To hear Hudson Riehle, Senior Vice President, Research & Knowledge Group for the National Restaurant Association, speak is to be optimistic about the future of the restaurant industry. I recently had the pleasure of hearing Riehle speak at the Restaurant Innovation Summit in Atlanta. He showed the attendees charts that presented American eating habits and the greater and greater shift toward “food away from home” rather than “food at home” — in other words, getting food from restaurants rather than getting food at grocery stores.
In fact, for the first time, the restaurant industry and grocery industry in the U.S. are nearly neck and neck, each with about $700B in annual sales (each approximately 14% of the $5T retail industry). In years past, the grocery industry far outpaced the restaurant industry. But restaurants have been making strong progress and have pulled even. If one extends the trendline into the future, it is clear that restaurants will become the majority recipient of what Riehle refers to as “the food dollar.”
This shouldn’t be terribly surprising to us. Restaurants are, after all, an example of outsourcing that has permeated nearly every sector of the U.S. economy, including domestic life. We live in a society that is increasingly outsourcing domestic duties: transportation, education, cleaning, laundry, child care, elder care. Why not outsource the kitchen? That’s exactly what Riehle articulates as the purpose of the restaurants “to remove labor from the home kitchen.” I’d never heard our industry’s mission stated so succinctly.
I know a thing or two about home cooking and the home kitchen. My mother, Peggy K. Glass, is cooking columnist and author of “Rescuing the Dinner Hour: Easy Meals for Busy People”. I grew up eating home-cooked meals 95% of the time. It was a rare occasion that our family would go out to eat. The title of the book, originally released in the early 90’s, emphasized that the home cooking trend was under pressure at the time. The book’s promise was to make it easy for busy people to still provide a home-cooked meal and preserve the time-honored tradition of the dinner hour. As people have continued to be busier ever since, it’s no surprise that few of us have the time to shop, prep, and cook meals on our own and instead turn to restaurants to provide those services for us.
Riehle shared another staggering research finding: 75% of restaurant industry traffic is off-premise. That means that the food is prepared at the restaurant, but consumed elsewhere. Whether it’s a takeout or a delivery order, 75% of us are not eating inside the dining room of the restaurant. Sure, that’s biased by the significant weighting of fast food restaurants and a focus on transactions rather than dollars (one can expect that the higher ticket fast casual, casual dining, and fine dining categories have far lower incidence of off-premise consumption), but it does seem to indicate an on-the-go consumer lifestyle that cannot be ignored. And perhaps something else, too. Riehle noted that the off-premise component of the casual dining industry sales is the only component that’s been growing over recent quarters. So perhaps customers are picking up the food at the restaurant (their outsourced kitchen) and then bringing the food home with them for their family dinner hour. It’s no surprise that 54% of consumers order takeout/delivery from restaurant branded sites and apps.
A week after hearing Riehle’s speech in Atlanta, I gave a speech in Dublin, Ireland at the 20,000+ attendee mega conference WebSummit. My speech was entitled “The Restaurant of the Future,” in which I was asked to predict the future of the restaurant industry in 20 minutes’ time, based on the trends that I’ve experienced as the Founder & CEO of Olo.com over the past nearly ten years. Channeling Riehle, I spoke about the trend toward restaurants and the trend toward off-premise consumption and off-premise ordering and payment going hand in hand. I noted that restaurants were focusing on how to increase their revenue per square foot by growing their kitchen and shrinking their dining room to maximize their productive square footage in a world in which kitchens matter more and more and dining rooms matter less and less. A “Bring Your Own Dining Room” world, if you will.
I left the Dublin crowd with a prediction. “You heard it here first,” I said. “The restaurant of the future is a kitchen with a pickup counter.”
Noah Glass is the Founder & CEO of Olo. Since 2005, Olo has helped restaurant brands increase revenue per square foot by delivering faster, more accurate, and more personal service through digital ordering. Today, over 8 million consumers use the Olo platform to order ahead and Skip the Line® at the restaurants they love.
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