2019 is shaping up to be a banner year for franchise restaurants in America.
The National Restaurant Association (NRA) predicts sales for US restaurants will reach a record $863 billion this year, representing 3.6% growth over 2018.
The projections were part of the association’s State of the Restaurant Industry report, which analyzes surveys from restaurant owners, operators, and consumers to evaluate how business is faring and predict what to expect over the next decade.
In the report, restaurant operators state their businesses are stronger than they were two years ago, and three in four operators gave ratings of “excellent” or “good” when asked to assess business conditions in the industry, according to the report.
This is great news for restaurant franchises, which make up about half of all restaurants in the US.
And although the restaurant industry is still challenged by a labor shortage, strict regulations, and rising food prices, the association is optimistic about the year ahead.
“The restaurant industry is on a continued growth trajectory, driven by an expanding U.S. economy and positive consumer sentiment,” says Dawn Sweeney, President, and CEO of the National Restaurant Association.
Technology—a growing area of investment for restaurants
Technology is also fueling the restaurant industry’s growth. Restaurants in every category are allocating greater portions of their budgets toward digitizing their business.
From digital kiosks and menu boards to virtual reality onboarding, technology is being integrated into nearly every aspect of food service. Today, more than eight in ten operators believe restaurants should continue to invest in new technology if they want to stay competitive, according to the State of the Restaurant Industry report.
This widespread application of technology ranges from streamlining operations behind the scenes to improve the customer experience both in-store and online.
Customer-facing technologies like app ordering, mobile payment, and mobile reservations are particularly interesting. Of those surveyed, 70% of quick-service restaurants say they plan to invest in this type of technology, followed by fast casuals at 62% and casual dining at 59%.
In 2019, most restaurant operators have come to realize that customer technology gives them a major competitive advantage, helping them attract and cater to a digital-first generation that highly values speed and convenience.
And perhaps no technology delivers on that promise better than...
Delivery and takeout—catering to the digital generation
For today’s consumers, the ideal dining experience isn’t always in the restaurant.
People are increasingly turning to off-premises dining options, a trend reflected in the growing popularity of food delivery apps like GrubHub and UberEats.
While the table-service restaurant segment still gets the majority of its business from on-premises customer traffic, demand for off-premises dining is rising and serves as a major driver of growth across the entire industry, according to the State of the Restaurant Industry report.
Data shows 38% of adults in the US—and 50% of Millennials—are more likely to have restaurant food delivered to them than they were just two years ago.
Offering food delivery, along with an easy ordering experience, is a HUGE opportunity for franchise restaurants—one many restaurant brands have already started cashing in on.
Quick-service restaurants currently dominate this shift in consumer behavior, with more than 70% of customer traffic coming from off-premises dining.
Casual and fast-casual restaurants are upping their game, too, reporting higher takeout and delivery sales than two years ago. In fact, fewer than one in ten have reported declines in their delivery sales.
Here’s a breakdown of off-premises customer traffic by category:
- Coffee & snack: 73%
- Quick-service: 72%
- Fast-casual: 50%
- Family dining: 20%
- Casual dining: 17%
- Fine dining: 6%
The rapid growth of delivery, enabled by technology, will only continue to flourish as generation Z enters adulthood and begins making independent purchases.
Seven in ten consumers already go online to view a restaurant menu, and nearly two-thirds look up location information, hours, or directions online.
Apps like Google Maps smooth the transition by offering user-friendly functionality such as reserving a table in-app and showing customer ratings and reviews.
Not surprisingly, the report notes that more restaurants are turning to social media and digital advertising to connect with a new generation of digitally savvy customers.
What restaurant franchises need to do to stay competitive
With 2019 shaping up to be a record-high year for franchise restaurant sales, restaurant franchises need to start thinking about how they can turn that increased demand into more revenue for their locations.
Restaurant franchises that want to grow their brands in 2019 and the years ahead need to be STRATEGIC in how they engage potential customers on the Internet and through mobile devices.
By building a seamless experience from the first digital touchpoint with the consumer to the last (from the first ad they see to the point of placing their order to continued engagement with the brand), restaurants are better positioned to secure loyal customers who will come back again and again.
Restaurant franchises that want to sharpen their competitive advantage should invest in digital marketing strategies like:
- Mobile-friendly websites with online ordering capabilities.
- Social media marketing to boost brand awareness and customer engagement.
- Search engine optimization (SEO) and pay-per-click ads improve visibility in search engines.
- Video marketing to captivate potential customers’ attention and leave a lasting impression.
- Online review monitoring to help spread the word about their restaurants and get more customers through the door.