Next-Gen 1, Current State of the Industry
A designer's case for the emergence of next-gen full-service restaurants in the post COVID era
The global COVID crisis forced us to change and adapt to the harsh new realities of everyday life, but also gave us an opportunity to review and reassess the place we're in on personal, societal and corporate levels. Any time there is a jolt in a fairly stable system, gaps will appear in which opportunities will arise for new forces to wedge in and change the nature of the system. This is more than obvious in the hospitality/restaurant industry with the emergence of third-party order/delivery platforms that enables us to easily and safely order food from the comfort of our homes. Restaurants can still keep their businesses open, customers can enjoy their favourite food, and the intermediary ordering services can continue to grow connecting customers with businesses. Seems like a win, win situation?
Not quite.
This is where the reassessment comes in. Third-party delivery companies, because of government lockdowns have turned dining out experiences that full-service restaurants had provided for their guests into an intermediary commodity trade. Restaurants that have spent years or decades investing into their story, environment, people, reliable suppliers, secret recipes, endless contacts and chats with their regular or new guests have now turned into just another source of a certain category of food that might, or might not, become salient to a user of a third-party app. Third-party app(s) decide who will be prioritized in their listings, features, searches etc. Now taken over by those apps, restaurant relationship with their guests slowly dwindles or disappears, causing many restaurants to shut down. The situation with quick-service restaurants might be slightly different, but not much.
“Third-party delivery companies, in the situation of the governments’ lockdowns, have turned dining out experiences into intermediary commodity trade.”
Guests on the other hand, when intrinsically triggered by hunger, turn to these apps easily, ordering the kind of food they crave few times a week or even a few times a day. Combine inevitability of presence of the hunger trigger, with high motivation, and easiness of ordering and you get a quickly formed habit as described in BJ Fog's model. Technology companies in the past decade have used this model abundantly in various different contexts. Think Amazon for shopping, or Facebook for FOMO, TikTok for entertainment - capturing our attention by hijacking our dopamine mechanisms, making us turn to one shiny object after another.
This new reality also amplifies flaws in the full-service restaurant operating models. The operations are run on a very thin margin of 4-5%, 10% is a jackpot, and not having much wiggle room for innovation they keep on going with their regular modes, until the next jolt from somewhere happens. High costs of staff turnover (hiring, training, retaining), inability to be more efficient at peak hours, seasonal volatilities in the supply chain, high lease costs, and many more pre-COVID factors, plus the whole current COVID crisis signal that the new era for full-service restaurants will need to bring in much-needed improvements that will make the operations leaner, focused on both on-premise and off-premise, with personalization and tighter connection with their guests; hence more satisfactory experiences for every customer - but also for restaurant employees. Based on many other transformed industries in the past decade like retail, banking, education, etc. it is clear that digital technologies will be a key factor in the blossoming of the next-gen restaurants, however it’s potentially not how others are envisioning it’ll happen.
The simple truth is, we can't wait to go back to restaurants and meet our friends and families and coworkers. We are getting deep fatigue of screens, zoom calls, deliveries, the same 4 walls of our homes (no matter how much we have improved them during COVID). We simply need variety to flourish as humans. "Those who eat together stay together" this old saying serves as a warning of what happens when that is not the case. With the latest uplifting news on vaccines, we are starting to see the light at the end of the tunnel, so everybody's getting ready.
Restaurateurs, here are a few things to contemplate to prep for post COVID era. Let’s start with the Experience Economy refresh.
