5 Bold Predictions for The Restaurant Industry for 2020

By Jessica Tian, Bensen AI (originally posted on Bensen's blog, re-published with their permission)

A decade ago, who would have known that we would be glued to the screens of computers, tablets, and smartphones. And who knew that our phones would be able to recognize our faces? Or that, at the press of a button, food could be paid for and delivered straight to our doorsteps?

This year alone, we’ve already witnessed the “the Instagram effect” on restaurant designs and the first steps into the digital age with online-ordering platforms and loyalty programs apps.

Now, the question begging to be asked is…what’s next? Here are five bold predictions for what the restaurant industry will look like in 2020.


Will restaurants revolt against Uber EATS?

While GrubHub remains the biggest food delivery company, Uber EATS holds the title of “fastest-growing meal delivery service.”

Uber EATS fees

When discussing restaurant expenses, two of the major players are labor costs (including payroll & taxes) and food costs.

Restaurant labor costs
Restaurant food costs

How are restaurants making money off of these sales? Short answer is...they aren’t. The average profit margin for restaurants is under 30%.

Restaurant profit margins

As C.E.O. of the Philadelphia-based fast-casual chain Honeygrow Justin Rosenberg said it to The New Yorker about Uber EATS, "It’s total bullshit, and you can quote me on that.”

At this point, it seems like the only one benefiting out of this fiasco is Uber EATS. However, how profitable really is Uber EATS? Or is it even profitable? As of October 2017, Uber EATS was profitable in “nearly 40” of their 165 locations. There are two possible scenarios that will come out of this.

  1. Uber EATS raises their commission, and restaurants give up Uber EATS.
  2. Uber EATS will run itself out of business, and restaurants give up Uber EATS.

2.  In-Store Kiosks

Kiosks will takeover the restaurant industry by 2020

With a couple pushes of buttons, your gas tank is filled, your boarding pass is printed, cash flies out of the ATM. The uses of kiosks are endless, but they have recently been making their way into the restaurant industry. After all, the benefits of kiosks go on and on.

  1.  Kiosks take up less space than traditional point-of-sale terminals.
  2. Kiosks reduce the time a customer waits in line.
  3. Kiosks can process orders faster and upsell additional items.
  4. Kiosks are tireless workers, yet they do not need to be paid.
  5. Kiosks appeal to all age groups, not just Millennials, as indicated by the Tillster's Self-Service Kiosk Index.

Kiosks are especially on the rise in quick-serve restaurants (QSR). For these QSR restaurants, a general rule-of-thumb in the industry states that reducing customer wait time by just seven seconds results in an average 1% gain in market share.

In the end, the rise of kiosks are another manifestation of the ongoing digitization of the restaurant industry. Their improvement on guest experience, reduction of labor costs, and increasing of efficiency are undeniable.

3. Restaurants Will Go Cashless

Will restaurants go cashless in the future?

The future of restaurants is cashless. Last year, Visa held "The Visa Cashless Challenge" with awards of "up to $500,000 to 50 eligible US-based small business food service owners who commit to joining the 100% cashless quest.” However, even if Visa were not handing out awards, these restaurants would still benefit.

In a study Visa conducted (Editor’s note: so take this for the source it’s worth), they found that if businesses in 100 cities transitioned completely from cash to digital, these cities would experience net benefits of $312 billion per year, while saving billions of hours of labor.

What are the benefits of going entirely cashless?

  •  According to accountants at Cornwell Jackson, “Cash transactions are a big source of loss when not monitored regularly against petty cash reconciliations. Cash is the most coveted form of theft, particularly for employees who suddenly experience an outside issue or concern that requires quick payment.”
  • According to Celia Zhang, VP of Business Development and Operations for Fuku, “Going cashless at our storefronts frees our employees from collecting, counting, recording, and depositing transactions.”
  • According to Co-founder of Sweetgreen Nicolas Jammet, after a Manhattan location was held up at gunpoint in late 2016 and once more in a Boston location in January this year, “The safety of our employees comes before accepting cash.”

4. Voice Assistant Domination

Voice assistants will dominate the restaurant delivery industry

Ever want your own personal butler? These voice assistants are pretty much doing it all - tirelessly, no judgement, and not a single complaint.

Alexa, turn on the lights. Alexa, tell me a joke. Alexa, what’s the weather like?

Star Trek: The Next Generation foretold this technology of the future applied to the restaurant industry when Captain Picard recurrently orders "Tea. Earl Grey. Hot."

In the beginning of the year in the United States, 1 out of 6 adults already owned a voice-activated smart speaker -- approx 39 million people to put it all into perspective. Currently, they are being adopted even faster than the smartphone, and 65% of people say that they would not go back to life without their voice assistant. Data shows that while the technology is still young, brands are recognizing the appeal of voice assistants to consumers and have launched themselves on the track to adopting voice the same way they adopted web in 1998.

Food delivery dominates voice assistant purchases

Now, what do restaurants have to do with voice? BI Intelligence in 2017 estimated that the use of voice payments would nearly quadruple over the next five years, hitting 31% of US adults, or 78 million consumers, by 2022. Food, at 34%, is already the most popular purchase using voice assistant.

Some large franchises in the fast-casual arena like Starbucks, Domino’s, Panera have taken notice of this trend and launched their own voice strategies through their apps, Google Home, and Alexa. This first-generation of voice strategies only have the ability to reorder.

Artificial intelligence companies (like Bensen) have popped up and offer a second-generation voice experience that provides customers with the ability to customize their orders and receive a tailored and personal experience, one comparable to ordering directly at the restaurant or online.

"Currently one of the questions that voice assistants get asked the most is 'How do I boil an egg'?  But it's only a matter of time before people want something a little more tasty and want someone else to make it for them, and restaurants are salivating at the opportunity." - David Xiao

5. Over-inflated Prices

Imagine paying $10 for a cup of coffee.

Now that might soon become reality. It’s undeniable that inflation has been raising the prices of food and everything on the market. We’ve already witnessed the death of the McDonald’s Dollar Menu.

Food inflation in the United States has averaged 3.42% since 1914. Back in 2013, the tragic news that McDonald's had ended its beloved Dollar Menu, which, at its peak, had once contributed to about 1/7th of the chain’s total sales, simply proved that selling burgers for $1 was just not profitable anymore.

Source:  The Atlantic

Source: The Atlantic

On top of inflation, with the onset of this year, we’ve already seen the increase in the minimum wage in 18 states, although the federal minimum wage remains just $7.25 per hour. Over the course of the past few years, labor advocacy groups like Fight for 15 have advocated for higher wages for minimum-wage workers. With each hike of the minimum wage, restaurants must start laying off workers or be forced to raise prices on their menu. Since restaurants still require humans to prepare the dishes, over-inflated prices are inevitable.

While a $10 coffee sounds ridiculous - and it sure is - don't blink because it sure is coming soon.