U.S. Restaurant Industry: Current State, Trends & Outlook
Today, we will explore the U.S restaurant industry, understand shifts in consumer behavior, look at key trends, and industry future.
March 2020 was the worst month for U.S. restaurants! For an industry that employs more than 15 million, 8 million were furloughed during the peak of the pandemic! By year-end, industry revenue had dropped $240 billion below projections! Today, more than 25% of well-established restaurants are permanently closed. Those that exist, say they will pivot soon.
Let’s look at the two primary concepts in the restaurant industry:
- Limited service, and
- Full service
Limited service is where you pick and pay before eating. These include coffee shops, drive-thrus, and take-outs. Full service is where you pay after eating and includes family dining, casual dining, and fine dining. Apart from this, there are various other fragmented foodservice options like cafeterias, caterers, food trucks, as well as restaurants operating at airports, theatres, and stadiums.
Let’s take a look at some operational trends. Concepts like ghost kitchens and host kitchens are delivery-focussed. They don’t need a physical presence and just provide catering.
Food halls are destinations that bring local chefs and startup restaurateurs under one marketplace. They are often set up in old mills or industrial buildings and offer unique local flavors.
We see a rising trend in urban farming, indoor kitchens, and restaurants embracing farm to fork philosophy.
Now let’s take look at food and menu trends. With increasing health awareness, consumers are leaning towards fresh, and organic foods, and diets like keto, vegan, and paleo.
We see Supermarkets entering the arena, offering fresh salads, soups, and prepared meals that taste more like homemade food.
During the pandemic a lot of folks got into cooking at home and this is where meal-delivery companies like BlueApron and HelloFresh thrived. They started providing all the ingredients you need to cook at your doorstep with detailed instructions so patrons could enjoy gourmet meals right from the comfort of their homes.
Let’s look at technology trends. With the advent of home theatres, there’s a rise in the consumer segment that prefers to eat at home. Curb-side pickup and drive-thru have now become a norm. Restaurants are teaming up with third-party food aggregators to deliver food and have also upgraded their delivery packaging.
We see that digital-savvy consumers are ordering via apps and QR codes and those visiting restaurants are using contactless payment methods.
In terms of the future,
- it is anticipated that the take-out only model will continue given that 60% of the food is presently consumed off-premises.
- We will see changes in real-estate site selection. With more than 110K restaurants closed, many restaurants are establishing new locations in cheaper neighborhoods and expanding drive-thru stations.
- The global ethnic market will grow 12% by 2024. This means that restaurants will need to offer diverse menus. With domestic opportunities shrinking, large restaurants may look to establish a presence in emerging international markets, adapting local tastes.
- By 2030, the population of 65+ will be higher than teenagers. This will lead to labor shortages in the industry that mostly hires 16 to 24-year-olds. This shortage could also drive increased automation.
In conclusion, despite these rapid changes, the industry is projected to grow to $1.2 trillion in the next decade. Further research needs to be conducted on menu designing for a diverse America as well as strategy formulation and execution playbooks for restaurant proprietors.
That brings me to the end of my presentation. We looked at key restaurant concepts, trends shaping the industry, and anticipated disruptions. Thank you.