The Innovation Report: How the Right Kind of Innovative Thinking Can Keep Operators Ahead of the Competitive Game


The phrase “innovate or die” carries a great deal of weight in the foodservice industry, where market share is a hard-won battle, margins are razor thin and customer engagement is becoming a project of epic proportions. Customers are increasingly impatient and seeking the next big dining experience or technology wizardry. Marketing has taken on an entirely new spin as mobile and third-party service providers introduce increasingly innovative apps to enhance customer engagement.

Cloud services and the IoT (Internet of Things) offers up new ways to save money and integrate front and back-end systems, while digital screens and social media are completely transforming the way restaurateurs interact with staff and patrons. The innovation players Robert Carter, executive director, Foodservice for NPD Group in Toronto, says there are different ways to define innovation in the industry. “You can look at it from the perspective of driving consumer traffic and overall sales, convenience, or disruptive ideas that are changing the marketplace. The A&Ws of the world changed the landscape by promoting sustainable beef; Booster Juice continues to evolve its offerings; and places such as Freshii have changed the industry with its focus on healthy eating. Then you throw in organizations such as McDonalds and Tim Hortons, which are constantly evolving their menus and introducing new taste profiles on a larger scale.”

While some of the biggest innovations come from the larger QSR and fast-casual players, smaller chains are keeping pace in their own way. “Mucho Burrito and Extreme Pita have spent the last five years innovating in the way they grew their brands. Hero Burgers is often overlooked, but it’s built its success around a platform of sustainable, antibiotic-free, locally grown ingredients,” Carter says.

He also singles out the “meal-kit delivery guys”: operators such as Chef’s Plate and Goodfood out of Montreal have posed a competitive challenge to the restaurant segment as they continue to evolve and influence people’s eating habits. “Even grocery stores are becoming ‘grocerants’, where customers can order chef’s meals. Longo’s is doing a good job of showcasing chef-prepared meals.”

Pop-up restaurant markets are also happening in major urban centres. “Operators are tying into brand awareness by taking their concept to where the people are and looking at different ways to engage them. It’s a reflection of how the market is changing,” Carter explains.

The bigger message restaurateurs need to understand is that convenience continues to be the number-1 influencer in the market, he adds. “The more convenient you make it for customers to respond, the better concepts like grab-and-go are in creating a more competitive market. Restaurants now have to give very customized, high-quality food experiences with a strong flavour profile and innovative menu items to compete.” Not to be outdone, single-purpose concepts are emerging and attracting Instagram and Snapchat lovers in droves. Sweet Jesus, for example, with its over-the-top ice-cream creations, or iHalo Krunch charcoal ice cream, are drawing unprecedented lineups as patrons look for the next big thing to post. on social media. “Smoke’s Poutinerie is another [brand] that is disrupting the market by building its business on one product,” Carter says.

No discussion around innovation can ignore the power of mobile. NPD reports that Canadians now spend $1.6 billion at restaurants using mobile devices, which includes ordering, payment, delivery and pickup. “We expect that to triple over the next three years at a rate of 30-per-cent growth rate per year. Within 10 years, a part of restaurant operations will be using digital overall,” Carter says.

Delivery, order and payment apps from players such as Skip the Dishes, Just Eat, OpenTable and Ritual are making significant inroads in pushing those numbers, he adds. “Those are the types of players that are tapping into trends that motivate consumers. Starbucks for example, changed the way they interact with consumers with its mobile apps.” While kiosks have become a familiar sight in QSR operations, Erik Thoresen, principal with Technomic in Chicago, believes mobile will take over in time. “In fact, some operators may skip that stage altogether and implement a mobile-ordering option because there’s a lot more innovation going on in that space.”

One of the biggest drivers looming large in operation managers’ minds these days is the pending minimum-wage increase, says Joel Sisson, president and founder of Crush Strategy Inc. in Burlington. “That will translate into a 30-per-cent increase in labour costs. Many operators can’t take that kind of increase, so they have to turn to technology to find ways to save on labour.”

