How Restaurants Are Reinventing To Thrive
Angela Diffly is co-founder of the Restaurant Technology Network.
Headline after compelling headline, the world’s most beloved restaurant brands are reimagining what it means to be a restaurant. Why? Because they have to.
During the pandemic world, reinvention has been table stakes for survival in many industries, but restaurants took a direct hit. Imagine owning your home and suddenly the doors have been locked and you have to find a new way to live there without actually entering the house. That’s what happened to restaurants. Doors closed seemingly overnight, and these company owners had to find new ways to keep their businesses alive, and they had to act fast.
Driving-Thru And Flying By
With restaurants unable to bring customers in, they found ways to get food out. This meant leaning hard into off-premises channels, take-out, delivery and drive-thru, all of which skyrocketed to satiate the never-ending consumer demand for eating “out,” even when eating out meant no longer eating in(side) the physical restaurant space.
Enter the drive-thru, a nearly 100-year-old American tradition, as the unexpected North Star of the show. Those lucky enough to have business models with drive-thrus were thriving. Restaurants without drive-thrus were finding ways to create them or repurpose parking lots into Sonic-like drive-up, carry-out areas.
Some brands, like Dunkin’, are looking to hyper-personalize the next drive-thru experience. What will it look like? Imagine someone speeding through a loyalty-app lane where they’re recognized by name, greeted with special offers and presented with their personal loyalty points.
Drive-thrus aren’t the only way restaurants are investing quickly and creatively. While other chains are entrenched in chicken sandwich turf wars, El Pollo Loco is taking to the sky as the first fast-food chain to announce drone delivery. “Piloting” in Southern California with partner Flytrex, the brand is hoping to cut delivery expenses by 30%.
Ghost, Dark And Virtual
Another bold example of reinvention? Fifty-one-year-old brand Wendy’s. The company announced plans to open 700 ghost kitchens by 2025 with restaurant tech startup unicorn/ghost kitchen concept, Reef Technology. Ghost kitchens allow restaurant brands to reach outside traditional brick-and-mortar stores, closer to new customers, in new ways, without the traditional investment outlay. In fact, by 2030, ghost kitchens are predicted to hold a 50% share of the drive-thru/takeaway foodservice markets.
And if you don’t want to embed your own brand in a ghost kitchen, why not invent a whole new restaurant brand to test the market? Virtual brands have skyrocketed as a way to offer delivery-only concepts via mostly third-party delivery platforms. Statista predicts that online food delivery’s share of the market will be more than 20% by 2025, and market research firm Euromonitor predicts virtual brands could be a $1 trillion business by 2030. I’d make a hefty wager that nearly every major restaurant brand is exploring or has already launched one or multiple virtual brands.
Yet another creative concept? Dark kitchens. As a fast-casual concept started back in 2003, Wow Bao saw an opportunity in 2020 to create dark kitchens, whereby any restaurant can serve its product out the back door via third-party delivery using underutilized space. The brand has launched these dark kitchens all over the U.S. and plans to have 1,000 by the end of the year.
My favorite example of virtual brand reinvention comes from Brinker International, home to Chili’s and Maggiano’s. The company just launched virtual brand Maggiano’s Italian Classics after massive success from the virtual brand It’s Just Wings. The company anticipates Maggiano’s Italian Classics to generate sales of more than $100 million since It’s Just Wings surpassed a target of $150 million in annualized sales, hitting $170 million in U.S. sales since launch.
Just when you thought virtual brands were the wow, some virtual brands that never existed in brick-and-mortar form are becoming so wildly popular that they’re reverse engineering, converting from native virtual brands to physical restaurants.
The pandemic has forced restaurants outside comfort zones and into life-sustaining revenue streams. The good news? Those revenue streams aren’t going anywhere.
The restaurants not afraid to reinvent themselves have taken big risks and are seeing big rewards. This is the resilient mindset of today’s restaurant operators. Covid-19 may have sucker-punched this industry, but it’s coming back swinging harder than ever, in every direction, taking back its turf and staking more claims along the way.
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