What’s Working and What Will Become Part of the New Normal
Change is upon us. Innovation, creativity, and reinvention describe how operators are reacting to the COVID-19 crisis. While not everything being tried is working, many of the promotions, programs, and changes are gaining traction. The question for all of us is this: Which of these new operator actions will stay with us and how will they change the industry?
Ultimately, the consumer is driving many of these operator actions. As the foodservice industry comes fully back on line, consumer behaviors, needs, and reactions will dictate much of what operators do next.
As we look further into the impact of the coronavirus on the foodservice industry, what’s working for operators and what will become part of our new normal is the subject of this article. How are operators addressing consumer’s fears about minimizing contact? What are they doing to drive traffic and boost sales? How are they supporting their employees through these challenging times? Which of these initiatives will continue into our new post-COVID foodservice environment? These are some of the questions we answer here. Plus, we will look at how operators’ mindsets and approaches to business will change, and how their expectations of suppliers will change.
We believe it is helpful to spend time looking forward because predicting the long-term impacts of this crisis can help us better prepare our companies, processes, portfolios, and employees for success.
These are unprecedented times and we expect some significant revolutions in how operators conduct business. We are all looking forward to “coming out the other side.” Let’s now look forward to what might change.
What’s Working and What Will Become Part of our New Normal
We have organized this article into eight “What’s Working” themes followed by a list of implications and predictions on how each will impact our new normal. Our themes range from how operators are communicating with their patrons, and what they are saying, to new back-of-house operational procedures, their use of technology, new employee programs, new financial management practices, and their interactions with suppliers.
1. Aggressive Merchandising & Promotion Tactics
Simply stated, operators are pulling out all the stops to hold onto traffic and maximize their revenue. We are seeing extreme discounting of up to 50% off menu items and creative merchandising offers such as “buy one hot meal and get one cold one for tomorrow” and new bundling offers such as date night meals that include ingredients and directions for preparation and three-course meals that include a half-price bottle of wine.
Free delivery is another popular tactic as many people don’t want to go out in public unless absolutely necessary. New on-premise signage is popping up to remind consumers that “We’re Open” and “Curbside Pickup” is available. Pre-COVID, an empty parking lot meant the location is closed. Now, we look for other signs that identify that we can stop and get something to eat.
Challenged by the dramatic decrease in traffic, some operators are testing new bolt-on business models to keep the cash coming in, including Express Grocery and Farmer’s Market offerings. Subway, Panera, and Sysco have all launched grocery programs. Now you can pickup milk, bread and toilet paper with your foot-long sub!
Other operators have launched support programs to help their local communities and people out of work, furloughed, and the elderly.
As we look forward, we predict some of these new tactics will remain and expand while others will not. Necessity is the mother of invention and it will be exciting to see how the industry evolves its merchandising and promotions going forward. Here’s what we see happening.
Looking Forward: Implications
It’s not all about price. Price will not be the only critical element to entice a consumer to come to a restaurant. Consumers will evaluate options and experiences based on a broader set of criteria with greater emphasis on ease of ordering, pickup and delivery options, food safety, and sanitization.
Telling a real story. When a story is told about a restaurant’s brand or a specific menu item, it needs to be real, authentic, and resonate with the consumer. Consumers may become less accepting of marketing “fluff-messaging” and look for fact-based points of difference.
Community activism. Community support will take on greater importance moving forward and consumers will look for more than simple sponsorship of the local baseball team. Our collective COVID experience has spawned a greater sense of community and businesses that find a way to tap into that and make it part of their DNA will experience greater consumer loyalty.
Family meals. Family meal bundles will become a standard for many brands, but it will be limited to the most popular items. Operators will innovate and test more ways to make it easier to order for more than one person and to order so that you have built-in leftovers.
Curbside pickup and delivery of two-three course meals. Fine dining and polished casual will accelerate their investment in takeout to grab their fair share of this growing market. The challenges with takeout that have hampered them in the past, including the inability to control food quality and presentation, the lack of personal tableside service, and the lack of the dining room experience, will be addressed and overcome.
Meal kits. Kits will become part of more restaurant brands, and even non-commercial operations, “new normal.” Meal kits provide the consumer with the opportunity to save money and have fun creating and cooking their favorite foods from their favorite restaurants.
