Restaurant Technology: Critical for Tomorrow’s Success
Hudson Riehle Senior Vice President Research and Knowledge Group Restaurant Innovation Summit
October 24, 2013 | Denver, CO 1
Agenda State of Industry
Role of Technology
Wrap-Up
2
DEFINITION:
“Restaurant Industry”
All meals/snacks prepared away from home, including all takeout meals and beverages. 3
Retail hosts:
The Industry Mosaic
Fullservice
Clubs
Service stations Convenience stores
Quickservice
Lodging places
Military restaurant services
Managed services contractors at: Industrial plants Hospitals and nursing homes Schools and universities Airlines Recreation and sports centers
Selfoperated services
Cafeterias and buffets
Snack and nonalcoholic beverage bars 4
State of Industry 5
Restaurant Industry 2013
Annual Sales:$660
billion 6
43 Years of Restaurant Industry Sales (1970-2013)
Source: National Restaurant Association
7
43 Years of Restaurant Industry Sales (1970-2013)
Source: National Restaurant Association
8
9
A Decade Perspective 2002 - 2012 Compound Annual Growth Rate
Item Restaurant Industry Sales
4.3%
Inflation –General
2.5%
–Menu Prices
2.9%
–Wholesale Food
4.0%
Wages –Industry Hourly*
3.0%
–Private Sector Hourly*
2.8%
Employment –Total
0.2%
–Eating & Drinking Places
1.6%
*non-supervisory, excludes tips Source: Bureau of Labor Statistics, National Restaurant Association
9
Restaurant Industry 2013 Employees
13.1 million 10
Restaurant Industry 2013 Locations
980,000 11
Restaurant Industry’s Share of the Food Dollar 1955 Present
1955: 25%
Present: 47%
Source: National Restaurant Association
12
Economy Continues to Lag Behind Past Recoveries Percent Change: Four Years After Official Recession Troughs 25%
Real Gross Domestic Product (GDP) 21.6%
Total U.S. Employment
20.1% 20% 15.8% 13.8%
15%
13.1% 9.2%
10.1% 10% 7.3%
5%
2.7%
3.6%
0% 1975:Q1
1982:Q2
1991:Q1
2001:Q4
2009:Q2
Official Recession Troughs Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, National Restaurant Association
13
14
Consumers Are Not Bullish About the Direction of the Economy Consumers’ ’ Outlook for the Economy in Six Months – September 2013 –
Don't Know 2%
Get Better 21%
Stay About the Same 51% Get Worse 26% Source: National Restaurant Association
14
15
National Economic Growth Expected to Remain Tepid Real Gross Domestic Product – Historical and Projected Growth Rates 4%
3.4% 2.8%
2.7% 3%
Projected
2.5% 1.8%
1.8%
1.6%
2% 1% 0% -0.3% -1% -2% -2.8%
-3% -4% 2005
2006
2007
2008
2009
Source: Bureau of Economic Analysis, National Restaurant Association
2010
2011
2012
2013
15
16
Disposable Personal Income Gains Projected to Be Modest Real Disposable Personal Income – Historical and Projected Growth Rates 5%
Projected 4.0%
4%
3%
2.4% 2.1%
2%
1.5%
2.0% 1.5% 1.1% 0.8%
1%
0% -0.5% -1% 2005
2006
2007
2008
2009
Source: Bureau of Economic Analysis, National Restaurant Association
2010
2011
2012
2013
16
Real Household Income Is Down 8.3% From its Recent High in 2007 Real Median Household Income (adjusted for inflation in 2012 dollars) $60,000
2012: $51,017 = Lowest Level Since 1995 $55,000
$50,000
$45,000
$40,000
$35,000
$30,000
1995
1996
1997
Source: U.S. Census Bureau
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
17
18
Nation Still Down 1.9 Million Jobs from Pre-Recession Peak Only 17 States Have More Jobs Than Before the Jobs Losses Started in Feb. 2008 +23%
-10%
DC
More jobs 0% to -1.9% -2% to -3.9% -4% or fewer Source: Bureau of Labor Statistics
National Average: 1.4% Fewer Jobs
18
Dramatic Consumer Confidence Variations By Region Continue Present Situation: September 2013
REGION West South Central West North Central Mid Atlantic Mountain Pacific East North Central South Atlantic East South Central New England Source: The Conference Board
INDEX 122.0 103.4 72.6 67.5 63.2 59.7 58.2 45.7 44.0 19
