Restaurant Industry Innovation is on the Menu
Local health restrictions, societal shifts, and economic instability took a toll on the restaurant industry in the last couple years. The results: one of the most challenging operational environments in recent history.
Supply chain disruptions
Restaurants, suppliers, and farmers are still playing catch up from food shortages. Ninety-six percent of restaurant operators recently experienced delays or shortages of key food or beverage items.1
Nearly four in five restaurants don't have enough employees to support operations, with 78% of owners citing staffing as their top challenge.2 Many restaurants are forced to cut back hours because they don't have enough employees to complete a full shift.
Delays and shortages all translate to higher operational costs for restaurants. Record inflation and an increase of more than six percent (6.1%) in U.S. food costs is putting an additional squeeze on profit margins.3
The news isn’t good. Some experts predict the restaurant industry won’t fully recover until 2024.4 Nineteen percent of owners think the industry is permanently changed.5
But the restaurant industry has faced adversity before. And still operators and owners evolved, creatively and nimbly meeting challenges as they arose. This time is no different.
Restaurants continue to adjust their business models to serve customers and boost revenue.
In-person dining wasn’t possible during the height of the pandemic. Restaurants were forced to adjust quickly. Many shifted to curbside pickup or delivery, but some new establishments that launched mid-pandemic opened as pickup and delivery only from the start. This works well for consumers, 53% of whom consider takeout or food delivery essential to their new normal.6
Ghost kitchens, cooking spaces set up only for food prep, are also emerging as an option for restaurants that need to offer delivery, takeout, or drive-through services. With this model, multiple restaurants may operate out of the same kitchen space. Ghost kitchens help restaurants reduce overhead, increase revenue, and address staffing shortages.
Technology enables greater efficiency and customer satisfaction.
Eighty-seven percent of restaurant operators, owners and managers say technology adoption was a key factor in surviving the pandemic, noting how technology can help improve the customer experience, streamline operations, and increase profitability.7 For example, menus and final bills can be delivered via QR code or digital check, so servers can focus attention on other areas of the dining experience. Digital menus also offer an enhanced customer experience, where restaurants can suggest items that “pair well” with a meal to increase check totals.
Restaurants are also turning to artificial intelligence (AI) to streamline operations in many areas, including:
- Notifying customers of order status and pick-up times.
- Voice-activated ordering via AlexaTM and AI-powered kiosks that recognize customers and their preferences – even serving food.
- Back-office functions like scheduling and inventory management.
Innovative, guest-focused technology can increase tips by up to 40%,8 while lowering staff turnover by 13%.9
Robots are a fun functional technology for restaurants.
A familiar technology in manufacturing, robots are now joining the restaurant workforce. Restaurants are using robots to perform tasks from taking orders, to preparing and serving food – all to the delight of customers who watch.
Last year, in partnership with Kiwibot, Chic fil-A® piloted a fleet of semi-autonomous robots to make deliveries in select California cities.10 Similarly, Dominoes is working with self-driving, robotic delivery company Nuro. Nuro received the first permit to operate commercially in California, as well as funding from Chipotle.11 Industry expectations are great for robotic delivery, which is projected to reduce delivery times, while also reducing costs.
Countering setbacks with innovation, the restaurant industry’s creativity is one of the most positive stories to come out of the pandemic. For a more in-depth discussion on restaurant banking and finance, contact our Restaurant Finance Group or your Synovus Relationship Manager.
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Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- National Restaurant Association, “Restaurants are Being Challenged by Rising Food Costs and Supply Chain Issues,” December 17, 2021 Back
- James Beard Foundation, “Restaurants Need Help to Survive the Winter,” December 9, 2021 Back
- Successful Farming, “Stability Uncertain After Global Food Prices Surge 28% in 2021,” January 7, 2022 Back
- McKinsey & Company, “How Restaurants Can Thrive in the Next Normal,” May 19, 2020 Back
- National Restaurant Association, “COVID-19 Restaurant Impact Survey VIII,” September 2021 Back
- PBS NewsHour, “How Restaurants Have Innovated to Face the Pandemic,” September 14, 2021 Back
- Restaurant Dive, “Report: 50% of Operators Plan to Deploy Automation Tech in 2 to 3 Years,” October 15, 2021 Back
- Modern Restaurant Management, “Turning Pain Points into Strengths: How to Create a 360-Degree Dining Experience,” July 20, 2021 Back
- Restaurant Dive, “Why Aren’t Restaurant Workers Coming Back? Here’s What the Data Shows,” September 8, 2021 Back
- Restaurant Business, “Chic fil-A is Testing Robot Delivery,” April 13, 2021 Back
- Restaurant Business, “Chipotle Invests in Self-Driving Delivery Company Nuro,” March 25, 2021 Back