A Promising Future (Restaurants USA, March 2000) | National Restaurant Association

March 2000 issue

A Promising Future

Restaurants USA magazine's final issue was published in September 2002 but these archived articles remain available for our readers' convenience.

Restaurants USA, March 2000

What does the future hold for the restaurant industry?
By Beth Panitz

Robotic waiters. Food that can be "beamed up" from a restaurant’s kitchen to customers’ homes, a la "Star Trek." Virtual dining in the comfort of your home. The 21st century might bring all of those changes and more to restaurants.

"Who knows what we’ll have in 100 years," says Howard Jenkins, vice president of management information systems for Red Robin International, an Englewood, Colorado-based chain of 149 restaurants. "One hundred years ago, we couldn’t have imagined that we’d have nuclear weapons and satellites today."

With today’s rapid rate of technological change, it’s difficult to foresee what most of the 21st century will bring. But now, at the dawn of this new century, is the perfect time to peek at the future. Here are some predictions of things to come from futurists, techies and forward-looking restaurateurs.

Online offerings

It’s hard to conceive of operating a restaurant today without having a phone to take reservations, to give directions to customers and to order items from suppliers. Just as the telephone became an essential communication tool for restaurants in the 20th century, the Internet is expected to become indispensable in the 21st century.

"There’s a huge guest base that wants to be able to find a restaurant online and get directions to it online," says Wayne Kostroski, a partner in Goodfellow’s restaurant in Minneapolis. "Online is here to stay. If you don't have a Web site, you’re off the chart with a good percentage of people."

Online ordering of takeout and carryout foods — which accounts for only a small fragment of industry sales today — is also expected to grow in popularity. "It’s a matter of the Internet becoming more mainstream and having the Internet become part of the family lifestyle," says futurist Bob Posten, a managing partner for Icon & Landis, a research-based consulting company in Palm Beach Gardens, Florida. "We’re a real time-pressed society, and it is only going to get worse," he says, adding that consumers are looking to the Internet as one way to make their lives more convenient.

Red Robin International is among the companies considering online commerce for carryout items. "In about 18 to 24 months, you’ll probably be able to go to our Web page, pull up a menu, order a carryout meal, put in your credit-card number and have [the order] ready when you go to pick it up," says Jenkins. The information will go directly from the consumer’s computer into the restaurant’s point-of-sale (POS) system, he says, saving employees from having to re-enter the order.

Some restaurants already use the Internet to accept reservations. Web sites operated by San Francisco-based OpenTable.com and New York City-based foodline.com allow consumers to make reservations at certain restaurants. "There’s no double-booking problem because it’s done in real time," says Paul Lightfoot, founder of foodline.com. Clients receive a computer system designed to manage all of their reservations. Online reservations go directly into the computer sys tem. "Only a handful of reservations are made online currently," says Lightfoot, but he expects the idea to gain momentum.

Nevertheless, some industry leaders dislike online reservations. For example, Darwin Davis, director of management information services for the Sonoma Mission Inn and Spa in Sonoma, California, says that he doesn’t expect his resort to accept online reservations anytime soon. "There are other things that we try to sell you on when you call, like spa treatments. We also like to tell callers about the resort. It helps give them some of that warm and fuzzy feeling. With online reservat ions, we would lose the chance to upsell and inform the customer," says Davis, who chairs the National Restaurant Association’s Management Information Systems Executive Study Group.

However, Davis predicts that the Internet will become an important tool for internal communication. For example, chain restaurants might use the Internet to train employees. "With Web-based training, you’re always communicating the same message, it’s current, and there’s a cost savings," he says.

Of course, the Internet could also pose a huge distraction for staff members. That’s why restaurants such as Whataburger plan to give employees only limited access. "The last thing we want to have happen is for an employee to have a picture on the screen that offends a co-worker and for us to end up getting sued," says Tom Jaggard, group director of information services for the 300-unit, Corpus Christi, Texas-based company.

Information is invaluable

The 21st century will also bring an increase in readily available information. Restaurateurs will be able to better track sales trends and food costs, says Jenkins. "All of this data will allow management to make better decisions. . . . Menu engineering will become more of a science than an art."

Red Robin’s information systems have already helped to reduce the restaurant’s food and supply costs, says Jenkins. As technology becomes less expensive, he expects that even independent restaurateurs will plug into sophisticated information systems.

