how restaurants can win the hunger …...practices and sustainability. hyper-localization is yet...

HOW RESTAURANTS CAN WIN THE HUNGER GAMESServing up customer experiences that build loyalty and drive growth

Responsible Retail

2 HOW RESTAURANTS CAN WIN THE HUNGER GAMES

In recent years, all types of restaurants, from casual dining to fast food, have worked hard to innovate to keep pace with changing dietary preferences and the ways customers are eating —but there is more to do. Today’s customers are increasingly looking for food that is good for them, the planet and the workforce. They are aware of the ingredients in their food and the sustainability of products used, and they care more about fair wages and schedules for the people serving the food. To remain relevant in this new era of responsibility, restaurants need to stay true to their purpose while delivering value to their customers, workforce, stakeholders and our planet.

And while change is afoot, some things have stayed the same. People still want their food quickly, but more than ever they want it conveniently too. Restaurant digital orders have grown 23% annually (on average) since 2013 and will triple in volume by the end of 2020. Six out of 10 of these orders are placed on mobile apps.1 Restaurants are teaming with the likes of Uber Eats to get fresh meals to customers faster than ever, but without integration they could lose critical customer data.



THE FLUCTUATIONS AFFECTING RESTAURANTS ARE GLOBALIn the United States, customer demand for restaurants is high, but it is more difficult to staff restaurants as new labor laws take effect. Since 2010, average restaurant hourly wages have increased at a 2.9% CAGR.2 In the United Kingdom, massive overexpansion has led to the collapses of many well-regarded high street restaurant chains.3

These pressures are forcing restaurants to rethink how they staff and use space. Occupancy costs can take up to 6 to 10% of a restaurant’s gross sales.1 That space can be downsized or used to greater advantage (see sidebar).

Restaurants have largely been focused on customer volume: building check averages, increasing customer traffic and growing repeat business. Many have cut costs, but some of these moves have had a negative impact on customer satisfaction.

Every aspect of the restaurant business is changing, and restaurants need to adapt while continuing to serve great food at compelling prices in a timely manner. It’s time to strike while the opportunity is hot.

In addition to dropping the “Donuts” from its name, Dunkin’ is rethinking its space, adding customer-friendly features such as interior pickup for to-go orders, a grab-and-go retail section with fresh fruit and packaged snacks, and self-order kiosks. The company’s new store format measures 2,200 square feet and requires 25% less energy than its conventional units.1

4 HOW RESTAURANTS CAN WIN THE HUNGER GAMES4 HOW RESTAURANTS CAN WIN THE HUNGER GAMES

SERVE UP INNOVATIONLeaders will make bold moves to shape the restaurant of the future.The digital age presents a menu of choices for restaurants to pursue new growth opportunities, while strengthening their core business of making satisfying food for hungry customers.


Automation can augment the work of humans in restaurants, saving costs and opening opportunities to add value to the customer experience in other ways. Self-pay tablets are being rolled out at scale—they’re in 8,000 eateries in the United States alone.4

In the kitchen, automation can reduce costs and get food to hungry customers faster. Boston’s Spyce Kitchen uses a robotic chef to cook food on sensor-enabled woks, delivering a customized bowl to customers in less than three minutes. Even cleanup is automated. Nearly half of restaurant operators surveyed (47%) believe robot cleaning would be mainstream or in mass adoption by 2025.5

Server calls in sick? Automated scheduling can help restaurants save thousands per month in labor costs and hours. Analytics can review a restaurant’s historical scheduling data, then automatically schedule employees based on their skill level and jobs they have performed in the past.6

Technology can also help employees to be safer when they are at work. For instance, PathSpot uses hands-free technology to scan employees’ hands to detect signs of pathogens that lead to foodborne illness.7 The cost of a single foodborne illness outbreak can range from $3,968 to $1.9 million for a fast-food restaurant and $8,030 to $2.2 million for a casual-dining restaurant.8


AUTOMATIONWork efficiently


Food service operators can do more with data. For instance, analyzing data from loyalty programs and apps to understand what items customers want, when they want it, why they want it and what offers would garner the strongest response.

Starbucks revamped its loyalty program to offer tiered rewards, so customers have more options in how they spend points, and rewards accumulate immediately, so even infrequent customers have an incentive to join.9 These changes tripled market capitalization between 2011 and 2017.

