Takeaways: 2023 National Restaurant Association Show

Every May, 10,000 of the finest in foodservice convene at McCormick Place in Chicago for the National Restaurant Association Show. As usual, we learned a lot, and wanted to share our top takeaways from this year’s outstanding show.

1. The definition of a restaurant is changing.

Ask a Gen X-er or even a millennial what they picture when they envision a restaurant, and that answer will vary greatly from their Gen Z counterparts. Generations of the past see themselves sitting around a table with friends. Gen Z sees technological experiences that add convenience to their day. To them, a restaurant is a logistics company fulfilling a need. This means gas station food is no longer considered bottom of the barrel.

The changing definition of a restaurant doesn’t stop at generational differences. The restaurant model itself continues to evolve to meet habits that were up-ended during the pandemic. 66% of consumers are more likely to take their meal off-premise than before the pandemic. This leads to the need for hybrid models and smaller footprints with automated kitchens.

Technology is key for restaurant survival. It is table stakes for consumer touchpoints, employee engagement and training, and automation. Tech costs should be a standard line item on every P&L. Consumers expect your digital experience to match the in-person experience — and if that digital experience is poor, they may not even give you a chance to impress them with an in-person experience.

One thing is sure, there is not a future in the restaurant industry for those who like to live in their comfort zone. The future belongs to the early innovators. The only constant is disruption and change.

2. Loyalty Programs can combat current economic headwinds.

The “R” word has been lurking for some time and restaurants are finally starting to see consumers tighten up their wallets in anticipation of a recession. Household net worth is on the decline after hitting its peak during the pandemic. According to Pew research, consumers are twice as anxious about the economy as they were during COVID years. In addition, April 2023 was the first month in recent history that restaurant inflation outpaced grocery inflation. Home cooking is a primary restaurant competitor again. Restaurants need to moderate their recent pricing increases and deliver on service.

One way to combat dwindling traffic counts is to increase the frequency of visits from, and in turn value of, loyal customers. Hand in hand with technology discussions, a strong loyalty app is becoming yet another fundamental expectation consumers have of restaurants.

So, what’s the best way to balance loyalty offers with restaurant profitability all while keeping customer needs at the forefront?

Published vs. unpublished benefits. Be mindful of core benefits that will be harder to move away from later (even if they are necessary to communicate the program’s value) and balance those with surprise and delights that reward guests while driving your own business goals and objectives. Build flexibility in your program from the beginning so you can dial the economics up and down, as needed.

Consumer sign-up value vs. use value. The first objective is to get your core customer to sign up for your loyalty program and the second is to make sure they keep using it. App offerings should include a rich benefit to encourage account creation as well as ongoing value that keeps the customer engaged and active. Rewards don’t always have to be monetary. Consider adding experiences and status.

Need to change some of your published benefits? Realize that your loyalty program is an important part of your relationship with the guest and it’s best to be transparent and communicate changes ahead of time. Demonstrate that you understand their needs by highlighting other values you can provide. Brands that try to gloss over changes and paint a picture rosier than it is are sure to leave a bad taste in consumers’ mouths, leading to overall brand distrust.

If you strive to build your program quickly, that’s not loyalty, it’s sales promotion. Loyalty is long-term. The longitudinal behavior data obtained through your loyalty program can build insights that will only make your program stronger.

3. Gen Z is breaking their previous generations’ habits.

Gen Z is eating out less frequently than millennials did when they were the same age. But just because they aren’t eating out doesn’t mean they aren’t obessed with food, they simply prefer to spend their money differently. Where millenials are the “experience generation,” Gen Z is bringing back materialism – spending their money on things rather than food away from home. An online-first mentality was only amplified by COVID — driving them to TikTok and, subsequently, their kitchens in a cooking revolution.

How does Gen Z define value when it comes to dining “out”? To them, dining out is more take-out or delivery-oriented, so value equates with things like product quality, product longevity (is my meal still hot and tasty when the delivery arrives), product volume, and above all else – convenience. Thanks to Amazon, they expect it fast and they expect it now. (Great news for QSRs who can keep up with their demands.)

Gen Z is redefining what a meal is (but don’t call it a snacking craze). Restaurants need to move past the fear of trade-down and embrace the move away from traditional dayparts by looking for ways to capture increased frequency from smaller meal occasions throughout the day. So how should restaurants address the changes Gen Z is bringing?

Switch up your arm candy. Food is a must-have accessory. This generation wants to “wear and share” so consider how your brand (and maybe more importantly, products) can mean something to their identity. They have a short attention span and require multi-innovation. Just think of how quickly artists drop albums compared to the music industry of the past. Thanks to this “drop culture,” LTOs are being reinvented.

Merch, strategic product collaborations, and novelty ordering experiences are all ways to Gen Z’s hearts … and stomachs.

Get a face for your food. Speaking of strategic collaborations, faces are the new logos for Gen Z. They buy products when they see someone use them. Think past the usual brand sponsorships and pivot to product sponsorships. At the same time, don’t think a face only means a star-powered celebrity endorsement, a la McDonalds. UGC is more achievable for brands than celebrity and can still build loyalty. This generation is moved by seeing someone else in their community participate in and with a brand.

Be a customization accomplice. Customization is becoming synonymous with engagement. If a consumer is customizing via a product offering, app functionality, or through a TikTok hack, consider them captured. Combine your existing inventory with operational viability, consumer preferences and on-trend items to lean into the “hacker” spirit in a low-stakes way.

4. LTO Quick-Hits

• “Loaded” trends are driving younger and everyday consumers (think Loaded Tots, etc). Make loaded LTOs low-risk by using existing ingredients.
• 18-24 yr olds want innovation. Coming out of COVID, they are moving from comfort to experimentation. Co-create with this younger demographic and listen to them on social media. For QSRs, add items that can be used in multiple dishes. Be bold. Spice is a no-brainer.
• Think of delivery as a flavor trend. Dishes must deliver at restaurant quality all of the time and anywhere.

JULIE ONDRUSEK is partner and Director of Client Services at LOOMIS, the country’s leading challenger brand advertising agency and a top Dallas advertising agency for digital, social, mobile and user experience. For more about challenger branding, advertising, and marketing, leadership, culture, and other inspirations that will drive your success, visit our blog BARK! The Voice of the Underdog and catch up on all of our posts.

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