Is the pandemic providing a taste of future for the restaurant industry?

Apr 2, 2021, 10:01 AM

Robert Brunner photoAs we slide into year two of this global pandemic, visions of long car rides flash in my head. You may have experienced the phenomena where the bored child asks, ‘Are we there yet?’ with increasing fervor as the distance to the destination dwindles. In this same spirit, we all look forward to the day when life returns to normal - ‘Are we there yet?’ But perhaps we are asking the wrong question, and, instead we should ask ‘Will we recognize normalcy when it arrives?’

Before the pandemic began, I created a course at Gies College of Business called Emerging Technology and Disruption. The pandemic has, of course, disrupted how the class operates; we, as many other courses across the world, are now remote. More importantly, though, the pandemic has changed the viewpoint of the students enrolled. For example, in the past I might talk about education technology and how remote learning might evolve, but students have now experienced this transition first-hand. As a result, their minds are more open to such transitions in other businesses.

In a recent class, students discussed how the food industry might change once the pandemic has ended. The conversations started by focusing on changes they were already experiencing and how those changes might carry over into the future. Central to this conversation was the closure of the dorm buffet and the lack of sit-down restaurants near campus. With this worldview, students stated that buffets would be less likely to exist in the future as people would be hesitant to share food in public with strangers. They also expected an increase in digital interactions with restaurants, including online ordering, payment, and either touchless pickup or more robust delivery options. 

That’s when the conversation became really interesting. Since people already use digital apps to find and choose restaurants (e.g., Google or Yelp), and they use apps to buy food and have it delivered (e.g., Uber Eats or DoorDash), students wondered if there are other pricing options that might be possible if restaurant operations become more digitized.

To understand this logic, consider the menu. In most cases, a restaurant hands out physical menus to patrons, even when ordering takeout, and have a PDF copy or similar static version of the menu online. What if the menu became digital? Restaurants could easily set prices to drive brand loyalty (e.g., repeat customers), to account for different portion sizes (e.g., lunch versus dinner), to account for a change in in-stock ingredients (e.g., popular items sell out quickly), or even to employ dynamic (or surge) pricing to encourage people to spread out demand to reduce overload times on the kitchen staff.

A digital menu could have greater benefit to the restaurant via an integration with other software. For example, the menu could be tied into a customer relationship management tool (CRM) to improve tracking of customer orders, which might lead to automatic reordering, simplified reviews, or tailored suggestions for new dishes that might follow from a recommendation engine (like Netflix). This also would allow the restaurant to track each customer’s interaction with the menu, which, via A/B testing, might improve order flow and execution by optimizing the look and feel of the presented information. At the other end of the business, the digital menu could be tied to inventory management and supply chains to enable automatic reordering.

At first glance, this might seem a bit far-fetched; however, many of these ideas are grounded in real-world experience. Students know that many businesses charge a lower price for cash purchases; might this carry over to a digital cash purchase (e.g., Venmo)? Students also often use loyalty cards to get discounted food; why shouldn’t the restaurant have greater control of this process? Finally, surge pricing has been used sparingly by restaurants and bars. For example, the Detroit Beer Exchange opened nearly a decade ago and adjusts beer prices based on demand. In the end, one lesson for that class period was that innovations are often in plain sight and are simply waiting for the right entrepreneur to seize the opportunity—pandemic notwithstanding.

Of course, when performing scenario planning, we don’t simply want to imagine a variety of futures; we need to select the most likely and most impactful scenarios to frame a conversation about making strategic decisions. When asked about the likelihood that buffets would disappear, the students responded with a low probability. Perhaps they were voting with their stomachs, as college students are wont to do. On the other hand, maybe the right entrepreneur just wasn’t in my class.

Robert Brunner is Associate Dean for Innovation and Chief Disruption Officer at Gies College of Business at the University of Illinois-Urbana Champaign. He is also the director of the Disruption Lab.