It’s no secret that the COVID-19 pandemic hit the food service industry with particular force. With global shutdowns and the temporary loss of in-person dining, many restaurants struggled to keep up with the changing landscape and had to drastically shift their business models to stay afloat.
However, the 2020s are not the only era in which the food service industry has had to cope with changing economic and social trends. During the Great Recession of 2008, the restaurant space experienced a massive downturn as many of their customer’s expendable income declined significantly. To meet the changing needs of those customers, options like food trucks and elevated fast-casual restaurants offered alternatives to the traditional sit-down restaurant.
The expansion of accessible options met (and to some extent, created) the demand for affordable luxuries. The public wanted delicious and imaginative food even when they couldn’t pay top dollar for an upscale restaurant experience.
Hip, interesting and innovative food trucks with off-the-beaten-path menus and fast-casual joints with elevated aesthetics and higher food quality allowed people to have great culinary experiences in a cheaper and more accessible way.
Just as the changes in the restaurant industry during the Great Recession have stayed with us, we expect that the changes the pandemic has brought about will also continue through the recovery.
Many strategies that restaurants can use to pivot their business have been developing and will now be cemented as longer-term approaches to success in the food service industry.
How Restaurants Plan to Keep Up with a Post-Pandemic World
The strategies different restaurants will take in the coming years will depend on many factors, including their existing business model, location, clientele and budget.
Nevertheless, there are a few key approaches that many restaurants and food service companies will follow as they (and the world) adapt to the longer-lasting changes wrought by COVID-19. Let’s take a look at some of the major ways restaurants, as we know them, are shifting to meet the demands of this new era.
Greater Focus on Food and Beverage CPG
During the height of the pandemic, when reducing the spread of the virus was paramount, restaurants were shut down and forced to rely on alternative sources of income including by focusing on developing and selling their food as CPG, or consumer packaged goods.
While many established restaurant brands had already entered the CPG business producing, for example, jars of their customer’s favorite pasta or bottles of their famous bbq sauce, the traditional appeal of restaurant dining has always been the fact that the food is freshly prepared and served hot (or cold) to the waiting customer.
While the typical restaurant model of freshly cooked and served meals has had a renaissance as the worst of the pandemic recedes into memory, many of those restaurants that entered the food and beverage CPG space have found it profitable to stay, seeing that there are plenty of opportunities in this new business model.
Most food entrepreneurs find that the complexity and challenges faced by trying both to run a restaurant that provides fresh meals in-person and manufacturing CPG items for retail sale in the same space are too much to handle. This is why some food service brands have pivoted to an exclusively CPG model or look to find an outside production solution.
Part of the appeal of entering the CPG market is that food and beverage CPG products are designed to be purchased and enjoyed over and over in a relatively short time frame as compared to the more infrequent restaurant experience.
That means you can develop repeat customers that return often to replace your products, making it easier to build up revenues and earn a profit from the same customers.
The Rise of the Ghost Kitchen
The ghost kitchen is an online-only restaurant that does not offer a physical dining room or storefront. This business model existed on a smaller scale before 2020 (think Domino’s pizza or Chinese food delivery-only locations), but for obvious reasons, pandemic shutdowns led to a massive rise in the viability of ghost kitchens that make food only for delivery.
Not only were people stuck at home and unable to go out to restaurants but grocery stores were also considered to be relatively unsafe spaces due to the fact that shopping brings people into close contact with others.
Similarly, many consumers became interested in ordering meal prep kits or fresh meals prepared and delivered periodically on a subscription basis from an offsite commercial kitchen. People found they could enjoy chef-quality food at home and at their convenience while avoiding the crowds at restaurants and grocery stores — a total win-win. These meal preps often cater to consumers’ specialty dietary or health requirements whether for those interested in a keto or paleo approach to weight loss or those having a medical need to avoid certain allergens or ingredients.
Though meal preps, as well as restaurant take-out-only concepts, often start in someone’s personal kitchen, the rise in availability of private commercial kitchens for rent has made it possible for chefs to share their creations on a much larger scale without the need for a space for customers to sit and eat.
The world has been moving over the last decade toward constant online availability helping drive a spike in interest in the convenience of home delivery of food. Both of these trends have exploded during the pandemic. The public health element of the pandemic and heightened concern for avoiding face-to-face contact in public settings served as an additional pivot point towards eating restaurant-quality food at home.
And voila — delivery-only restaurants and subscription meal services took their places as mainstays in the food service industry, with so many benefits to both the consumer and the producer that we expect these innovations to stick around for a long time to come.
Stronger Online Brand Identities and User-Friendly Interfaces
Social media has changed the scope of every element of our food economy, especially with the meteoric rise of online shopping.
While shopping online used to be limited to used goods and dodgy or obscure items not available at your local store, the online accessibility of everything from cars to homes to food and beverage CPG has changed the face of e-commerce for good.
As online shopping for every kind of product has become the norm, brands have had to meet today’s shoppers where they are by bringing the storefront and meal ordering experience to their screens.
The first part of this process is making sure that your company website is easy to navigate, makes purchasing simple and fast, and offers ways to stay in touch with customers after their first touch with auto-ship options, special deals for repeat customers, and other marketing tools.
The second part of the process is elevating your social media presence to present your products to the world in new and exciting ways.
If your restaurant offers food and beverage CPG or has even pivoted to app-based deliveries or subscription meal services entirely, social media is no longer a sideshow to your core business of making and serving food. . This means you have to prioritize close connections with current and potential customers in the most hands-on way via social media posts and frequent engagement. Many Amped Kitchens tenants run their entire business off of these kinds of strong social media relationships. The opportunities for finding and keeping customers in new ways may surprise you.
Find Your Stride in the Changing Food Service Space with Amped Kitchens
The food service industry continues to evolve to meet the demands of its customers and restaurants and food producers of all kinds need to be open to exploring new ways to meet these new challenges.
Prioritizing food and beverage CPG or shifting to a model that includes app-based deliveries or subscription meal services in your production strategy? You will likely need reliable, exclusive commercial kitchen space to experiment, prep, and create for your customers.
Amped Kitchens allows food service and CPG companies of all sizes and scopes to grow their business in new and exciting ways in their own private commercial kitchen space. Each kitchen space is rented long-term to a single client, so you have the freedom to set up shop for the long haul and plan for your company’s bright future. Amped Kitchens also offers an unmatched suite of amenities including onsite storage (dry/refrigerated/frozen), multiple loading docks, a professional warehouse team, office space and much more to support your growth well into the future.
Interested in renting a commercial kitchen space with Amped Kitchens? We’re excited to work with you. Contact us to learn more.
