Square has the tools to run your business—on your own terms. In its annual Future of Restaurants report, see how businesses celebrate resilience, adapt to new trends, and explore what’s next. Get data-backed insights on the retail industry in this edition of Future of Restaurants, and watch how trends evolve in the next edition launching in December 2021.
T he restaurant industry is incredibly adaptive. Every year, restaurateurs continue to find innovative ways to improve on-site and off-site experiences for their customers, even if this means pivoting from their core offerings or rethinking their services.
Consumer preferences, as well as prevailing economic conditions, point to the trends and strategies that stick. Whether it’s adopting contactless payment strategies, experimenting with online ordering, or finding ways to connect to their local communities, restaurants are open to finding the best ways to connect with their diners.
To discover the strategies that are shaping the industry in 2021, Square teamed up with Wakefield Research to investigate what 500 restaurant owners and managers and 1,000 consumers across the U.S. think about the state and future of the restaurant industry. Square analyzed the survey results, gathered insights from its Square restaurant experts, and interviewed leading creative restaurateurs to identify the top restaurant trends for local businesses to explore this year.
Across our findings, digitization takes center stage as restaurants explore ways to improve internal efficiency, deliver more spectacular multi-channel experiences, and stay connected with their customers.
All data cited below comes from the survey results. For a more in-depth look at these 2021 retail industry trends, download the full report.
1. Contactless ordering and delivery are here to stay.
Safety has always been a priority in the restaurant industry, but it’s become even more important during the pandemic. Contactless technology is a key investment in 2021, as restaurants look for ways to improve customer experience and meet changing safety guidelines.
Contactless ordering and payment options, such as touchless payments and digital and QR-code menus, have become more mainstream. About three-quarters of restaurateurs (76 percent) plan on offering contactless technology in 2021, including contactless on-site payment.
Jeff Krupman, owner of San Francisco’s PizzaHacker, succinctly captures the benefits for businesses when he asks: “How often is there a technology that costs nothing, saves a restaurant money, improves the experience for the customer, reduces errors, and ends up effectively increasing the employee tips?”
2. More restaurants are diversifying revenue streams.
For many restaurants, an important survival strategy is to diversify revenue streams by pivoting from their primary offerings and branching out into other verticals, such as retail.
David Rusenko, head of e-commerce at Square, describes these businesses as “multi-hyphenates.” “We’re seeing that the defined, straight vertical lines of your retail business versus your restaurant versus your services business are all blurring,” says Rusenko. “A restaurant-bar-store, for example, might be a place that sells mixology classes, retail gear, and tastings in addition to serving patrons food and drinks.”
The good news is that consumers are receptive to these experiments. More than half of consumers, 59 percent in fact, say they are either very likely or somewhat likely to buy items from restaurants or retail stores that are not part of their core offerings.
Even restaurateurs who are not ready to take the leap into new verticals are still making changes to their identities, starting with their menus. Nearly all restaurateurs, around 92 percent, say they are likely to make menu changes, with 48 percent planning to cut items or completely change their menus in 2021. Again, consumers say bring it on. In fact, 41 percent expressed their willingness to try new menu offerings.
With customers open to these identity experiments, there’s no reason not to spice things up, especially if it can translate to more revenue for your business.
3. Kitchen automation is a priority.
As restaurants experiment with new menus, offers, and channels, streamlining the kitchen becomes crucial in order to effectively deliver a consistent customer experience across channels.
Restaurateurs are investing in digital technology to improve back-of-house processes, with 91 percent reporting they have made or plan to make investments in kitchen-automation technology.
Streamlined kitchens mean better efficiency across channels, giving restaurateurs the confidence and freedom to test out new concepts.
“With a streamlined and equipped kitchen, there’s nothing physically stopping you from trying four or five new restaurant concepts at a time, and then picking the winner once one of those concepts is proven,” says Rajat Deva, a product marketing manager for Square for Restaurants.
4. More direct orders are coming through.
More restaurateurs want to take charge of their online ordering and delivery in 2021 and decrease reliance on third parties. The reason is simple: They want to control the end-to-end customer experience.
“Direct delivery is going to become a very big thing,” says Bruce Bell, head of Square for Restaurants. “Having a direct ordering channel gives restaurateurs more control [over] how they engage consumers with marketing and loyalty programs.”
Consumers also want to skip the middleman, with 67 percent saying they would rather use a restaurant’s own website or app for food delivery rather than a third-party app. Their main reason for doing so is to support the restaurant directly.
“If the restaurant has its own couriers, or leverages Square’s resources for on-demand delivery, there’s an even bigger opportunity to own the end-to-end customer experience in a really efficient way,” says Bell.
By taking more direct orders, businesses have more control over customer engagement. They have access to centralized customer data, allowing them to deliver better marketing and loyalty programs.
5. Restaurants are enhancing experiences to build customer loyalty.
Restaurants are coming up with creative ways to boost customer engagement and loyalty. About 90 percent of restaurateurs plan to implement customer engagement initiatives to increase customer retention.
One way businesses are doing this is by reimagining existing concepts. For example, drive-in and drive-through services are hardly new concepts in the fast-food industry, but they have become more popular since the pandemic.
Fifty-two percent of restaurateurs reported plans to offer drive-through service for takeout in 2021, but the appeal lies in how they plan to deliver these services. Almost half of restaurateurs (48 percent) plan to offer the classic, 1950s-style model of drive-in dining, in which customers park on-site to eat in their cars, while others are considering hybrid models.
Besides reimagined concepts, 41 percent of restaurateurs are also exploring special event initiatives to increase customer engagement. Some of these initiatives include personalized dining experiences for major holidays, online cooking classes, and virtual tastings or dining events.
To make the most out of these initiatives, restaurants are also focused on rewarding loyalty. Well-planned loyalty programs can provide deep insight into the needs and preferences of customers, helping businesses improve customer satisfaction. This is why 42 percent of restaurateurs plan to offer new or expanded loyalty programs.
By providing creatively revamped services and investing in fresh initiatives, restaurants can provide great customer experiences whether customers are dining in or doing takeout which, helps to boost customer retention and sales.
6. Restaurants are refocusing on community.
Restaurants play a special role in many communities. They’re the venues for many important life events, such as first dates, reunions, and business meetings. Strong community ties mean stronger connections with patrons, which is why many restaurants plan to invest in more community-service initiatives.
Ninety-two percent plan to do more community engagement in 2021, such as cooking for community-service providers, donating food or money to community organizations, and offering support to local minority-owned businesses.
This is a good development because 81 percent of consumers want to see businesses provide food or supplies to community organizations, events, or service providers. “People recognize that it’s important for restaurateurs to share what they can with their communities, and the industry is stepping up to do that,” says Bell.
By participating in more community engagement initiatives, restaurant owners and managers can win more brand love while delighting patrons with new experiences.
Restaurant owners and managers have remained enduringly resilient in the face of mounting challenges and difficult economic conditions. From contactless delivery and kitchen automation to reinventing old services to delight patrons, restaurateurs say there’s no slowing down.
You can adapt some of these trends in your business. First, take stock of your current challenges and consider the trends that could deliver the most benefit for your business. In particular, embracing digital technology will help you run your business more efficiently and stay relevant in a digital future. An efficient, technology-driven restaurant that’s in touch with its community is the future of the restaurant industry.