Back in April, a month into COVID restrictions, collectively we imagined that things would return to normal in a few short weeks. Like an overstretched rubber band, we thought we’d snap back.
We weren’t quite right.
What has stretched? Our creativity, our tech adoption and our critical thinking skills.
The industry managed a Herculean pivot this year, but change is still required. So, what’s in store for 2021? We asked a “power panel” that question in the third episode of “Revenue Stream,” RMS’ ongoing webinar series geared for restaurant operators, franchisors and franchisees.
Senior Food and Drink Contributor for Forbes.com Alicia Kelso hosted the panel discussion with Nicole Miller Regan, managing director and head of the consumer equity research practice at Piper Sandler; Joel Davis, Chief Strategy Officer of Revenue Management Solutions; and Andrew Reid, founder and CEO of consumer research firm Rival Technologies.
The panel shared wide-ranging thoughts on the macro issues facing operators in 2021, based on their deep understanding of investors, consumers and operators. Our takeaways:
1. Restaurants are better prepared
“Nearly three quarters in since the pandemic hit,” Kelso asked the panel, “is the industry where we thought it would be in terms of recovery?”
Miller Regan says it’s hard to put down a guidepost, but she is optimistic that restaurants have emerged from the initial, painful stages of not knowing how bad it would be and how long it would take to bottom out. “Today, we’re in a better place,” she says. “If mobilization restrictions occur again, operators will know what to do. We’ve already figured out parts 1 and 2. We know how bad, and we know for how long.”
2. Data is a mandate
“Restaurant brands were trying to figure out how to manage data pre-COVID,” Kelso noted. “Now it’s almost a mandate.”
Davis, an expert in using data to model operators’ strategies and plans , agrees. The future is not going to look like the past, he said, and the data that will inform the future looks very different. “It’s worth thinking about strategy,” he advises. “Most pre-COVID data is not reliable anymore — we just don’t know what the post-COVID behaviors are going to be.”
Davis discussed build-out strategies as an example. “If I were relying on building stores even 19-20 months from now in an urban environment that needs a lunch crowd, I’d be very cautious and look for some other research opportunities to learn more about how the consumer has changed.”
3. Omnichannel is the new reality
Davis is also optimistic, noting that “restaurants will recover at a higher level than they are now.” He predicts that the industry will continue to see a return of people in seats, while new distribution channels will not vanish, resulting in a net gain. The question, he maintains, is whether or not brands will need to pull back from those new, creative distribution channels.
“Operators will have to decide if these new delivery channels grow presence or erode the brand,” Davis notes.
4. Investors are still looking for winners
To be expected, investors have some concerns. Most notably, says Miller Regan, who is going to win? And by that, she means not only survive but take share.
With so much at stake and, ultimately, up for grabs, the spoils will go to the teams who can get the data, understand digital and execute on it the right way while accelerating development. Investors, she says, are facing a scarcity valuation. They are looking for next-gen leaders, particularly in private, emerging concepts.
5. Cede nothing to the grocery channel
As we enter 2021, Miller Regan says it’s still the year of the restaurant: “If you have the team and the balance sheet, you’re coming out of this, there is zero doubt.”
She advises restaurants, however, to keep an eye on the grocery channel. Pre-COVID, grocery made inroads into restaurant market share. But contactless channels created an opportunity for brands. At the end of the day, she said, the only mistake a restaurant can make is to give up for good the sales that were ceded to the grocery channel.
What do consumers think about dining heading into 2021? Check back for more.