On the cutting-edge of information-technology systems, Whataburger is creating a paperless office that will give managers the information they need without the hassle or space required to maintain and access paper records. "Our ultimate end goal is that the manager can pull up a P&L [profit-and-loss] statement on the screen, look at it, and click on it to see a list of invoices. And then click again to see an actual invoice," says Jaggard.

Some restaurants are also starting to integrate their information systems. For example, foodline.com’s Lightfoot expects to see "a marriage between POS systems and [online reservation] systems like ours." Restaurants will be able to track customers’ dining preferences and "can use that information to make customers feel special. . . . Restaurants are yearning for this kind of information," he says. "They’re used to managing all that information in a book or in the brain of someone in a high turnover position."

Ryan Mathews, a futurist for FirstMatter, a consulting company based in Westport, Connecticut, expects restaurants to use that abundance of information to market themselves to individuals. For example, if a customer always orders the duck special, he or she can expect to receive e-mail notification when duck is on the menu.

But there’s a fine line between serving customers’ needs and invading their privacy, says Kostroski. "It’s good that we can track information about dining preferences, but I shudder to think about someone coming up to the podium and the host pulling up a stat sheet and saying, ‘Oh, I see here you usually like to dine on Tuesdays’ . . . . I wonder about how far we want it to go."

Smarter than your average kitchen

Advances in technology will make restaurant operations smoother, faster and smarter. "I think all appliances will be smart in the next three to four years," says Jenkins. "They’ll be smart enough to do their own self-diagnosis and send a message that says, ‘My compressor is going, you need to get a technician.’ " Tim Bohan, vice president of construction for California Cafe Restaurant Corporation, headquartered in Corte Madera, California, predicts that some appliances will go a step further, calling the service technician directly when necessary.

Expect smart refrigerators to track inventory and to automatically order needed items through an Internet connection. "Everything will have a bar code or a chip in it" allowing the refrigerator to know when, for example, a gallon of milk is removed, says Mathews.

Technology will also bring a higher level of food safety into restaurant kitchens. For example, new equipment will allow restaurants to cool foods quicker, reducing the chance of bacterial growth. "I expect to see a blast chiller in every kitchen in the next few years," says Bohan. "[A blast chiller] brings down the temperature in a heartbeat. It’s like a refrigerator with a huge fan that sucks out all the heat."

Hand-held POS systems will allow servers to input an order tableside and have the information go directly to the kitchen. Already standard in some restaurants, such systems are becoming more widely used, says Jenkins. However, Red Robin has no immediate plan for installing a hand-held POS system. "The problem with them is that they foster what we call a heads-down order-entry approach. We prefer to have our servers look at the guest and take the order in shorthand," he says.

Futuristic foods

As the population continues to age, futurists predict that Americans will consume more healthful foods — but don’t expect menus to feature bland health foods identified by nutrient names. "People will be looking for tastier and health ier foods, not just health foods," says Mathews. "Foods will have more of a citrus base, chili base, garlic base and onion base."

Foodservice analyst Art Siemering predicts that scientists will develop ways to isolate the flavor components of foods and add them to healthful, less flavorful foods. "I expect improvements in flavoring technology — any edible subject will be made to taste like any other," says Siemering, who publishes the Leawood, Kansas-based Trend/Wire, a weekly advisory letter about food trends. "You’ll be able to make tofu taste like creme brulee."

He also predicts that bioengineered foods will become more popular. "Over the short term, there is going to be a lot of resistance to genetically modified organisms. . . . Over the long term, anything that helps us feed our fast-growing popul ation is going to be more common."

Hunger growing for takeout

Takeout foods are expected to constitute a bigger chunk of industry sales in coming years. According to the NPD Group in Port Washington, New York, takeout occasions represented 51 percent of all foodservice occasions in 1999, up from 46 percent in 1990. The Chicago-based consulting firm Technomic Inc. projects that between 1997 and 2007 takeout sales will grow from $126 billion to $195 billion.

Recognizing the growth in the market, restaurants such as Tampa, Florida-based Outback Steakhouse are stepping up their takeout efforts. Each of the nearly 600 Outback restaurants now has curbside take-away service. Devon Beam, assistant kitchen manager for the Outback Steakhouse in Vancouver, Washington, explains how the system works: "A party will call, and we’ll take the order and ask them for a description of their car and their license-plate number." A video-camera hookup allows staff inside the restaurant to identify the car when it pulls up to the designated take-away area. "[Customers] can wait in their car and listen to the radio" while a staff member brings the food directly to them. "It works very well," says Beam.