Groceries at Foodservice. Express grocery will remain, to a limited degree. The grocerant trend, foodservice, and prepared meals in grocery stores, has been fueled by convenience and that same consumer need should translate in reverse. If executed and promoted properly, operators in all segments can take advantage of this. Sale of proprietary restaurant items like sauces, breads, frozen soups, beverages, seasonings, and even branded napkins can drive revenue. If a consumer is having supper delivered or picked-up, why not make it easier for them add on some of the restaurant’s signature items and grocery staples.
No more free delivery and lower third-party delivery fees covered by operators. Free delivery will go back to regular cost. This is a cost that operators cannot absorb indefinitely. Curbside may pick up steam as an alternative to higher delivery charges. As for third-party delivery fees, we predict fee structures with Grubhub and Uber Eats will change. They have been punitive to the operator and will be renegotiated.
2. New No-Touch Food-Safety Protocols & Services
“No-touch” and “frictionless” are now terms we have all adopted. Minimizing contact is top-of-mind for consumers and operators have come up with creative and effective ways to enable this and to send clear visible clues that sanitization and distancing is top-of-mind, such as gloves, masks, floor stickers, and parking cones to maintain distance while standing in line. Consumers don’t see these as an inconvenience, but as a thoughtful and appreciated gesture.
With the focus on off-premises sales, operators have had to figure how to make curbside pickup, takeout, and drive thru more “frictionless.” We’re seeing credit-card swipe machines stuck out the drive-thru window on a pole and having your order handed to you in a plastic tray to maintain a safer distance.
Front-of-house sanitization and no-touch protocols have also been widely adopted. Mask wearing is becoming standard and shielded face coverings and Plexiglass walls are being adopted in front of cash registers and at drive thrus. McDonalds just announced all store staff will be wearing gloves and masks, both for their safety and for patron’s peace of mind.
Government regulations on mandated use of PPE is also expected.
Tamper-proof packaging has become a must-have and operators have either bought better packaging or adopted home-made solutions using tape and staplers. Some operators have also included safety instructions that come in the take-out bag and provide safe-handling tips.
Moving forward, we see some of these tactics and protocols remaining with us. Some may only be short-term as “transitionary comfort practices,” and others will evolve and become part of our new post-COVID reality.
Looking Forward: Implications
Frictionless curbside pick-up. Curbside pickup will become part of virtually every full-service operation. Apps will allow for ordering, payment, communication, and pickup with the goal of zero contact between patrons and staff.
Frictionless drive thru. Similarly, we predict widespread adoption of greater no-touch protocols for quick-service restaurants and ultimately fast casual drive thru. These will include ordering on an app and driving through, no-touch payment at the window, improved window-side sanitization practices, and continued use of gloves.
Overt employee sanitization practices. New and expanded sanitization standards for employees will be put in place. Simply having a sign that says “employees must wash hands” will not be good enough. In our post-COVID world we will see overt cues of safe-handing/no-touch protocols such as broad use of latex gloves and mandatory use of masks, expanded dining room, and bathroom sanitization practices, and new cleaning products that make it easier and more effective. There will be signs on tables and doors communicating these practices. Consumers want to see these and smart operators will go out of their way to make sure they do.
Mandated sanitization practices. Of course, the government will help and launch new sanitization and safety protocols. These could include requirements for operators to spray down their restaurants on a regular basis with a hi-grade disinfectant similar to what the airlines are using. We may also see regulations for glove usage as well as new training requirements for employees on sanitization and food handling.
Self-serve anything will become a safety issue. Existing self-serve condiments, beverages, and touch-screen ordering platforms will need to be modified. We will likely see beverage machines either go back behind the counter or be redesigned to be no-touch. Buffets and salad bars will be re-thought or disappear entirely. Portion control condiments will see greater adoption and these will be kept behind the counter and added upon request. Anything that more than one patron touches will either be regularly sanitized or removed.
Sick employee protocols. New rules for what constitutes being sick will be commonplace and managers will be required to keep an eye out for signs of employee illness. What was allowed in the past will no longer be acceptable. Short term some operators will mandate employees to have their temperatures taken before their shifts begin, as Yum! Brands recently announced.
Tamper-proof packaging. It goes without saying that packaging needs to change. This will be one of the greatest areas of immediate operator investment which will be fueled by consumers’ willingness to pay for it. We may also see restaurants itemize on the bill “+$1.50 for tamper-proof delivery packaging.” Delivery packaging will become a differentiator and part of an operator’s brand experience and no longer be viewed as a cost to be minimized.
