Changes and challenges in the restaurant sector in recent years that any construction business needs to be aware of
Restaurants, retail and the construction sector have long provided the basis for fruitful collaboration. Often, remaining on top of the changes and trends affecting sectors can help construction businesses to stay ahead of the curve when it comes to meeting the needs of clients in that industry. In this whitepaper we’ll be looking at the current state of the restaurant sector, including how it could change in the next few years, the most dominant trends and what it takes for restaurants to stand out in a crowded marketplace. The idea is to provide key insight into an industry that has a constant and ongoing construction need that will likely be influenced by the direction that it takes, now and in the years to come.
The UK restaurant sector
The restaurant industry in the UK is worth in excess of £38 billion. More than 86,000 restaurants participate in the sector with most Brits spending a weekly average of around £18 on eating out. 1.7 million people in the UK visit a restaurant at least once a week, which explains why this industry is one that continues to grow and evolve, despite economic and political uncertainty. The restaurant sector is also a significant employer and has a big role to play in the UK economy. Currently, around 988,000 people are employed by the restaurant sector, across a varied range of roles from chefs and cooks through to waiting staff.
Although there have been challenges for the UK restaurant sector in recent years it remains one of the UK’s most creative industries, as well as one of the most diverse. Currently, businesses in the sector could take any number of forms, including:
- Mobile restaurants and pop ups
- Chain restaurants
- Casual dining
- Family style
- Fine dining
- Bistro or brasserie
- Café or coffee shop
It’s also an industry that is heavily influenced by movement in consumer desires and trends. For example, many diners today have an increasingly inquisitive palate and there is much more of a demand for quality in provenance and service than there has ever been before. Turnover in the restaurant industry can be high and survival rates low but there are also many dining institutions that stand the test of time. Given the uniqueness and diversity of the industry there are a myriad of construction needs, many of which require specialist insight or expertise.
Trends in the UK restaurant sector today
Gaining insight into the UK restaurant sector starts by looking at the themes and trends that are shaping the way that businesses in the industry are changing. Much of this is driven by consumers – their behaviours, tastes and preferences have been generating considerable change. These are some of the key trends to emerge in the UK restaurant sector in the last 12 months.
The influence of technology is huge
There are few sectors where technology isn’t making an impact right now but the restaurant industry, in particular, is feeling the need to evolve. Currently, this is taking the form of ePOS systems and enterprise software that enables businesses to better manage stock and data. The technology exists to provide ways for restaurant brands to stand out against the competition, to provide unique experience dining and to streamline operations to reduce costs and maximise opportunities. Many brands are keen to invest.
Veganism is growing in popularity
Even some of the most meat driven menus now have a vegan option on them. There has been little choice for restaurants other than to evolve to incorporate tastes for more plant based food. This is because around 13% of people now identify as vegetarian or vegan and a fifth are “flexitarian.” It’s no longer simply enough to offer meatless or dairy free dishes that were clearly an after thought. Today’s consumers have something much more high quality in mind.
Providing “an experience.”
Recent research from Barclaycard identified that more than half of consumers prioritise paying for a good experience over spending on possessions. An authentic and unique experience is a way for any brand to set itself apart today and this is especially so in the restaurant industry. As a result, the trend towards experience dining is one that is likely to continue to build.
Transparency, sustainability and trust
Consumers today expect brands to be much more accountable when it comes to whether or not they remain loyal. And frequently, perceived accountability comes in the form of commitment to transparency and more socially responsible values and processes. The driving force behind this is shifts that consumers are starting to make in their own lives – for example 88% of people who watched the BBC’s Blue Planet have changed their behaviour in terms of taking action over sustainability.
As a result, some businesses in the restaurant sector have taken issues such as sustainability and reducing waste to a new level – 80% of members of the Sustainable Restaurant Association now separate waste and we have seen the introduction of eco dining on a new level with the UK’s first zero waste restaurant. Although consumers are certainly driving these trends they are supported by brands in the restaurant sector because there are clear benefits to doing so, including streamlining costs and reducing financial and physical waste.
Where is the restaurant industry going in the next few years?
Being able to look ahead to see the direction that businesses in this sector are likely to take through 2020 and 2021 is incredibly useful when it comes to gaining a deeper understanding of how the industry is going to evolve. Although a cloud of uncertainty currently hangs over virtually every UK business as a result of Brexit, it’s still possible to look at the key predictions for the restaurant sector in the next few years and examine the impact that they might have.
Predictions for the UK restaurant sector
A more diverse workforce
It’s not just Brexit that is likely to affect the make up of the restaurant industry in the UK but changing working patterns too. Many businesses are now keen to hire in a more diverse way to take advantage of benefits, such as the experience of an older worker or the commitment of someone who has struggled to get a job elsewhere. As a result, traditional employees and old style contracts could soon be less dominant.
Chains are making a comeback
2018 was not a good year for casual dining and this impacted particularly badly on many restaurant chains. There were closures and significant profit losses that left many questioning the future of the chain in the dining market. However, now – looking ahead to 2020 and beyond – there is a much better forecast for restaurant chains. In fact, as these businesses begin to analyse and overcome the issues and obstacles that caused problems, it’s likely that expansion may begin once again.
Tackling the hard issues
One of the biggest problems for restaurant sector businesses is diners who book and then don’t show up. This may sound like a minor issue but can have a serious impact on a restaurant, especially if other diners have been turned away in order to cater to a particular booking. It has also has an impact where volume is involved – for example, one restaurant in Edinburgh had 450+ no shows or cancellations in just one month. The solution? Prepayment. In the same way as we currently book sports or cinema tickets in advance, the restaurant industry would like to encourage consumers to do this with dining too.
