Pepper, Automation, Future of work Thu, Oct 5, '17
These Four Trends Will Define the Next Decade of Restaurants

Marc Andreessen, the billionaire investor and co founder of venture capital firm Andreessen-Horowitz, once noted that “companies in every industry need to assume that a software revolution is coming.” As of today, over 260 tech startups have achieved a valuation of one billion dollars or more, disrupting industries like transportation, entertainment, healthcare, financial services, and, of course, e-commerce.

The tide of innovation is quickly rising in the restaurant industry; from supply chain to block chain, point-of-sale to voice-of-customer, a plethora of new technologies is available to restaurateurs designed to drive revenue and reduce costs. Each of these players, however, are converging into four major trends that will define the way the restaurant industry evolves over the next decade.

1. Accessibility

Customers demand that ability to access restaurant services from a plethora of media. In 2015, 70% of customers use their cellphones to view menus. Mobile-based orders accounted for 21% of transactions at Starbucks in the first quarter of 2016. And mobile-based usage has only continued to grow rapidly into the summer of 2017, with a projected 5-year CAGR of 57%.

But placing orders via phone or mobile app isn’t the only way that consumers want to interact with their favorite food vendors. Now, customers can order from TGI Friday’s with their Amazon account, as well as pizza on Facebook. Office workers can now order fast food directly from messaging apps, with no human interaction required.

We’re already seeing technologies like natural language processing and artificial intelligence converge to facilitate ordering any time, any place, and through any medium. Over the next decade, this will become not just a nicety, but a major demand restaurateurs must meet to thrive in a highly competitive market.

2. Availability 

In the same way that customers demand access to their favorite restaurants from whatever medium they choose, they also demand that their favorite restaurants cater to whatever location they’re at - be it home, office, or at the beach.

As of today, over 80% of publicly traded restaurant chains in the US offer delivery, and the pressure is mounting for all restaurants to offer this service. More than 74% of millennials and 56% of older adults expect delivery to be available from table-service restaurants. Consumer demand for delivery is so strong, McKinsey estimates that the addressable market for delivery services will grow to over 26 billion dollars by 2025.

Major players like DoorDash, Grubhub, and Caviar are being challenged by global powerhouses like Uber and Amazon. Despite the fact that these companies often times charge exceptionally high commissions to restaurants - often around 14% - these companies are sitting on a potentially 201 billion dollar market opportunity. And as their capabilities to deliver food anywhere at anytime continue to expand, restaurants may find themselves completely reliant on delivery services to make their goods available to consumers in a way that meets their expectations.

3. Analytics 

Big data analytics has changed every industry, worldwide, and food service is no exception. From back end logistics and supply chain, to front-end customer marketing, the power of data is driving the restaurant space to new levels of innovation and achievement.

Big data has clearly revolutionized customer marketing. In addition to the insights delivered through ecommerce tracking, new channels and platforms have expanded the visibility restaurants have into the customer life cycle. For example, digital loyalty cards have given restaurant chains like Arby’s valuable insights into their customers’ behavior, allowing for better customer acquisition and activation programs.

Big data’s power in marketing is also felt as restaurants make better menu decisions, offer more tailored goods and services to customers, and proactively anticipate their needs, even on a seasonal basis. Data-mining around customer behavior is also being used to drive a better customer experience in the physical restaurant, even driving aesthetic decisions like music and lighting.

On the back end, big data analytics is helping restaurants partner with local farmers to source produce more effectively, answering customer demand for local, as well as cutting food waste and making supply chain management far more efficient. Analytics are also being used to help improve employee turnover, which is upwards of 70% in the restaurant industry.

As technology advances and the breadth and depth of data available to restaurant chains increases, analytics will only continue to drive better efficiency and predictive decision making in the industry.

4. Automation

Automation has, perhaps, the most potential to completely change the restaurant industry over the next decade. We see automation changing the customer experience today, as businesses move to increasingly self-service models. In modern restaurants, customers can customize their own drinks. Meanwhile, mobile apps, self-service kiosks and point-of-sale solutions have automated payment.

Even delivery systems are being automated, as the concept of dinner by drone will eventually allow restaurants to serve food right to their customers’ location with minimal human touch.

The irony, however, is that, while these three trends are enabling restaurants to deliver a better customer experience, automation in its current state is actually putting more burden onto the customer - self-services, is of course, self-service.

This is where automation driven by robotics is showing true potential. Technologies like SoftBank Robotics’ Pepper are being deployed in restaurants to truly serve patrons. Artificial intelligence can enable humanoid robots to draw from available customer data and restaurant inventory to present tailored recommendations along with standard menus. Robots can already prepare and cook full meals, drawing from thousands of different recipes.

As advancements in robotics and artificial intelligence continue to evolve, robotic automation will reduce the burden on the customer completing these actions for themselves. Under human management and guidance, robots are poised to drive automation in restaurants, leverage analytics to their full capacity, and make goods and services both accessible and available in a way that’s tailored to the individual consumer’s needs.

Who Will Win?

From small, family-owned establishments to international powerhouses, restaurantees seek leadership through innovation. What places a mom-and-pop shop and McDonald’s on the same level? An “early adoption” attitude.

Adoption of new technology takes time, and rarely do technology trends so clearly present themselves as the demands for Accessibility, Availability, Analytics, and Automation do. This type of technology convergence offers an exceptional and reliable glimpse into the future of the marketplace, which is why early adoption is so critical. Whether it’s a small-to-midsize restaurant to a multi billion-dollar chain, those that embrace, adopt, and optimize the technologies that drive these four trends will be set up for success for years to come.

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