Operations that specialize in takeout — or home-meal replacement (HMR) — have also emerged in recent years. Businesses such as Boston-based Take Me! Marche! and Dallas-based Eatzi’s specialize in HMR, featuring an abundance of ready-to-heat meals.

"HMR has such a tremendous appeal that it will continue to grow," says Siemering. "Fewer and fewer people are willing to put the time into going out to eat. They want to eat in the comfort of their home."

He also expects restaurants to improve their takeout services. Those that don’t can expect to lose business to other operations — such as grocery stores offering HMR. "It’s kind of a power struggle. If you don’t make an aggressive move to take over some of their business, others will take over some of yours," he says. "[Restaurants] have to not only defend their turf but go on the offensive."

Turf wars

More than 1 million restaurants are expected to be in operation by the year 2010 — up from 831,000 restaurants in 2000. Competition will also come from personal chefs and grocery stores.

To thrive in this competitive field, restaurants will need to improve the total dining experience, says Posten. "It’s going to be harder to survive in the arena. Consumers are going to want more entertainment value. Restaurants need to provide a multiple-sensory experience. Restaurateurs must ask, ‘What is it that I need to do to ensure that I get my share of a customer’s disposable income?’ Unless you can cut through the clutter to make the experience memorable, it's not going to happen."

And in a time-pressed society, restaurateurs will be competing not only for their customers’ money but also their time. "How we respond to that is critical," says Kostroski. "It’s not just getting them in and out quickly. Customers are saying, ‘If I’m giving up my valuable time, what are you going to do?’" He predicts that customers will be willing to invest the time in dining out if they feel that they’re getting value for their time commitment.

Mathews says that restaurants will develop new ways to woo customers, perhaps delivering kitchenware along with takeout meals and returning later to retrieve and wash the kitchenware. "Customers will get very spoiled," he predicts.

Help wanted — please!

Tableservice- and quickservice-restaurant operators alike have identified finding qualified, motivated labor as their biggest challenge for 2000, according to the National Restaurant Association’s 2000 Restaurant Industry Forecast — and the problem is expected to get worse. According to the U.S. Bureau of Labor Statistics, restaurants are expected to need another 2 million employees by 2010.

Meanwhile, consumers are becoming more educated and are expecting more from existing service staff, says Posten. "People are coming in and asking about menu items, asking how they were prepared. . . . The waitstaff needs to become more educated, more involved."

To survive, restaurants will need to make server positions more prestigious, Posten says. "Waitstaff will need to become comparable to other positions that aren’t entry-level. . . . The only way to get qualified people is to position it as a meaningful job rather than just a mindless activity." Restaurateurs may also need to increase waitstaff wages, which can translate into higher costs for consumers. "But I think people are willing to pay for it if they see competent people," he says.

Kostroski agrees that "we may have to pay more, but fortunately money is not the driving factor for employees. . . . People pass up pretty nifty-paying jobs" in favor of other benefits.

Kostroski expects some restaurateurs to tackle the labor problem by reducing staff hours and relying on automated systems. For example, some restaurants already use voice-mail systems to handle incoming calls rather than personally greeting callers. "People will say it saves them a lot of labor costs. That’s probably true, but it’s short-minded. You have to think about the type of business we’re in," says Kostroski. Hospitality is all about personal interaction. That’s why he does not see robotic waiters taking a foothold anytime in the near future. "I don’t think restaurants will ever become automated machines."

The challenge is to become high-tech while remaining high-touch, according to Restaurant Industry 2010: The Road Ahead. "The tough part is how to balance [using technology to] be more efficient with providing hospitality," says Kostroski.

"Technology-wise, it would be easy to put a little screen on the table and people would order there, but I don’t think that’s going to happen, because it’s missing personal interaction," says Lightfoot.

Setting the table for tomorrow

Robotic waiters and food that can be "beamed" from one location to another might end up being the stuff of science fiction rather than reality. Even so, there’s no question that advances in technology and other 21st-century changes will greatly impact restaurants. According to Kostroski, "If someone doesn’t think that the technological revolution is going to have a large effect on them — even if they’re a mom-and-pop restaurant — then they’re in for a large surprise."

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Beth Panitz is an assistant editor at the National Restaurant Association.