Female Labor Force Participation at Lowest Level Since 1991 Female Labor Force Participation Rate 70%
Record High: 1999 = 60.0%
2012 = 57.7%
Percent in Labor Force
60%
50%
40%
30%
20%
10%
0% 1950
1955
Source: Bureau of Labor Statistics
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
20
The Economy is the Top Challenge Facing Restaurant Operators Top Challenges Facing Restaurant Operators: September 2011, September 2012 and September 2013 SEPTEMBER 2011
SEPTEMBER 2013
SEPTEMBER 2012
The Economy
35%
The Economy
26%
The Economy
27%
Food Costs
17
Government
21
Government
23
Sales Volume
14
Food Costs
18
Sales Volume
13
Government
10
Sales Volume
9
Food Costs
11
Taxes
4
Recruiting Employees
5
Recruiting Employees 8
Recruiting Employees
4
Labor Costs
3
Labor Costs
3
Source: National Restaurant Association, Restaurant Industry Tracking Survey
21
Restaurant Performance Index (RPI) Fell for 3rd Consecutive Month Values Above 100 = Expansion, Values Below 100 = Contraction 104 103 102 101 100 99 98 97 96 Jan-03
Jan-04
Jan-05
Source: National Restaurant Association
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
22
Where Do Consumers Spend? PERCENT OF TOTAL
CATEGORY Housing
34%
Transportation
16
Food
13
Insurance/pensions
11
Healthcare
7
Entertainment
5
Clothing
4
Contributions
3
Other
7 Total
Source: Bureau of Labor Statistics, Consumer Expenditure Survey
100% 23
23
Wholesale Food Prices Continue to Trend Upward Annual Growth in Wholesale Food Prices 9%
7.6%
8.1%
7.7%
6%
4.9% 2.7% 2.2%
3%
0%
-3% -3.8% -6% 2007
2008
Source: Bureau of Labor Statistics
2009
2010
2011
2012
2013*
*Year-to-date through August 2013
24
Fullservice Restaurant Sales 2013 Forecast
$202 billion
2012
Source: National Restaurant Association
$208 billion
2013
25
25
26
Pent-Up Demand for Restaurants Moving Higher Percentage of adults NOT eating on-premises at restaurants as often as they would like
Source: National Restaurant Association
26
Quickservice Restaurant Sales 2013 Forecast
$188 billion $179 billion
2012
Source: National Restaurant Association
2013
27
Managed Services Sales 2013 Forecast
$45.6 billion $43.9 billion
2012
28 National Restaurant Association Source:
2013
28
Snack and Nonalcoholic Beverage Bars 2013 Forecast
$27.9 billion
2012
29 National Restaurant Association Source:
$29.1 billion
2013
29
Restaurant Sales Growth in 2013 (Projected)
Source: National Restaurant Association
30
2014 Economic Outlook
Source: National Restaurant Association projections as of September 2013 31
ROLE OF TECHNOLOGY 32
32
Restaurants are Extremely Labor Intensive Average Sales per Full-Time Equivalent Non-Supervisory Employee, 2012
Eating and Drinking Places
$86,000
Grocery Stores
$299,000
Auto Dealers
$757,000
Gasoline Service Stations
$873,000
Source: National Restaurant Association, based on Bureau of Labor Statistics and U.S. Census Bureau data
33
Restaurant Operators’ Assessment of How They Use Technology in Their Restaurant Operation Industry Segment
Ownership Category
All Respondents
LimitedService
Full Service
Independent
Franchisee/ Chain
Leading Edge
9%
8%
10%
5%
17%
Mainstream
40%
42%
37%
36%
50%
Lagging
47%
47%
47%
54%
32%
Don’t Know
4%
3%
6%
5%
1%
Source: National Restaurant Association
34
Percentage of Restaurant Operators That Agree or Disagree With the Following Statement: “The use of technology in a restaurant provides a competitive advantage.”
Industry Segment
Ownership Category
All Respondents
LimitedService
FullService
Independent
Franchisee/ Chain
Agree
73%
78%
68%
67%
90%
Disagree
24%
19%
29%
20%
8%
Source: National Restaurant Association
35
Percentage of Restaurant Operators That Agree or Disagree With the Following Statement: “Investing in restaurant technology makes your operation more profitable.”
