Channel Strategies

In long-term partnerships and marriages, anniversaries often are marked by a specific element to signify as an inspiration for a gift. Among the iconic milestones are the 25th and 50th anniversaries, commonly known as the silver and gold anniversaries, respectively.

Although not as personal as anniversary milestones, the restaurant industry is poised to hit its own milestone this year as sales are projected to exceed $1.1 trillion, according to the National Restaurant Association’s “2024 State of the Restaurant Industry Report.”

“With more than $1 trillion in sales expected this year, the state of the restaurant industry is strong thanks to the agility of its operators and employees,” said Michelle Korsmo, president and CEO of the National Restaurant Association, in a statement in February. “As our report shows, restaurants are finding ways to adapt to the challenges of increased food costs and supply chain disruption. Restaurants have responded well to customers’ desire to have more opportunities to enjoy restaurant meals, which continues to grow sales, create employment opportunities, and foster a strong sense of community.”

Despite this milestone year ahead, experts note that the channel is not without its challenges. David Portalatin, senior vice president and industry adviser of food and foodservice at Chicago-based Circana notes the impact of a decline in foot traffic as well as challenges with inflation.

“Customer traffic at commercial restaurants is down 2% for [year-to-date] (YTD) April 2024 vs. year ago,” he says.

Additionally, inflation has hampered the channel. “The average eater check at commercial foodservice operators is up 5% versus year ago, and is up 36% versus 2019,” Portalatin says.

The National Restaurant Association’s report highlights how foodservice operators are coping with inflation, including finding “new suppliers, removing items from their menus, adjusting portion sizes or substituting lower cost items all in response to elevated food prices,” a release states.

In fact, 77% of operators reported supply delays or shortages of key food or beverage items in 2023, it notes.

Embracing technology
As foodservice operators balance these challenges, many are seeing a path forward with digital solutions.

The National Restaurant Association’s report highlights the growing influence that technology is having on foodservice operators. However, because affinity varies in terms of the consumers and the restaurant, application of these advancements are being approached strategically. The report highlights that among consumers, 46% of adults think technology has a positive impact with Gen Z and millennials over indexing at 64% and 66%, respectively.

Given this, the National Restaurant Association’s report notes this can help operators makes decisions on making investments in this technology. It found that in 2023, 48% of operators made technology investments, yet 60% plan to make those investments in 2024.

Chicago-based Technomic in its Whitepaper titled “What’s in Store for 2024” the market research firm highlighted how tech-enabled hospitality will take on a greater role.

“In the coming year, we’ll see technologies get implemented using the kitchen as the central hub for the purpose of freeing up staff time to enhance the customer and employee experience,” the Whitepaper stated. “Online ordering systems will be integrated with kitchen systems to ensure a seamless takeout experience and facilitate order-ahead drive-thru service. Sales data will combine with supply chain management and marketing software to better predict supply, demand and proper staffing levels, as well as deliver data to drive loyalty.”

Chicago-based Mintel further elaborates in its May report titled “Foodservice Loyalty – US” that digital experiences in foodservice must deliver on the core needs of quality, value and convenience.

“Consumers’ engagement with an increasingly tech-focused industry puts loyalty program apps in the unique position of delivering on core needs through digital channels,” the report states.

Mintel’s report further notes that consumers are approaching loyalty apps as a savings app ― for both money and time.

“The most sought-after loyalty program feature is notifications for new deals, which can prompt spontaneous purchases, direct traffic to specific dayparts and form new buying patterns,” the report states.

The National Restaurant Association’s report goes deeper, highlighting these loyalty apps’ abilities to retain consumers.

“To further fuel customer retention, the data suggests focusing on loyalty and rewards programs,” the association states in a press release. “Customers prefer to see this type of program on a smartphone app, further enforcing the need for technological innovation and creating additional touchpoints between customers and restaurants.”

Innovation with beverages
As more in the foodservice industry embrace the role that technology will play in the future, they are just as focused on applying that to their menus.

Despite the attention that food gets when it comes to foodservice, beverages are a vital role.

“Beverages are present in 84% of orders and the percentage of orders including a beverage is up almost 1 percentage point versus last year (Q124 vs. Q123),” Circana’s Portalatin says. “However total beverage servings volume declined about 1% with the softness in overall customer traffic.”

He adds that when it comes to serving volumes, it has been non-carbonated beverages that are on the rise.

Technomic’s Whitepaper, meanwhile explains that foodservice purveyors are looking to go more granular, moving away from vague descriptions.

“Cocktails won’t contain just any apple flavor, but rather that of a Granny Smith,” the whitepaper states. “Generic red wine vinegar will move aside for Barolo wine vinegar. And raw beef dishes will become more distinct as filet mignon carpaccio and tenderloin steak tartare.

“Not only will ingredient varietal types find momentum in menu descriptions, but so will callouts of regions or countries of origin and influence, especially lesser-known ones, such as Haitian honey and Senegalese-style chicken,” it continues. “This in-depth menu detail will further push quality, premiumization and transparency in the consumer mindset.”

As part of its summer menu, specialty coffee and tea house The Coffee Bean & Tea Leaf, Los Angeles, is pushing forward premiumization with the release of four new beverages: Iced Brown Sugar Latte with Boba, Iced Ceylon Milk Tea with Brown Sugar Boba, Iced Matcha Cream Strawberry Latte, and Iced Matcha Cream Mango Latte.

“At The Coffee Bean & Tea Leaf, we pride ourselves on being at the forefront of flavor innovation and using the highest quality tea and coffee ingredients,” said Dee Hadley, head of marketing for Americas at The Coffee Bean & Tea Leaf, in a statement. “We’re thrilled for guests to join us on our summer adventure of flavor with these bold and delicious boba and matcha beverages and experience the perfect blend of taste and texture. Boba is a fun and flavor-packed way for guests to build a customized beverage, including their favorite iced coffee or iced tea drink. So, how do you boba?”

This premium approach also is being tested within fast food operations. This spring, Taco Bell Corp. announced that it is testing Agua Refrescas, a new line of beverages infused with sweet and tangy fruit flavors, mixed with real fruit pieces and a green tea base to boost energy. The new drinks are Strawberry Passionfruit, Peach Mango, and Dragonfruit Berry at an Irvine, Calif.-based restaurant.

“We want to make our beverages just as iconic as our food,” said Taylor Montgomery, chief marketing officer at Taco Bell Corp., in a statement in April. “Our new Agua Refrescas are a perfect, vibrant pairing with everything our fans crave from Taco Bell and will help us on our journey to make Taco Bell a beverage destination.”

As foodservice operators embrace technology and elevate their offerings, consumers will have more opportunities to show them whether they want more of this. BI