Is recession coming for restaurants?
What’s the restaurant's best approach to navigate the current climate sustainably?
October 2022
A research by Veond app in collaboration with Zomato Portugal.
In a conversation with Nuno Fernandes (NF), General Manager at Zomato Portugal - the largest Food Delivery, Dining and Restaurant Discovery platform - the trend is very encouraging.
"People will always need to eat. For many, restaurants are a primary meal source."
According to NF “People will not stop going to restaurants, actually they will want to go even more frequently. However, it will require a stronger investment from restaurants to ensure that they are providing a better and more unique experience to
- attract new customers and
- retain old ones.”
Customers will put more effort into choosing a restaurant before actually deciding where to go. This now tech-savvy guest, will demand assurances on whether it is worth going to that specific restaurant or not, before actually committing to “book a table”.
Based on Zomato’s most up-to-date reports, the average viewing session of a customer has increased 3 times when compared to pre-pandemic levels. A customer has increased his/hers research by 3 times before committing to making a reservation at a specific restaurant, and this research is now done across multiple platforms (i.e. social media channels, other restaurant platforms, reviews, etc.).
What does this mean for a restaurant?
This means that for a restaurant the need to have a better online presence is now bigger than ever. Customers will want to be 100% sure that going to that specific restaurant will be a unique and worth it experience.
What can we expect?
There will be an increase in the search for the kind of fast-food, snacking, cheap/low cost offering. This will likely translate into an increase for fast-food/low-cost restaurants.
Smaller/local restaurants will likely suffer as they are not neither super fast nor super cheap and also they are not considered a “unique experience” (they will likely rely on government support).
On the other side, restaurants with better online/social presence, with more information on their menus, with information about calories and ingredients, with vegan-friendly/healthier/sustainably focused options will be better positioned to attract new customers and retain old ones as they tend to be seen as a “unique & worth it experience”.
Delivery vs. Dining in
During Summer a decrease in delivery/takeaways would be expected as well as an increase in the search for dining out restaurants. This trend has been confirmed and delivery platforms have struggled with lower margins since May. However, this is expected to change during Winter (between December and mid February) when customers will likely look for more indoor activities, therefore resulting in a decrease in dining out.
Trends and Strategy - Where to go and what to do?
The number of restaurant openings keeps going up. There are more restaurants opening than closing, which is very encouraging. The demand for better online practices and more diversity has increased and restaurants adapting to this reality will navigate the current climate positively. Also, according to a recent research by Deliveroo, a variety of plant-based meals with good discounts are some main differentiators for consumers. The discount has been shown as a huge success point for restaurants wanting to have a bigger online presence. The digitalization of the restaurant industry is now likely to happen at a 100% and only the restaurants onboarding this change will survive.
Whether due to technologically savvy consumers’ demand or restaurants trying to set themselves apart, restaurants have awakened to the power of technology. Now more than ever, there’s a need for restaurants to set their brand apart and technology will be a key factor in this industry’s future success. Targeting a new audience, creating better and more sophisticated ways to attract new customers as well as giving them reasons to become loyal guests will be essential.
A decrease in attendance to dining in restaurants is likely to happen between December and February, but unlike what happened during the pandemic, businesses are able to predict trends and adjust / prepare accordingly.
Bigger revenues for restaurants whilst helping consumers save
Restaurant discovery platforms like Zomato and Opentable are well positioned to support businesses navigating the current climate positively. Either by supporting them with a better online presence or by providing tools to showcase more detailed information on menus, suppliers, etc.
On the other hand, tech platforms like Veond, will be a valuable commercial asset to restaurants wanting to feature healthier, more sustainable dishes to a growing audience (i.e., flexitarians, vegetarians or vegans) as well as saving on production costs by focusing on plant-based ingredients (i.e. unprocessed foods like fruits, beans and vegetables) which, according to a recent study by Oxford University, when compared to meat, fish, milk and eggs, have been the less affected by inflation, allowing savings of up to 1 third.
Win win: Better for the restaurant industry and better for the planet
Plant based foods are evidently cheaper than meat or fish and now the difference can be even higher. So with such significant pressure on the families budget, it's likely that inflation will change consumers' eating habits towards more sustainable ones. The consumer trend shows an interest in unique dining experiences when going out so what a great opportunity for restaurants to innovate, create and highlight new plant-based dishes that will help them go through recession whilst contributing to a more sustainable society.
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Source: Highest inflated foods: milk, cheese and eggs - a great opportunity for Plant-based foods.
Source: Oxford University study about savings on Plant-based foods.