Industry Segment
Ownership Category
All Respondents
LimitedService
FullService
Independent
Franchisee/ Chain
Agree
73%
75%
71%
66%
91%
Disagree
24%
23%
25%
30%
9%
Source: National Restaurant Association
36
Enhancing the Experience Through Technology Proportion of full-service restaurant operators planning to devote more of their resources to the following technology in 2013
37
Enhancing the Experience Through Technology Proportion of limited-service restaurant operators planning to devote more of their resources to the following technology in 2013
38
Consumers Need Directions During the past month, did you use any of the following RESTAURANT-RELATED technology options?
All Adults
18-34
Age Groups 35-44 45-54 55-64
65+
Look up restaurant location and directions on a smartphone or tablet
46%
68
58
39
32
16
Use a computer to view menus, order food, or make online reservation
41%
52
47
40
38
20
Order takeout or delivery on a smartphone or tablet
23%
35
30
18
13
7
Look up nutrition information on a smartphone or tablet
19%
28
22
16
16
9
Source: National Restaurant Association, 2013
39
Consumers Seek More Restaurant Technology Regardless of whether you have used them in the past, how likely would you be to use each of the following technology options, if they were offered by restaurants?
All Adults 18-34
Age Groups 35-44 45-54 55-64
65+
Look up restaurant location and directions on a smartphone or tablet
67%
88
78
39
32
16
Use a computer to view menus, order food, or make online reservation
63%
82
74
40
38
20
Order takeout or delivery on a smartphone or tablet
52%
74
62
45
39
20
Look up nutrition information on a smartphone or tablet
50%
70
58
47
38
21
Source: National Restaurant Association, 2013
40
Consumers Seek More Restaurant Technology Regardless of whether you have used them in the past, how likely would you be to use each of the following technology options, if they were offered by restaurants? All Adults
18-34
Age Groups 35-44 45-54 55-64
65+
Interact with a restaurant on social media
46%
56
60
38
40
22
Make a reservation using a smartphone or tablet
46%
62
53
40
39
23
Use a restaurant reward or special deal with a smartphone or tablet
42%
55
46
38
35
23
Place an order on a touchscreen terminal in a restaurant
31%
52
36
22
19
9
Pay for your meal with a smartphone
24%
43
22
16
16
9
Source: National Restaurant Association, 2013
41
Future Growth Areas with Patrons
In which area would you MOST like to see restaurants adding more technology options in the future?
All Adults Loyalty Programs
27%
Ordering
26%
Reservations
19%
Entertainment
18%
Payment
6%
Source: National Restaurant Association, 2013
42
Future Growth Area with Apps Regardless of whether you have used a restaurant’s smartphone app in the past, which of the following features would be important options for you to have on a restaurant’s smartphone app?
Age Groups 35-34 45-54 55-64
All Adults
18-34
Find restaurant location and directions
89%
90%
96%
92%
92%
75%
View the menu
84%
88%
83%
85%
83%
73%
Order food for takeout or delivery
75%
84%
81%
69%
70%
59%
Make reservations
70%
73%
69%
69%
76%
60%
Loyalty and rewards programs
67%
67%
68%
74%
69%
52%
Purchase and send gift cards
45%
44%
49%
48%
41%
38%
Easy ways to connect on social media
34%
45%
31%
35%
22%
25%
Source: National Restaurant Association, 2013
65+
43
Will Technology Solve the Splitting the Check Issue? If you were dining at a restaurant and you had the option to split the check among you and your dining companions and pay with a smartphone, how likely would you be to use that feature?
All Adults 18-34
Likely
33%
53%
Age Groups 35-44 45-54 55-64
65+
30%
13%
27%
25%
Source: National Restaurant Association, 2013
44
Technology as Part of the Decision Matrix Would the availability of technology options like touch-screen ordering stations, smartphone apps, and mobile ordering and payment systems make you more likely to choose one restaurant over another, or would it have no impact on your decision?
