Tuesday, February 14, 2023

Restaurant Customers Are Migrating Is Your Restaurant Evolving


Consumers are dynamic not static.  If you are running a restaurant like you did in 2015, 2019, or 2022 it’s very likely that your year over year customer counts are in decline.  According to Steven Johnson Grocerant Guru® at Tacoma WA based Foodservice Solutions®, “Where, when, and how consumers buy a meal and eat a meal are evolving faster than many food retailers can keep up with.”

While technology seems to have solutions to many legacy problems that all food retailers have been looking for, the question remains what helps me keep up with our evolving consumer? Recently panelists at NRF 2023: Retail's Big Show was presented by the National Retail Federation (NRF) had a top-of-mind question surrounding technology in the retail space is whether automation is going to replace labor. Today technology is about more than just labor. 

Ira Gleser, director, industry advisor at Microsoft, stated, “These are really exciting and challenging times in the restaurant space from a technology standpoint," Now according to Gleser, the pandemic spurred the acceleration of digital transformation. Customers are owning the guest journey like never before, and restaurants are pivoting to meet the guests where they are — in fact, many have already pivoted.”

Johnson and the team at Foodservice Solutions® has documented the increasing migration from legacy restaurants and grocery stores to grocerant Ready-2-Eat and Heat-N-Eat fresh prepared food since 1991 which is only intensifying with the popularity of mix & match meal component bundling .

Gleser pointed out that there is a need to expand the view of technology and look at the back of the house. Operators should be thinking about the role technology can play in improving efficiencies, taking friction out of the jobs of frontline workers, and how technology can empower team members.

Bruce Hoffmeister, chief information officer at Cracker Barrel Old Country Store , thinks that while dine-in traffic has returned post-pandemic, it's not as simple as that.  

Hoffmeister noted that, "It is easy to say traffic is back for dine-in, because it is, but it's much more complicated than that," …. "A lot of people don’t realize that pre-pandemic dine-in traffic across the industry was declining steadily year over year. It was going down about 2 percent a year and of course, it fell off the table during the pandemic. It is coming back up, but it is still not back to pre-pandemic, and what we are seeing is the pre-pandemic trend of a slow erosion of dine-in traffic continues because of all the off-premise opportunities that customers have."

That said, the team at Foodservice Solutions® was the first to identify, quantify and qualify the grocerant niche, its customer attraction, migration, and adoption. Regular readers of this blog know it was Foodservice Solutions® Steven Johnson who was first to coin the term Grocerant.   

The question now becomes: What's ahead? Gleser continued, "The consumer is driving the journey bus," … "They are very clear on what they want, where they want it and how they want it."

Hoffmeister agreed. "In today's world, no matter what industry you are in, the guest wants more control than ever and we need to give it them," he said, adding that the challenge is not every guest is the same.

So, technology-wise, restaurants can offer guests the ability to join a waitlist before they arrive, have tableside tablets for servers to enter orders, and offer customers the ability to pay without having to go to a cashier by scanning a QR code at their table. 

Hoffmeister  continued, "From my perspective, it's called Cracker Barrel Old Country Store, so we have to blend technology into the old country store in a way that fits well and feels like it's not alienating to some guests while empowering other guests," …. "That's part of the balancing act we have to look at from a technology perspective. It's always a balance of blending high tech with high touch."

Technology can’t fix prices when corporate raises prices so they are out of reach for many consumers as the last earning call reflected.  However,  Colin McGuire, vice president of corporate systems at Chipotle, stated  “After some testing, the chain rolled out a contextual restaurant experience, "which essentially allows us to anticipate the intent of the customer using the mobile app; do things like message them if they are going to the wrong restaurant; [and] messaging as close to possible in real time when their meal is ready, when it is going to be put on the shelf, when they are making the meal,"  "We are taking it to the next level of communication."

The next step, McGuire said, is to use the data customers have allowed Chipotle to capture to customize the experience even more. For example, the brand will not send a customer a beef promotion if they've never order beef.

A little note here both Hoffmeister and McGuire are members of Microsoft's CIO Council.

Grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food continues to drive top-line sales With takeout and delivery increasing, some quick-service and fast-casual restaurants are looking at smaller footprints that reduce — or even eliminate — dine-in space.

How does the increase in digital orders impact the back of the house?

This past fall, Chipotle began piloting a cook-to-needs kitchen management system that uses camera technology to measure, among other things, ingredients on hand and cooking temperatures. "The intent is to always have availability of food and forecast sales that are coming so that we can tell the person on the grill they need to drop two pans of chicken because you are going to sell it in the next 45 minutes," McGuire said.

Now think about this, Chipotle developed the technology in collaboration with Microsoft. "The challenge becomes, is it the AI [artificial intelligence] and machine learning that runs the restaurant or is it the GM [general manager] and the grill person?" he posed.

"What we are finding is when they work well together, they work well together. But when the person on the grill ignores the suggestions of the AI, it doesn’t like that," McGuire explained. "There is a long way to go to get to that interaction between the human and the technology to really be seamless, but once we do, I think you are going to see this technology in a lot of our spaces."

At Cracker Barrel, forecasting is done by the hour using AI and comparing it against what the managers do, according to Hoffmeister, who echoes there are challenges.

"There are times when the manager knows something that the computer didn't know," he pointed out. "The computer does a very good job at recognizing patterns and doing things based upon information as long as there is no glitch in the system. That glitch in the system is what the manager needs to be aware of."

Then when asked to fill in the blank, "In the next five years, restaurants will," Hoffmeister answered "give more control to the guests and the customer on how they want to be served."

He noted that this is happening now, but said the evolution will continue.

Meanwhile, McGuire said in the next five years, restaurants are going to be using technology to make the industry a compelling place for people to work, especially in the quick-service restaurant space.

Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

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