Another year has come and gone and we find ourselves in a very familiar situation. The commercial foodservice industry remains flat and traffic remains stalled. Even one-time darling segments, such as quick-service restaurants, are now growing at a very mediocre two per cent year-over-year.
These challenges are not new, but they present significant headwinds for the foodservice industry. However, despite the doom and gloom, a number of key growth drivers have emerged over the last year and understanding them is critical. One of the most significant growth drivers to emerge over the last two years has been digital and mobile technology. In fact, that single development has the potential to transform the foodservice industry in a way we haven’t seen since the emergence of the drive thru in the 1950s.
Despite accounting for only two per cent of foodservice traffic, digital orders drive 15 per cent of foodservice growth on the year and represent the fastest-growing access mode. New convenience-enabling technologies — such as mobile ordering and delivery apps — are a bright spot in an otherwise slow period for the restaurant industry, which has been stuck between a one-per-cent gain in traffic and flat for several years now. Restaurant visits paid by mobile apps, however, increased by 50 per cent in the last year.
Mobile apps and other technologies are meeting the needs of time-strapped consumers and have given new meaning to quick service. According to recent research by Toronto-baed The NPD Group, consumers are using mobile apps and other technologies to order, pay and have food ready when they arrive. Other reasons include the ability to earn rewards and loyalty points, receive specials and coupons and look up menu items, according to the report, which explores awareness and use of digital services, including barriers, most- and least-liked features and demographic and geographic differences.
Mobile technology is also changing where consumers eat. Off-premise foodservice occasions are up five per cent year-over-year, while on-premise occasions have posted declines (down two per cent). In fact, 58 per cent of all foodservice occasions are now off-premise (the highest number on record) — a trend driven by the emergence of digital technology. However, it’s worth noting not all consumers are embracing technology when using restaurants. In 2017, two-in-five visits to restaurants were paid in cash. Of these digital non-users, 22 per cent preferred to pay in cash, while 18 per cent don’t want to pay service fees and 16 per cent are worried about identity theft or credit-card fraud. Nevertheless, providing the ability to easily order food from a restaurant is no longer a nice-to-have, it’s a need-to-have.
Simply put, restaurant operators seeking to gain more visits and grow the bottom line must decide which convenience enablers — whether digital or non-digital — are worth the investment.
Written by Robert Carter
