Restaurants are shrinking, going greener, and popping up in unconventional places.
Marketing campaigns are moving online and bold flavors are finding their way into all cuisine types.
Restaurant concepts and cuisines are both changing form, and consolidation is happening on several fronts of the restaurant industry.
What does all of this mean for you? You're about to find out in QMG's annual 2008 Restaurant Forecast. Read on to get the exclusive scoop on top trends poised to impact the restaurant industry in the coming year.
Modified-casual dining
A new category in the restaurant industry, modified-casual dining, is poised for rapid growth over the next several years.
Modified-casual dining offers the same service and amenities of a large casual dining chain or mega-independent casual operation, but in a much smaller footprint.
Like fast-casual restaurants, modified-casual concepts generally open inside in-line or end cap spaces, which are smaller than free-standing structures, and offer a specialized menu which allows for scaled-down back-of-the-house operations.
But modified-casual restaurants are more sophisticated than fast-casual operations because they offer table service instead of counter service. They also carry a higher check average than fast-casual establishments.
Modified-casual operations offer more promising sales-to-investment ratios than fast-casual concepts. A modified-casual operation may cost less than $800,000 to develop, but can generate more than $1 million in sales. In contrast, fast-casual operations costs $500,000 or less to develop, but traditionally produce less than $1 million in revenue
Compressing size to drive sales
Restaurant operations are diminishing in size as restaurateurs strive to boost efficiency and profits. The core aspect of new development is a high sales-to-square-foot ratio which leaves no room for inefficiency in design or floor space. Operators are scaling back kitchen designs and operations to save on floor space and turning to commissaries to produce original recipe products off-site.
Global consciousness
One of the most powerful words in branding is 'consciousness'. Consumers today are seeking out businesses that are focused, not just on making profits, but on making the world a better place. The restaurant industry is beginning to make global consciousness a top priority by showing they care on every level.
More and more restaurant companies have taken steps to make a difference by preserving natural resources, designing operations with conservation in mind, building affiliations with non-profit organizations, and by fostering personal growth in the workplace through mentoring, educational and diversity programs.
Non-traditional sites
Escalating real-estate prices and dwindling availability of premium locations are convincing many quick-service and fast-casual operators to open in non-traditional sites where construction costs are lower, rental terms are more reasonable, and volume and sales rival traditional venues.
Operators are opening on campuses, hospitals, office buildings, airports, stadiums, kiosks, and mini-outlets in convenience stores. In these non-traditional sites, competition is less fierce and brand-building is easier.
Consolidation
Consolidation is changing the face of the restaurant industry. Top restaurant companies are merging to boost their economic and growth potential and win a larger market share.
Consolidation is also gaining steam in the form of purchasing cooperatives. Small restaurant operators are teaming up and forming or joining buying groups that allow them to enhance their purchasing power, lower costs, and improve their competitiveness, all while retaining their own brand identity.
Drastic Concept Overhauls
As the casual-dining segment continues to erode, mid-market chains like Bennigan's Grill & Tavern, Applebee's Neighborhood Bar & Grill, and Chili's Grill & Bar will be forced to reinvent themselves to win back guests. Many will need to introduce new menus or conceptual designs to survive.
Experiential Branding
Restaurants can't just be concerned with good food, good service, and good ambience anymore. Experiential branding is a restaurant's opportunity to build lifelong relationships with guests.
The guest experience is everything. Operators must ensure the restaurant's brand is in action through all touch points, including culinary offerings, service, uniforms-- even wall decor-- to win credibility and loyalty with customers.
Check out the next QMG newsletter for part two of this series.
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