Restaurants can implement artificial intelligence and machine learning technology in kitchens to reduce waste and save money, but also to ensure consistency, quality and safety. IKEA is using a smart scale solution as part of its effort to reduce 50% of its food waste by the end of fiscal year 2020. Since the food waste program’s inception, IKEA has saved more than 1.4 million kilos of food—the equivalent to more than 3 million meals.10

By sharing recipes and instructional videos with kitchen staff, they can create food in a consistent manner. Bluetooth temperature sensors can wirelessly record temperature readings so employees don’t have to, making food safety easier to control.

Restaurants equipped with real-time data about customer purchases, inventory and customer feedback can be more agile to respond to changing preferences and shifting food trends.

OPERATIONAL IMPROVEMENT

Work smartly



Labor represents one of the largest costs in the industry—and it’s on the rise. Some restaurants are reporting labor costs running as high as 40% of total sales.11 The Hospitality and Food Service Wage Inflation Survey in the US found 64% of restaurant operators reduced employee hours, and 43% of operators eliminated jobs because of labor cost increases.12 Both cuts can result in a poorer customer experience.

Restaurants must pay attention to the enormous fines that are coming soon if they do not comply to new complex labor laws, such as giving employees two weeks’ notice of their schedule. Solutions such as LIFELENZ13 have an analytics-driven labor scheduling tool to help operators automatically infuse the business rules into their labor schedules. They can use tools like this to be more responsible—meeting staffing needs while ensuring fair work schedules for employees.

Restaurants can plan for the future through better workforce management. People need to be reskilled and retrained to work alongside technology, using innovative tools to process orders, manage inventory and more. Approaches like gamification can make learning fun and even spark a sense of competition among employees.

NEXT-GENERATION STAFFING

Smart staffing will allow restaurants to meet their labor needs and optimize the schedule while adhering to labor laws. Supply and demand is always changing in restaurants. On-demand platforms like Jobletics, Wonolo and Jitjatjo can track labor needs and plug in scheduling holes with qualified talent.14


Work leanly


Convenience is often what brings customers in, but to keep them coming back and build loyalty, you need to truly understand them and tailor offerings and experiences to their tastes, desires and preferences.

Restaurants can do this by acting on customer insight data. For instance, social listening might reveal that customers are hankering for a new menu item. Act fast to test, tweak and either shelf or scale new concepts. Monitoring social media can also enable restaurants to respond quickly to poor reviews that can hurt your brand.

Restaurants are responding to “flexitarians” who want more environmentally friendly and ethical meal choices. Hence, the industry has seen a surge in plant-based options, such as Burger King’s “Impossible Whopper.” A recent Herbalife Nutrition survey found that 71% of respondents are open to including more plant-based foods in their diet.15

Other restaurants, such as American fast casual salad chain Sweetgreen, are connecting with customers by helping them to meet their health goals. They allow visitors to send their order’s calorie counts directly to Apple Health, which currently does not have a food database.16

CONNECT WITH CUSTOMERS

Work for your customer

In addition to health goals, today’s customer has “life” goals. They want locally sourced food and they support companies that communicate a sense of purpose and behave responsibly towards the planet. The aforementioned Sweetgreen, which has a locally focused supply chain, showcases its local farmers on in-store chalkboards as if they were celebrities. The company prides itself on local sourcing, sustainability, transparency and animal welfare.17

Taking a stance on the environment, reducing waste and using sustainable ingredients will resonate with certain customer segments, especially in this era of responsible retail. Businesses are thinking differently about how they set their business priorities and operational plans, focusing on goals such as ethical practices and sustainability.

Hyper-localization is yet another way to connect. A restaurant’s brand experience can be customized to local markets. For instance, McDonald’s is testing favorite menu items from around the world—including McSpicy Chicken Sandwich from Hong Kong, Mighty Angus Burger from Canada and Baci McFlurry from Italy—at its flagship store in Chicago.18



TECHNOLOGY HAS TURNED THE TABLECustomer appetites will continue to change, and expectations will rise.

However, technology has reached a maturity level that allows restaurants to respond to shifting demands better, and with greater agility. The opportunity to transform is rich, but it raises big questions:

• What does your brand mean when a physical restaurant is meaningless?

• How does the brand-operator relationship change when a franchisor’s most valuable asset is a tech stack and not real estate?

• How do you operate when the cost of labor doubles overnight?

Fervently innovating. Innovation is no longer optional; it must become part of a restaurant’s DNA. For instance, adopting an experimentation mindset and agile operating models that can support testing new ideas, failing fast and moving on—or adopting

the winning concepts.