All Adults
Age Groups 18-34
35-34
45-54
55-64
65+
More likely to choose one restaurant over another
13%
21%
10%
9%
9%
12%
No Impact on Decision
86%
79%
90%
91%
90%
85%
Source: National Restaurant Association, 2013
45
Building Off-Peak Traffic Growth Proportion of operators who think off-peak dining at reduced prices will become more popular
70%
59%
61%
58%
60% 50%
39%
40%
33%
30% 20% 10% 0% Family Dining
Casual Dining
Fine Dining
Quickservice
Fast Casual
Source: National Restaurant Association, Restaurant Trends Survey, 2012
46
Smartphone Ownership ~ % U.S. Adults ~
2013 2011
47
Source: Pew Research Center
47
Current Smartphone Ownership ~ % by Age Group ~ 90%
79%
81%
80%
69%
70% 55%
60% 50%
39%
40% 30%
18%
20% 10% 0% 48
Source: Pew Research Center, May 2013
18-24
25-34
35-44
45-54
55-64
65+
48
Per Capita Restaurant Spending ~ 2011 ~
Age of Head of Household
$893
75+
$1,163
65 - 74
$1,243
55 - 64 $1,073
45 - 54 $961
35 - 44 25 - 34
$953
< 25
$939
$0
$200
$400
Source: Bureau of Labor Statistics, Consumer Expenditure Survey: National Restaurant Association
$600
$800
$1,000
$1,200 49
A Growing Opportunity: Mobile Foodservice Percent of adults likely to visit a food truck if offered by a favorite restaurant
2011
50 National Restaurant Association, National Household Surveys Source:
2012
50
Meals in Motion Proportion of adults who said they are likely to use the following off-premise options
All Adults Delivery from a fullservice restaurant directly to a home or office
55%
Delivery from a quickservice restaurant directly to a home or office
52%
Curbside takeout from a fullservice restaurant
51%
Source: National Restaurant Association, National Household Survey, 2012
51
RESTAURANT INDUSTRY 2020 TOP 8 Developments The restaurant industry will experience continued intense competition. To remain successful, restaurant operations will have to provide the highest levels of service and quality food. Consumers will still want comfort foods regardless of their nutritional content. Although new technologies will offer great benefits, successful operators will retain a “personal touch” element.
Source: National Restaurant Association
52
RESTAURANT INDUSTRY 2020 TOP 8 Developments (cont’d) In order to survive, operators will need to upgrade all concepts on an ongoing basis. Healthy eating will continue to grow. Restaurant operators will make better use of mobile technology. Equipment used in restaurants will continue to become more energy efficient.
Source: National Restaurant Association
53
WRAP-UP 54
54
55
Americans Retain Positive View of the Restaurant Industry August 2013
Rank 1 2 3 4 5
Industry Computer Restaurant Farming & Agriculture Internet Travel
% Positive 65% 61% 60% 54% 49%
Source: Gallup 55
56
Americans Have Strong Negative Views of These Sectors August 2013
Rank 25 24 23 22 20-21 20-21
Sector % Positive Oil and Gas 26% Federal Government 27% Banking 33% Legal 34% Pharmaceutical 35% Real Estate 35%
Source: Gallup 56
Americans Love Restaurants Percent of adults who said they enjoy going to:
Source: National Restaurant Association, 2012
57
Unfilled Demand for Restaurant Services Remains Elevated
Almost one out of two adults are NOT dining onpremises or using take-out as often as they would like Source: National Restaurant Association
58
59
Restaurant Operators’ Outlook for the Economy Remains Mixed Operators’ Outlook for Business Conditions in Six Months 40% 32%
30%
30%
30%
29%
30%
28% 25%
20%
20%
23% 20%
23% 22%
20% 18%
17%
15%
16%
13%
10%
0% Jan-13 Feb-13 Mar-13
Apr-13 May-13 Jun-13
Better Conditions in Six Months Source: National Restaurant Association
Jul-13
Aug-13 Sep-13
Worse Conditions in Six Months 59
60
Restaurant Operators Pulled Back on Capital Spending Plans % of Operators Who Plan to Make a Capital Expenditures in the Next Six Months 70% 59%
60%
59% 57%
55%
59% 57%
50% 50%
53% 45%
40% 30% 20% 10% 0% Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Source: National Restaurant Association
Jul-13 Aug-13 Sep-13 60
Wrap-Up Modest growth environment remainder of 2013 and into 2014 Income and employment growth remains challenged as wholesale food price inflation pressures continue Pent-up demand for restaurants highlights sustained importance of nudging/incenting consumer thru technology Consumer acceptance of restaurant technology is high Over the short and long term, a positive future aided and enhanced by higher levels of technology integration 61
61
Restaurant Technology: Critical for Tomorrow’s Success
Hudson Riehle Senior Vice President Research and Knowledge Group Restaurant Innovation Summit
October 24, 2013 | Denver, CO 62
