The Future of Hospitality – The Tables are Turning and ‘The Times They are a-Changin’…
Wednesday 4th October
Big changes are coming for the hospitality sector. The current model of building chains is coming under pressure due to shifts in demographics and the values of the younger generation of customers. In the run-up to London Food Tech Week this October, Chris will be sharing his perspectives on each of the week’s key Day Themes. This week he explores our day focused on the The Tables Are Turning; where he deep dives into some of the trends and technologies in the hospitality industry and where the future of eating out and in the home may take us.
We’ve had a recent influx of restaurant and site closures being announced – Byron, The Restaurant Group, Handmade Burger Co, Prezzo, ASK, Strada and others all have units for sale. Trading updates have softened for many including Franco Manca and Wildwood. While this might be seen as the natural order of oversupply and weeding out weaker performers, I believe it is the start of a fundamental change in the structure of hospitality. Despite brewing for a while, it has gone relatively unnoticed, masked by favourable consumer growth and consumption of the past few years.
The shift in hospitality in the UK might be initiated by the quadruple whammy of increased labour costs (both in minimum and living wage), Brexit uncertainty (exchange rate impact on imported supplies), business rate increases and saturated competition (with over 700 estimated restaurants opening in the UK in 2015 alone!). These pressures will no doubt force operators to think more widely about how they continue to engage and attract customers across a number of channels while keeping costs under control.
Large brick-and-mortar brands and established businesses are being impacted by food startups and delivery services chipping away at their core business and shifting consumer behaviours and expectations.
Chains across the board are going to find it harder to survive on rollout options alone. The days of the cookie cutter, “how many stores can I roll out” attitude needs to be re-imagined. The business model for these groups needs to adapt to become more tiered and omni-channel to take advantage of brand positioning and customer reach.
Turning with the tables
There is a need to think holistically about different experiences and ways to engage customers. From in-store and in-home dining experiences all the way through to home delivery options. The current categorisation of out-of-home vs in-home dining won’t be fit for purpose anymore. Where previously, ‘in-home’ meant anything coming out of a supermarket, be it ingredients that were cooked from scratch at home to ready meals; and ‘out-of-home’ meant anything from a full-service fine dining restaurant to your local Chinese take away – these categorisations are increasingly blurred.
We now have delivery services that let us consume a full-blown restaurant meal at home and we are also seeing supermarkets offer branded out-of-home food counter operations within their stores, like the partnerships between Sainsbury’s and healthy eating chain Crussh, and M&S with sushi operator Wasabi.
We need to recast old categories in order to understand the market shifts occurring. The future will operate on a spectrum, akin to the film industry which has been disaggregated by the internet over the years. Where previously value was concentrated in the hands of a few production studios and distributors, now a combination of video, Netflix, Amazon Prime, cinema, DVD and TV exists and the value chain is being redistributed towards Netflix for the bulk of viewing occasions with an impact on dining occasions. The obvious observation being that many casual dining operators co-located within multiplexes will be impacted.
As this summer’s statistics on US cinema show, attendance is down 52% Y-T-D (per Box Office Mojo) with this summer’s worst Labour Day weekend closing in 17 years. It won’t be long before these trends start impacting closer to home – we’ve been here before with the TV, video and DVD revolutions but on-demand movies alongside food delivery disruption now closes the circle to drive customer inertia.
What then for dining and hospitality?
I’m not suggesting there isn’t a place on the high street for dining outlets. We just aren’t likely to need the same density of coffee shops, burger joints and mid-market casual dining offerings on a relentless roll out. Nor am I suggesting that no one will go out to eat – that would be likened to suggesting the death of cinema from the rollout of DVD and Netflix – we’re certainly not there yet.
What will happen though, is a significant redistribution of wealth along a spectrum of wider options. The in-store dining experience in the future will only be a small part of the overall customer’s willingness to engage and purchase from a restaurant. To maximise the value of a customer, the brand needs to figure out how to engage across multiple channels and locations.
There will always be space for the temples of experience – whether it’s the newest single offering pop-up or food truck or something on a grander scale. Witness The Ned, Soho House’s new venture and one of London’s most audacious and ambitious openings in years. But the dark kitchen that relies only on digital and packaging assets and significantly less CAPEX is likely to become a channel too attractive to ignore when return on investment (ROI) can be achieved without the burden of an expensive fit-out.
The savvy operator will seek to partner both distribution channels and a variety of formats to understand the When, Where, and How a customer wants to be engaged in order to satisfy the right demand.
A whiff of what’s cooking
So, what does this spectrum look like? It covers everything from Deliveroo, Just Eat, Uber Eats doing takeaway deliveries to La Belle Assiette providing private chefs in the home; from Hello Fresh, Mindful Chef, and Gousto with meal kits, to the premium end of the market where the Cook and the Thief and Fanceat aim to deliver Michelin-starred menus to your dining table.
A new startup Pasta Evangelists is delivering restaurant quality pasta to your home, ready to eat in 3 minutes – The total time from Ubereats is less than 15 minutes compared to your typical 30 minutes wait for your normal takeaway. With Prue Leith, Giles Coren and William Sitwell on board as the Evangelists – it might not be so far into the future that you could imagine plugging yourself in to see one of them wax lyrical about the origins of the recipe and the provenance of the ingredients as you enhance your dining experience with both VR and AR layers.
For celebratory dinners with friends over – a not so distant future could envisage you making starters by Ollie Dabbous, mains by Gordon Ramsay, and dessert by Heston Blumenthal or whatever combination you fancy delivered to you in perfect harmony. On a normal weekday, perhaps just a quick Jamie Oliver branded lasagne or Franco Manca pizza printed on your Foodini 3D printer and set to cook in time for the kids coming home.
Across the pond, CafeX, a robotic café developed by Hong Kong entrepreneurs and backed by Silicon Valley investors, is serving coffee just the way the customer wants it. It is already taking on some interesting challenges in San Francisco with a vision to replace Starbucks partners to free them up to pursue more engaging uses of their talents. Roostersbot a chicken robot concept looking to disrupt Chik-fil-A and Chowbotics looking to automate fresh custom ordered salads are also at the forefront of this shift.
The spectrum now also includes smart vending machines. The current vending machine dispensing unhealthy snacks and standard long shelf-life soda pops will evolve to include Smart Vending concepts like Mr Lee’s Noodles, an interactive noodle kiosk with data analytics and Berries by Astrid, a Swedish smoothie vending machine using fresh ingredients blended on demand. The ability to get ever fresher, custom ordered meals on demand in a variety of places is blurring our concept of dining.
This change won’t happen overnight but like many other technological advances, the behavioural change will sneak up upon us. Remember when the days of the self-checkout at the supermarket was unheard of and everyone expected to be served by a manned check-out cashier? We now don’t bat an eyelid at supermarkets with a dozen self-checkout stations for every one manned station. It won’t completely eliminate the human interaction but the shift has started and the times are certainly a-changing.
Come join us from 30 October – 3 November during London Food Tech Week as we explore the future of eating in the home, workplace and restaurant alongside a host of other key Food Tech trends that will be driving the industry over the next 12 months. We’ll discuss the opportunities, innovations and tech for chefs and restaurants to look out for plus so much more so don’t miss out!
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