Government intervention on tipping
This is something that the government has already hinted at – indicating that steps will be taken to ensure that restaurants are not able to keep earned tips from employees. As yet there is no legal protection in place to ensure that this doesn’t happen. However, the problem of dealing with tips has been a big issue in the restaurant industry for some time and all the predictions are that tackling it is going to be a priority in the next few years.
Making a real impact on sustainability
The trend for sustainability is not going away in the restaurant sector, something that we will look at in more depth shortly. Plastic has been a particular issue given that it’s the restaurant and hospitality sector where the vast majority of plastic straws and cups are used. Although many businesses have now started to take steps towards reducing environmental impact, few have gone far enough. Analysts predict that the next few years will see a huge shift towards real commitments in the restaurant sector so that businesses become far more eco or green than they have ever previously been.
The sustainability issue
If there is one issue that is taking prominence over all the others as the UK restaurant sector continues to evolve it’s that of sustainability. Today, the idea of a more sustainable restaurant requires much higher standards than would have been the case a decade or so ago. With the first zero waste restaurant already set up and consumers increasingly demanding that the brands they buy from are as efficient and eco as they can possibly be, sustainability in the restaurant sector is one trend that just isn’t going to go away. Currently, the UK ranks 24th in the world for global food sustainability, according to research from the Sustainable Restaurant Association (SRA). Given that Britain has the fifth largest economy in the world, in GDP terms, the ranking is not particularly impressive.
How prepared is the restaurant sector in the UK to make sustainability a priority?
Andrew Stephen, Chief Executive of the SRA, has been very vocal in terms of stating publicly the importance of the industry moving towards a much more sustainable approach. He said recently, “If we don’t fix food, we can’t fix climate change.” Some great examples of a more sustainable approach to food and hospitality are already out there. Costa Coffee, for example, has recently set out to tackle the problem of non-recyclable cups. The drinks giant has established a scheme, which sees it working with makers of its cups to try to find a way to make 100 million cups a year recyclable. Given that non-recyclable cups were identified as one of the biggest issues in terms of industry waste this is a big step.
What commitments are already in place?
There are also commitments that have been agreed to help ensure that the restaurant industry doesn’t go off track in its quest to be more sustainable. These include WRAP’s Plastics Pact and Food Waste Reduction Roadmap and the Cool Food Pledge from the World Resources Institute. The SRA is pushing for more engagement with these standards, as well as:
- Adhering to a target to reduce food related greenhouse gas emissions by a quarter by 2030
- Cutting food service sector food waste by a quarter by 2025
- Ensuring that all four targets set out in the Plastics Pledge are met
If the sector is able to meet these targets then it will signal significant progress for an industry that has a big responsibility when it comes to environmental impact – and, as a result, is capable of making a huge difference. For any business in the construction sector interested in restaurant industry enterprises and building projects in the coming years, addressing sustainability is going to be a top concern.
How are restaurant sector brands looking to set themselves apart?
Perhaps one of the biggest challenges that any enterprise in the restaurant industry faces today is that of differentiating itself against the competition. The industry is huge and very crowded. Customers have shown caution over the past few years in terms of reigning in spending on “extras” such as dining out. This has meant that it’s even more important for those in the restaurant sector to find ways of standing out in order to survive. There are a number of key steps that many are taking to ensure that they don’t get overwhelmed in the sea of competition.
Making use of customer data
Just like in construction, data is becoming increasingly important for the restaurant industry. Collection and analysis of data enables businesses in the restaurant sector to acquire more insights about consumers and to segment audiences to identify what each type of customer really wants. This will feed into the ability to apply more consumer- centric marketing that delivers more ROI.
Avoiding the trend triggers
The restaurant sector is awash with trends, not just those mentioned here but food and décor trends, as well as micro trends and those specifically driven by social media. What many businesses in the industry are starting to find is that investing in every single trend that comes along is simply a waste of time and effort – and may also damage credibility with customers. Instead, it’s crucial for restaurants to be able to identify and work with only those trends that align with the culture and values that form the basis of marketing messages and daily operations.
The advantage of innovation
Consumers today are much more aware of innovation than ever before and many have to come to expect it from their experience of brands, whatever sector they are in. As a result, many businesses in the food field find themselves under a constant pressure to evolve to keep up with the need for innovation. What’s becoming crucial is investing in innovation that delivers, whether that’s in terms of the premises or the technology, as opposed to innovation for innovation’s sake.
The power of marketing
Very few businesses today don’t appreciate the transformative power of great marketing on the bottom line of any enterprise. However, marketing is also a challenge to get right, as everyone is doing it. Differentiation in the restaurant industry is hard, especially for those brands relying almost purely on digital marketing. A return to more traditional methods of marketing is where many restaurant businesses are seeking to set themselves apart and to establish greater trust.
The value of authenticity
In recent years the scales have fallen away from the eyes of consumers when it comes to brand authenticity. Today, customers are savvier to advertising, more aware of marketing messages and more digitally native than they have ever been. Brands striving to be unique don’t need to focus on spending more, or shouting louder, but on ensuring that messages are authentic and that the business is as transparent and credible as it can be.
The shape of the restaurant sector today is very fluid. It’s an exciting but challenging landscape for any business to be in – over the coming years it will also be a place of lucrative partnership with the construction sector, for those who understand developing trends and the obstacles faced.
For more information about construction in the restaurant sector, or discuss your project with The RG Group today by calling our team on 01732 526 850.