Rethinking big bets. Every dollar can make a difference in the customer experience. However, right now, restaurants are over indexing on investing in innovation inside restaurants. It’s time to think differently about where investments will move the needle most—delivery services, rapid menu innovation, personalization and automation.

Restaurants can begin to start embracing the opportunity for change by:

Supersizing relationships. Now that restaurants need to rely on others more than ever to bring technology, delivery and other in-demand capabilities, the ecosystem is critical. Restaurants should be re-imagining ecosystem partnerships to drive cooperation rather than competition. For instance, creating on-premise digital experiences that will drive traffic to locations and ensuring customer data is not lost when third-party ordering is used.



The status quo has been reset and the race is on to create the restaurant of the future. Act now before the opportunity gets cold.



References1 “Mobile Apps Now Represent the Bulk of Restaurant Digital Orders and Restaurant

Branded Apps Dominate;” The NPD Group; February 2019; https://www.npd.com/wps/portal/npd/us/news/press-releases/2019/mobile-apps-now-represent-the-bulk-of-restaurant-digital-orders-and-restaurant-branded-apps-dominate/

2 Statista; US Bureau of Labour Statistics; CreditSuisse; Accenture Client Value Services. 3 “Jamie Oliver restaurant chain collapse costs 1,000 jobs,” BBC; May 2019;

https://www.bbc.com/news/business-483520264 http://www.grubstreet.com/2018/07/restaurant-tablets-server-complaints.html5 “Restaurant 2025;” Oracle; https://www.oracle.com/webfolder/s/delivery_

production/docs/FY16h1/doc36/Restaurant-2025-Oracle-Hospitality.pdf6 “Inside the Rise of Restaurant Automation;” FSR Magazine; September 2018;

https://www.fsrmagazine.com/research/inside-rise-restaurant-automation7 https://www.pathspottech.com/home8 Estimated Cost to a Restaurant of a Foodborne Illness Outbreak.9 “The evolution of the Starbucks loyalty program;” National Restaurant News; April

2019; https://www.nrn.com/quick-service/evolution-starbucks-loyalty-program10 IKEA news release; February 2019; https://newsroom.inter.ikea.com/news/at-ikea-

more-than-3-million-precious-meals-did-not-go-to-waste/s/04d3349d-50ce-4850-a600-8d6f26895450

11 “Restaurant Megatrends 2019: Labor Crunch Determines In-Restaurant Changes;” Skift Table; January 2019; https://table.skift.com/2019/01/17/restaurants-megatrends-2019-labor-crunch-determines-in-restaurant-changes/

12 “2019 Hospitality & Food ServiceWage Inflation Report;” Harri; https://content.harri.com/Research/Hospitality-Wage-Inflation-Survey-2019

13 “These Platforms Will Help You Manage Staffing with Uber-Efficiency;” FSR Magazine, October 2017; https://www.fsrmagazine.com/fsr/technology/these-platforms-will-help-you-manage-staffing-uber-efficiency

13 https://www.linkedin.com/company/lifelenz/about/14 “These Platforms Will Help You Manage Staffing with Uber-Efficiency;”

FSR Magazine, October 2017; https://www.fsrmagazine.com/fsr/technology/these-platforms-will-help-you-manage-staffing-uber-efficiency

15 “The altruistic reasons more and more people are ditching meat;” The New York Post; September 2019; https://nypost.com/2019/09/25/the-altruistic-reasons-more-and-more-people-are-ditching-meat/

16 “Sweetgreen’s iOS app logs calories directly to Apple Health;” engadget; July 2017; https://www.engadget.com/2017/07/14/sweetgreen-ios-app-apple-health/?utm

17 https://www.sweetgreen.com/food-ethos/18 https://news.mcdonalds.com/stories/our-food-details/global-menu-mhq-april-2019

About AccentureAccenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions — underpinned by the world’s largest delivery network — Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 492,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

Copyright © 2019 Accenture. All rights reserved.Accenture and its logo are trademarks of Accenture.

This document makes descriptive reference to trademarks thatmay be owned by others. The use of such trademarks herein is notan assertion of ownership of such trademarks by Accenture and isnot intended to represent or imply the existence of an associationbetween Accenture and the lawful owners of such trademarks.

Contact the AuthorsELIZABETH MARRIONManaging Director [email protected]

ROBERT RAIDTManaging Director [email protected]

MATT JEFFERSManaging Director [email protected]

JEN PRITCHARDManaging Director [email protected]

MAUREEN BOSSIGlobal Retail Research Co-Lead [email protected]

JAY AMBURKARRetail Innovation Lead, [email protected]

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