head of the Table

The importance to restaurants of third-party relationship management is growing as fast as their third-party delivery aggregators. In the wake of COVID-19, that growth is unprecedented.

Restaurants have always relied on third-party suppliers, but they now find themselves at the head of a table where multiple lucrative third parties are seated. The need for efficient and affordable cybersecurity solutions that evolve with cybercrime pertains as much to the restaurants themselves as to their third parties. Risks are increasing as restaurants struggle to maintain margins by integrating third-party delivery with their point-of-sale systems and loyalty programs. The situation isn’t novel, but restaurants being the hardest hit by COVID-19 is undoubtedly related to the predominance of small businesses in the sector. And the smaller the business, the harder it is to spare resources to invest in cybersecurity. Affordable effectivity is a must.

Table Talk Goes Social

The chicken sandwich wars of 2019 began as a social media rivalry between two American restaurant brands that grew as other brands joined in. It was a taste of the intense online environment to come.

The spirited online discussion was valuable to quick-service restaurants. It’s since become invaluable as everything has shifted online as a result of COVID-19. But it’s notoriously difficult to achieve that level of traction on social media to transform consumers into brand ambassadors. The use of restaurant transaction data to inform menus, pricing, promotions and marketing is a staple of competitiveness in the sector. Before COVID-19, combining that data with social listening platforms to ensure online engagement was a wise business choice. Now, with people online more than ever, it’s a business necessity.

Artificial Intelligence Gives Restaurants a Voice

AI-powered voice assistants were designed to bring faster and more personalized drive-through and drive-in experiences to consumers. It turns out they also happen to reduce unwanted physical contact during COVID-19.

The use of voice recognition over touch screens syncs with an upsurge in contactless payments by consumers unwilling to touch anything at the point of sale. Contactless payments have now emerged as the cherries on top of voice-powered digital menu boards. Personalization—based on past order history, time of day and even specific allergy requirements—is combined with speed as the order is instantly processed after payment is made with a contactless “tap.” The rising demand for curbside commerce is further making the technology relevant across the whole restaurant sector as “walk-through” becomes the norm for any restaurant without an existing drive-through option.

Robots in Disguise … as Chefs and Waiters

Robots were starting to take artificial intelligence in restaurants beyond the point of sale before COVID-19. The fact that social distancing isn’t needed with robots only makes them more attractive.

The fact that social distancing isn’t needed with robots only makes them more attractive.

Softbank’s humanoid robot “Pepper,” which Mastercard provided with a commercial payment application for restaurants, is now being used to avoid the spread of COVID-19. But even before COVID-19, restaurants were treading a fine line between automated personalization and actual personal touch. While human contact might be a challenge now, it’s an integral part of many dining experiences. Efforts to understand the degree to which robots can free up human employees to add personal touches elsewhere were being made before COVID-19 and will continue beyond it. And robots look well placed to help humans better handle any future social distancing requirements.

The hastening of the onset of predictable trends doesn’t mean that the impact of COVID-19 on the restaurant sector was entirely foreseeable. Financial difficulties aside, the idea that no touch could replace a high-touch approach to a flawless dining experience would have been unfathomable before. But white-glove service won’t keep its newfound clinical connotation forever. And while many people anticipate eating out less in the future, that perception is counterbalanced by eating out being the activity most missed by people during COVID-19.

 

Learn how Mastercard’s data insights, software platforms, consulting services and predictive analytics empower restaurants to innovate.

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