2021 was a bumpy one for the hospitality industry. According to the National Restaurant Association’s State of the Restaurant Industry Mid-Year report, restaurant and foodservice industry sales for 2021 were forecasted at $789 billion. While this number is higher than 2020 numbers, it is still below pre-pandemic levels.
The hospitality industry still faces several challenges going into the new year.. Food costs are still high and rising, supply chain issues persist, and businesses aren’t sufficiently staffed. As a result, customers should not only assume that there will be longer wait times and higher bills, but they also shouldn’t be surprised if a restaurant runs out of a dish based on ingredient availability.
Despite various setbacks, the hospitality industry continues to adapt and evolve. The use of restaurant technology, the growth of ghost kitchens, and the adoption of new labor strategies are just a few of the themes we expect to continue to see this year, even as Covid levels drop. Read on for a full roundup of top hospitality trends for 2022.
Takeout, Delivery, and Ghost Kitchens Will Continue to Thrive
If a restaurant didn’t offer takeout pre-pandemic, likely, they do now. Takeout is what fueled many restaurants over the last few years and even as patrons resume dining out, takeout and at-home dining remain a constant as the pandemic continues to linger.
According to the National Restaurant Association, nearly 70% of American adults are now more likely to order takeout than they were pre-pandemic. Not limited to quick-service restaurants anymore, 80% of fine dining and casual restaurant owners enhanced their takeout options.
Consumer trends have shown a dramatic increase in off-premise sales, which dominated cash flow for restaurants relying heavily on takeout and delivery. This trend is expected to continue post-COVID as takeout and delivery gained popularity even in pre-pandemic days.
Given the rise in takeout and delivery, virtual-only restaurants or ghost kitchens will continue to be a growing trend. Ghost kitchens are commercial cooking spaces rented by restaurants or traditional dining venues used to exclusively cook food to be delivered to customers.
Ghost kitchens were a $43.1 billion industry in 2019 and expected to reach $71.4 billion by 2027, according to Hospitality Technology. A boost in demand for delivery during the pandemic is certainly a driver behind this growing trend.
With low overhead costs, ghost kitchens are appealing to a variety of businesses, including those who have brick and mortar locations already or those looking to break into the industry. With most virtual-only restaurants relying on third-party delivery services like Grubhub, UberEats, or DoorDash, you’ve probably been served food from a ghost kitchen without even knowing it.
TikTok is jumping on the ghost kitchen bandwagon with a ghost kitchen restaurant concept based on its most viral food hits. The social media company is expected to open 1,000 ghost kitchens by the end of 2022.
With a focus on delivery only, ghost kitchens were already set up for success as the pandemic hit and we expect they will continue to play an integral role as the takeout and delivery market continues to grow.
Staffing Shortages Remain – Restaurants Must Rethink Labor Strategies
Labor shortages everywhere greatly impacted restaurants in 2021. Staff was hard to come by not only affecting the restaurants themselves but also suppliers, distributors, and the like. Just as things were looking up, the latest COVID surge has brought any hope drastically down with restaurants and businesses not being able to operate at full capacity with staff members sick, scared or unable to work as they are back home with children who are back to remote learning.
"It's not the start to 2022 that any of us wanted," Texas Restaurant Association president Emily Williams Knight said. "The bottom line is that consumer demand is far outpacing labor participation, but we do see that settling out." She says the restaurant association is telling its members to hang on for the coming months, because the rest of the year may be especially lucrative.
Square’s 2022 Future of Restaurants report offers a glimpse into just how acute the restaurant labor shortage is. The big number: 21 percent of restaurant positions are unfilled, according to the report, while 73 percent of restaurants reported experiencing a labor shortage.
According to the NYTimes, the hiring crisis has prompted many restaurants to raise wages: Pay for hourly workers in leisure and hospitality jumped 13 percent to an average of $16.60 in August, from $14.72 a year ago. Many big chains and some high-end restaurant groups — including Starr Restaurants, which owns Upland and Buddakan in New York City — have made headlines by offering signing bonuses to new employees.
Jason Berry, a founder of Knead Hospitality, a restaurant group in Washington, D.C., will start introducing a four-day workweek for his restaurants’ managers, after losing two valued employees this summer. Although it may be costly in the short run, losing workers costs money in time, recruiting, and training. “We hope to bring some balance back to people’s lives who still love the industry.”
Efforts to attract workers through higher wages, incentives, benefits, and better working conditions will continue to be a theme but with a smaller pool of candidates it will not be an easy task.
Amid the hiring crisis, many businesses have turned to temporary labor sourcing applications such as Jitjatjo’s Ondemand staffing platform to help bridge the gap. Leveraging AI and Empathic Intelligence, Ondemand by Jitjatjo instantly and accurately provides quality, vetted talent to businesses as quickly as within an hour. Businesses are able to operate more efficiently by scaling up and down as needed.
