As the global pandemic develops, the spread of the virus is being controlled within an acceptable range, and at the same time, the global economy is facing a new issue - how to "live with" the new virus.

Whether it is a traditional industry or an emerging industry, everyone is thinking about industrial transformation and new growth points.

The restaurant industry is also facing many persistent problems and challenges.

No.1 Global Food Price Increases

According to the latest data from the Food and Agriculture Organization of the United Nations (FAO), food prices have increased by nearly 40 percent over the past 15 months due to the global pandemic, the largest increase since the Arab Spring riots of 2010 to 2011. According to the director of food and nutrition services of a school in Missouri, the school has received notices from three major food distributors to "suspend supplies" because of the seriousness of the food shortage.

Rising commodity prices don't always affect consumers, but this food price increase is predicted by economists as a "relatively clear signal".

This indicates that food price increases and shortages, as well as the global consumer purchasing power will continue to decline and may continue until 2022.

No.2 Supply Chain Issues

Logistics issues have been a major concern since the outbreak, and UPS executives predict that the supply chain crisis caused by the outbreak will cause lasting damage to the globalization driven by multinational companies.

As a result, multinational retailers and manufacturers are pushing to "regionalize" their supply chains.

Regionalization of the supply chain is the second blow to the cost of the restaurant industry, and this "blow" will become an ongoing "phenomenon."

No.3 U.S. Inflation Expectations Reach 4%

The latest survey results released by the New York Fed on October 4 show that U.S. consumers' medium-term inflation expectations rose to the highest level on record, with inflation expected to reach 4% over the next three years.

At the same time, expectations that wages will keep pace with price growth are beginning to cool, with the median expectation of earnings growth falling by 0.4 percentage points over the next year.

Lower consumer incomes and a large and persistent decline in the purchasing power of money continue to have a negative impact on the U.S. economy.

 

 

The three major issues, rising food prices, supply shortages and rising costs, as well as the declining purchasing power of consumers, are having an overwhelming impact on the restaurant industry going forward.

So, how will the restaurant industry respond to the crisis and challenges?

--Lightweight

1. Digital marketing is imperative

On the one hand, restaurant owners can reduce marketing expenses, such as reducing promotional overhead, lowering printing costs and reducing event price cuts; on the other hand, owners can make good use of online channels to increase customer acquisition and raise restaurant awareness through social media, such as Tiktok and Little Red Book passages

More than 65 million Americans are active on TikTok each month, and according to a new study by marketing agency MGH, 36% of TikTok users will choose a restaurant to order from after seeing a video of that restaurant on the platform.

In March, a pasta recipe went viral on TikTok, leading directly to a shortage of goat cheese, and in October, a song called "Fancy Like" with the lyrics "Yeah we fancy like Applebee's on a date night" brought a wave of traffic to Applebee's and Applebee's launched Oreo cookie shakes, which were well received.

In addition, the cost of digital marketing is much lower than the traditional marketing model, which is suitable for restaurant owners who "need traffic but don't know how to get customers".

 

 

2. Lightweight healthy dining model

According to NRA research data, while dine-in dining is important for restaurants (especially dine-in restaurants), the outdoor dining season is winding down with the onset of fall and winter.

At the same time, due to the pandemic, consumers are more likely to choose take-out, single-serve, smaller portions and lighter restaurants with more options. This lighter dining option is in line with consumers' need for self-protection during the epidemic period and also has strong growth potential due to the efficient and less labor-demanding nature of this business model.

 

 

3. Small volume catering model

Traditional restaurant industry is not large in volume, but also not light enough; restaurant owners are faced with rent, utilities, labor and other problems, dine-in needs to provide good service to guests, marketing of the restaurant, continuous improvement of the menu, which are all headaches for restaurant owners.

In a period of reduced consumer purchasing power and reduced reliance on dine-in, restaurants with large volumes are facing more challenges.

What is the best way to reduce restaurant volume? We can refer to the "food truck" model that is seen everywhere in New York.

 

 

Reef has also entered into a strategic partnership with burger brand Wendy's to open 700 Wendy's restaurants in the U.S., U.K. and Canada over the next five years, most of which will be mobile "kitchen carts" (Neighborhood Cloud Restaurants) in high-traffic parking lots, a landmark partnership.

The long-term strategic decisions of these much larger companies are proof that "food truck restaurants," or even "cloud restaurants," are a new operating model with excellent potential.

 

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Reference 

[1]21st Century Business Herald，https://www.163.com/dy/article/GJRL0F8G05199NPP.html，2021-09-1；

[2]Chinese Restaurant News，https://www.c-r-n.com/News/2/46565.html，2021-10-05；

[3]Chinese Restaurant News，https://www.c-r-n.com/News/2/46561.html，2021-10-05；

[4]National Restaurant Association，https://restaurant.org/articles/news/customer-demand-for-outdoor-dining-rose，2021-10-06；

[5]Chinese Restaurant News，https://www.c-r-n.com/News/2/46523.html，2021-09-29；

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