Some innovations that could ease the overhead burden are apps that allow menus to be downloaded on a guest’s cellphone when they enter an establishment. “You don’t need an iPad or tablet. You can connect the app to the POS, leaving servers free to handle more tables. That’s a brand new concept being developed,” Sisson says. “On the fast-casual side, we’re starting to see some hybrid setups, where people come up to the counter and order and get full service from there.”

He notes that even on the supply-chain side, there are more innovative products being developed to help alleviate labour costs. “The quality of ready-made items is far better than ever. Everyone is looking to solutions on the supply side.” PICTURE PERFECT Not to be overlooked, the visual element goes hand-in-hand with the guest experience. Daniel Griffin, vice-president of Userful in Calgary, a developer of digital video-wall-display solutions, says displays are becoming an increasingly important aspect of restaurant operations in the fight to engage customers and differentiate themselves by creating special environments.

Digital-display technology has reached a point where even independent operators can install a system, whether it’s to display menu offerings, advertise daily specials, stream sports events and/or the latest news, or showcase community services. “They are so much more than menu boards today. And they can all be managed through a single PC over a network,” Griffin says.

Large-format displays are showing particularly strong growth, because they “make a big statement,” he notes. “Synchronized video walls can transform an environment.” In Smoking Joe’s pub in Florida, for example, a series of large screens along a wall serve as virtual windows, where images change from snow falling to fish swimming to sporting events. “We’ll see a lot more video walls and large-format displays over the next year,” Griffin says. “It’s all about making an impact, especially in malls and airports, where restaurants need to stand out from the crowd.”

Creative partnerships and loyalty programs are becoming an important part of the innovation landscape, Sisson says. “A&W has a smart loyalty and couponing program that’s different from anyone else’s and McDonald’s is always a great brand for looking into interesting partnerships with services like their recent work with UberEats.” Carter also reports some inspired partnerships that are taking place. “Cara has done a great job with Scene points. There are also more partnerships being done with services like Netflix.”

While it may not have the cachet of more visible innovations, front- and back-end integration is becoming an increasingly vital part of efficient operations. Scheduling, for one, has seen considerable improvements in recent years, Sisson notes. “Most chains have some form of online scheduling and push notifications to mobile phones. The challenge is having an integrated system that ties in to all the right pieces.”

Thoresen says the public often thinks of innovation as robotics and automation. But, potentially trend-worthy innovations in foodservice are a bit more pedestrian than that. “Last year there was strong growth for third-party delivery platforms. IoT apps are a bit further out, but we are now seeing opportunities for operators to integrate that kind of technology, not only in the back-of-house for inventory and managing equipment, but also for engaging the customer at the front of house. While a lot is not yet defined, there is plenty of opportunity for operators to innovate in that space.”

One integration effort of note was last year’s launch of Sysco’s Cake Platform, an all-in-one restaurant POS system designed to connect front and back-of-house operations, Thoresen says. “Having systems talk to each other is a growing area. We can also expect to see more training technology built into platforms, as well as maintenance notifications and alerts for cooking equipment.”

A more immediate trend can be found in upgrades to the order interface, Thoresen says. “A lot of order processes have shifted from the phone to online and then cell-phone apps. We expect to see more operators moving away from apps, to websites that mimic the app experience on phones. With the approach, the interface is more accessible, less costly, more lightweight and easier to manage because consumers don’t have to download updates.” Within the restaurants, integrated tablet-based ordering and mobile-pay options will continue to grow, Thoresen adds. “In the future I see more things coming together through integration. Anything that simplifies processes for operators will win, but that varies by chain versus independents versus franchisees. There will be pickup in the utilization of artificial intelligence in the way of automated chatbots and things like that — but it’s early days for that.”

Written by Denise Deveau 

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