According to Aaron Allen & Associates, a leading global restaurant industry consultancy specializing in growth strategy, marketing, branding, and commercial due diligence for emerging restaurant chains and prestigious private equity firms, five trends will be seen in 2018 when it comes to restaurants’ digital consumers.
These sum up in mobile ordering, commerce behavior, new payment models, AR,and AI.
Most of the digital consumer trends currently impacting the restaurant industry are nothing new — mobile ordering has been used for several years now, for instance, and AI has achieved great success in other industries, like medicine. But even though companies like Starbucks and Chick-fil-A have been turning to tech for some time, others are slower to catch on — and the furtjher behind they find themselves, the more difficult the catch-up will be. That’s because digital consumer restaurant trends are taking off like never before. Pizza chains, which have always relied heavily on delivery, are seeing at least half of their sales come via digital channels. But they aren’t slowing down — in fact, chains like Domino’s and Pizza Hut are pushing to grow that percentage, thanks to research showing that the average pizza spend is roughly 18% greater online than it is over the phone. Below, the top five digital consumer trends to impact restaurants in 2018, and beyond.
By 2030 the percent of population using the Internet is expected to reach 76 percent. The highest growth in internet penetration will be seen in Middle East and Africa, where the share of the population using the internet will grow some 6.8 percent per year on average, and in Asia Pacific, with a 4.8 percent CAGR. Similarly, the percent of mobile internet subscribers relative to mobile telephone subscribers is expected to grow the most in these same regions. In ME&A, the share of people who have a cell phone and a mobile internet subscription is forecasted to go from 42.4 percent (2017) to 99.5 percent in 2030 (a 6.8 percent CAGR). Globally, the percent of people who subscribe to Mobile Internet (as a share of those who are Mobile Telephone Subscribers) is expected to grow an average 4.3 percent yearly until 2030, going from a 58 percent penetration in 2017 to 100 percent by 2030. The smartphone has risen in popularity to become the default screen for brand engagement and digital commerce transactions. Today, 45 percent of the global population uses the internet. ME&A and Asia Pacific are the regions with the lowest penetration level, and thus the ones in which most of the catching up will happen. There are also dissimilarities within these regions. For instance, though in ME&A only 27 percent of the population uses the internet, countries of the region such as Qatar and the UAE reach more than a 90 percent penetration (95 percent for Qatar and 92 percent for the UAE as of 2017). As we mentioned above, mobile orders aren’t anything new, though we’ll see more chains make the investment into the technology in 2018. Already, mobile ordering has had a major impact on restaurants — particularly the fast food and coffee segments. Orders placed via smartphone are expected to account for more than 10 percent of all quick-service restaurant sales by 2020, at which point mobile ordering is expected to be a USD 38 billion industry.
Conduits of commerce
The modern level of connectedness will become an important tool for brand strategists and marketers as well as merchants looking to bridge the physical and online worlds of commerce. The CAGR of smart wearables (the fastest-growing electronics category) is forecast at 28 percent. These days, everything is smarter — food can be, too (a fact that will alter the supply chain and freshness of food). New technologies like 3-D and facial recognition (which we’ll delve into below) can be used for several different purposes, including food quality, portion control, security, and measuring guest sentiment. And operators seem open to it: some 46 percent of owners questioned openly said that they expect facial recognition and 3-D will be used in most restaurants by the end of 2025.
New ways to pay
Technology has opened the door to new ways of engaging with brands and has dramatically altered consumer expectations. Now new technologies are giving way to even more new payment environments. Thanks to smartphones, consumers no longer have to wait in line. In fact, already, 20 percent of global consumers buy an item or service via mobile on a weekly basis.
Virtual and augmented reality technologies offer an escape from everyday life and in time could pave the way to a new commerce reality for end-consumers. Seven million VR headsets sold in 2016 and, while still in its early phases of adoption, these technologies could have a major impact on commerce. For example, through driving foot traffic to create new brand experiences or even establish a virtual storefront (already, many restaurant brands are going into retail — Taco Bell, for instance, has a virtual storefront on its website, where it sells clothing and accessories). The near-term impacts of augmented reality aren’t likely to affect restaurants in a major way in 2018. Instead, we’ll see industries like gaming or other enterprise applications invest heavily into augmented reality. Longer-term, though (in the next five years), we’ll start to see in-home commerce experiences.
The future of the restaurant industry is intertwined with artificial intelligence and today’s commerce players are continually being reminded of its importance. Just look at how the smart home device market has taken off. 58 million wireless speakers (Amazon Echo, for instance) sold globally in 2016. That means more and more consumers are expecting a 1:1 experience (though not necessarily one reliant on humans). Certainly by 2025, artificial intelligence and virtual reality will become integral to the hospitality industry, as new technologies are helping restaurants create more personalized experiences for their guests.
While AI was once thought to be the stuff of sci-fi films, it’s becoming more practical for businesses – and more accepted by consumers. One recent survey found that roughly 50 percent of restaurant guests would prefer using facial recognition in lieu of supplying a name or loyalty card when turning up for reservations. Customers also said that facial recognition — along with 3-D imaging — would actually improve their overall restaurant experience. Among the key elements of AI that could impact restaurant commerce in 2018 are machine learning, which could be used by marketers to determine the best times to send emails or promo blasts to customers; and natural language processing which, by interpreting what people are saying in words or text, could automate the customer service and hospitality experience of the future.