3. Focus on Simplifying Operations
In tough times, we tend to step back and regroup. Over the past few weeks we’ve seen a number of changes and new programs designed to simplify the restaurant operation. One of most common simplification actions has been a forced one. Closing the dining room. With operators losing their dine-in business and consumers still looking for “safe” restaurant food there has been an obvious and expected increase in takeout, delivery, and curbside pickup. For operators who previously had never offered these service or had not focused on them, the current COVID crises has forced experimentation in these areas with mixed results.
Another area of significant simplification has been with the menu. A limited menu that focuses on the most popular sellers allows customers to quickly make a decision and order. It’s also easier and faster to produce with a limited staff so orders can be executed quickly without mistakes. Reducing the menu has also led to a reduction in the number of skus in the kitchen which has made it easier to manage inventory and place orders for ingredients. After years of menu expansion and kitchen complication perhaps a period of “regrouping” will lead to good things.
As we move forward, foodservice operations will be simplified to make them safer, require less labor, require less space, and be more efficient overall.
Looking Forward: Implications
Restaurants will go back to their core menus. We predict that a “back to basics” approach will become the norm. Menus will be reduced. Well thought out differentiation will still be crucial to success, but innovation stage-gate hurdles will be stricter. Innovation will need to drive traffic and incremental revenue not simply be content for the next commercial.
Reduction of SKUs. Paring down SKUs that are used infrequently will make it easier on purchasing, receiving, and storage as well as reduce waste. It will make the operation more productive and reduce labor needs. Operators will make each product coming into the kitchen work harder, such as through the use of bold flavors and flexible-use ingredients that can be incorporated into multiple recipes and creative LTOs.
Peeling off of staffing layers. Foodservice employees in larger operations have become specialized in their roles and we anticipate a move back to “multi-taskers” who are well trained to handle multiple roles. This will allow an operation to run leaner and provide more flexibility in staff scheduling.
Practical packaging. Effective, safe, multi-use take-out packaging will take the place of cheap packaging. We see the dimensions of great packaging being expanded from, priced right + sustainable + functional, to also now include tamper-proof.
Comfort food innovation. Consumers retreat to comfort foods in difficult times. Moving forward they will continue to crave these items, but we see this as an opportunity for operators to be creative in a simpler way. Similar to the innovation explosion we’ve experienced with hamburgers and more recently with mac & cheese, other comfort foods will be turned into successful, yet simple, innovation platforms.
4. New App Modifications & New Technology
Although we are only weeks into the COVID crisis we are already seeing some operators using technology to address the situation. One of the fastest tech fixes has been updating apps and websites to communicate with consumers. In some cases, we have also seen new functionality around ordering, pickup, delivery and community support. But these are only the quick fixes and barely scratch the surface of what post-COVID technology can assist with.
Over the past decade there has been an explosion of new technology for restaurants from ordering, to production, to inventory, to staff scheduling. Looking forward we expect tech companies to play a key role in helping operators manage the challenges of safety, sanitization, distancing, and no-touch.
Looking Forward: Implications
New app functionality. We can expect to see a flurry of new app functionality to help consumers research and track their new post-COVID foodservice buying criteria, from sanitization and no-touch protocols, to curbside delivery, to menu bundling services, to foodservice grocery shopping options and community support programs. For employees, we can expect new sanitization and food handling training functionality and heath and sick-day trackers.
Self-serve ordering terminals. We live in a touch-screen world. In the short-term, consumers will likely continue to wear gloves or use a napkin or their sleeve at order touchscreens or self-service drink dispensers, but in the long-term there will need to be a no-touch solution. We expect new technology such as facial recognition and voice-driven solutions to be eventually adopted.
Consumer order tracking. Our collective obsession with tracking orders will be amplified by our new compulsion to know who has touched our food. We can expect to see Amazon-like tracking come to foodservice delivery and curb-side orders along with video of our food being prepared. Consumers will want more. Order tracking communication will be more common, detailed, and required.
Sanitization tracking. Consumer’s appetites for information on an operator’s sanitization practices will be greater than expected. Accessibility to data about what operators are doing related to sanitization and safety will become a necessity. Tools to track this data and communicate to consumers via apps, websites, and in-restaurant trackers will become commonplace. Simple cues to show consumers that they are safe, like table tent that reads “this table has been sanitized” will become expected and appreciated. •