We expect businesses to continue to rethink their labor strategies in 2022 and anticipate an increase in the use of temporary workers to help businesses operate more efficiently amid the ongoing staffing shortage.
Technology – QR Codes, Automation, Artificial Intelligence & More!
Restaurant technology has grown tremendously over the last two years mostly as a result of the pandemic and the need to cater to guests’ new expectations of cleanliness and service. Beyond delivering on customers’ shifting demands, these new technologies as outlined below have helped businesses become more automated and efficient.
With a focus on cleanliness, many restaurants have replaced physical menus with QR codes providing patrons a more sanitary way to scan and peruse the menu. According to CNBC, Bitly, a link management service, has seen a 750 percent increase in QR code downloads during the pandemic.
According to Steve Wright, CEO of Scanour.menu, QR code adoption has been high in fast-casual restaurants but they are also seeing adoption in fine dining where QR codes fuel “hybrid service,” where QR ordering is available at the bar, but the restaurant goes full-service when you’re seated at a table.
Not only is this process more hygienic but it has allowed restaurants to streamline their process as it relates to staffing and supplies. Out of the chicken special? Now it can be removed from the menu in a flash, no paper is wasted for new menus and the staff doesn’t have to bother remembering menu changes.
Beyond menu offerings, QR codes are also being used for ordering, payment, and collecting customer reviews and feedback. We expect QR codes to continue to play a role in hospitality in the coming year and anticipate that the tech will continue to evolve and provide greater capabilities and benefits to businesses.
Robots and AI
According to QSR Magazine as the demand for off-premises has increased some operators are turning to robotics and artificial intelligence (AI) to simplify processes and ensure customers have that, “perfect” experience.
Robots can be used for basic line cooking, to prepare dishes with accurate portions and are useful for back-of-house tasks such as cleaning silverware. If you haven’t yet had the pleasure of being served by a robot, one customer shared his recent experience at Denny’s on TikTok.
In addition to serving, robots are being used to deliver food as well as to prepare food. Nala Robotics, an Illinois-based technology firm, recently launched a fully automatic robotic kitchen that can cook millions of recipes without any human intervention.
As robots take on some of these basic tasks, fewer employees are needed to cover shifts and operators don’t have to worry about fluctuating hourly wages. Many restaurants look towards automation to fill the gap. According to Square’s 2022 Future of Restaurants report, 90 percent of restaurants agree that increased automation for back-of-house operations would allow staff to focus on more important tasks.
In addition to adding robots, many restaurants have integrated AI into their daily processes with the use of platforms such as Agot AI to help with things like preparation and order accuracy. According to one recent report, more restaurants in the U.S. are warming up to the idea of using automation technology, with 50% of them planning to implement the technology in the next two to three years.
We should expect to see the use of robots and AI in restaurants continue to grow in the coming years but it will not replace the human interaction customers desire when it comes to dining.
Contactless Ordering and Payment, Improved Data
Operators will continue to lean into technologies that increase efficiency and decrease staff needed. The integration of mobile ordering and payment systems, drive-thru systems, Pay At Table and server handheld devices are all technologies that businesses will continue to adopt to provide a more seamless experience for both the guest and server. The data collected from the various technologies adopted by restaurants will be valuable for forecasting to improve restaurant operations over time.
Dining Out Will Continue to be Expensive
Eating out has become dramatically more expensive over the last year. According to the Bureau of Labor and Statistics, restaurant prices spiked 5.8% as of November 2021, the largest 12-month increase since January 1982.
In 2021, the forecast showed a 3% to 4% increase in all food and is expected to rise another 2% to 3% in 2022. With rising food costs and workers demanding higher wages, some restaurants have had no choice but to raise prices. According to the Bureau of Labor and Statistics, prices at America’s fast-food restaurants are 7.1% higher than they were in 2020 and the prices at full-service restaurants are 5.9% higher, both representing the most significant increases ever recorded.
For those hoping to avoid dining out and cooking at home, grocery prices are also at record highs. This increase is a result of a number of factors including the pandemic, supply chains, extreme weather, and the labor shortage.
Consumers should expect that prices may continue to rise but hopefully not as severely as we’ve seen. USDA Economist Matt MacLachlan said, "We usually see deceleration following accelerations. That's not to say that food prices are going to go down. It's just the rate at which they have increased should slow a bit."
Technology in the restaurant industry will continue to be a driving force in 2022 and beyond helping restaurants become more efficient and allowing them to operate with less staff.
Although there has been tremendous growth in restaurant technologies, the face-to-face dining experience is still strongly desired and is not going away. However, we’re not too far off from a time when you may find yourself placing a food order on your phone, which is prepared in a ghost kitchen, and delivered to you by a robot!
Despite insufficient staffing, supply shortages, and rising food costs, we’re hoping 2022 is the year for restaurants and are rooting for the comeback the industry deserves!
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