“Necessity is the mother of invention.”
The author of this proverbial saying isn’t known, but it is sometimes ascribed to the ancient Greek philosopher Plato as it appears in translations of the Plato’s Republic. A need or problem encourages creative efforts to meet the need or solve the problem. The restaurant industry has certainly demonstrated that this saying continues to hold true.
The COVID pandemic has landed a particularly crushing blow to the hospitality industry, but this is among the most creative industries anywhere and adjusting to the needs of the consumer is what we do best. We know how to roll-up our sleeves and get sh#t done. In the course of our figuring out how to maintain food service during a global pandemic, the need to embrace technology and innovation became of paramount importance. There have been plenty of misses, but many more direct hits and wins that the industry should feel proud of. People have asked us when will restaurants return to “normal” and the answer is clear, we are in the “new normal” and Branded believes many of the inventions and creative solutions that were born during the pandemic are here to stay long after it’s gone.
Delivery is clearly not a new thing, but the percentage of restaurants that now deliver has grown exponentially. The delivery space has been historically reserved for more casual meals, but the pandemic changed all of that. As off-premise food services represented one of the only available sales channels for restaurants, the need to get online and offer delivery spiked. The technology available for these newcomers to the delivery market has never been better and in addition to the many 3rd party delivery service platforms (“DSPs”), the emergence of sophisticated white-label or native delivery platforms provided both new and existing restaurants with delivery offerings an arsenal of tools to choose from. The love affair between those that needed to get online and start delivering and the technology platforms available to make this happen in a most accelerated timeframe was an amazing thing to watch. The percentage of restaurants that now deliver will not be reduced when the pandemic is behind us as the importance of the off-premise market will only continue to expand.
Off-Premise: The Rise of Pick-up
Sticking with the off-premise market, pre-COVID, 90% of our restaurants’ off-premise orders were for delivery, leaving only 10% for pick-up. During the pandemic, those percentages shifted to 50% delivery and 50% pick-up. Curbside pick-up is not a new concept but faced with limited revenue opportunities and the technology to support and bring efficiencies to the effort, the industry saw nearly 70% of restaurants add curbside during the pandemic. Pre-COVID, the percentage of restaurants that offered curbside was 15%.
There are many factors that contributed to the increase in demand for pick-up and many of those aren’t going away after the pandemic does. The cost of delivery and specifically the convenience fee associated with getting food to your door is proving to be very costly. Food security remains a hot topic and food temperature is another issue that’s encouraged people to become their own last mile solution. The technology supporting curbside pick-up removed a substantial amount of the friction that had turned the consumer off from coming to get the food themselves. As the technology continues to improve and as importantly, the embracement by the venues and consumers continues to grow, Branded believes curbside pick-up is not only here to stay, but will become even more important than delivery itself.
Going Virtual: The Rise of the Ghost Kitchen
The biggest innovation of 2020 that is here to stay is the virtual restaurant. Branded wants to make a rather bold prediction – by 2030, 50% of restaurants will be virtual. 2020 saw literally thousands of restaurants add off-premise only concepts that exist exclusively online. The continued growth and expansion of the virtual restaurant is going to accelerate because of the attractiveness that comes for the dramatically reduced cost structure of starting and operating virtual restaurants. There is without question many challenges and headwinds associated with successfully launching virtual brands, but here again technology and innovation is on the side of the bold and we now have the tools required to market and engage with customers from our virtual stores.