In the last ten years, the quick-serve industry (fast food for the remainder of this article) and the restaurant industry as a whole has experienced a dramatic shift. From the 1950’s and the birth of the All-American Diner to the 1990’s and the onset of the epidemic of obesity, fast-food restaurants have come to define our culture of convenience and laziness. Today, a variety of quickly made meal options now exist for the consumer, but even the mighty fast food industry has experienced a shakedown as of late.
In years past, 4 primary types of restaurants existed: the fast food joint, the cheap diner, the chain sit-down restaurant, and the classy fine dining place. Today, as a result of increased public knowledge of the food industry and the demand for change, a new breed of restaurants have emerged, and their principle selling point isn’t the food itself; it’s the novelty of the experience.
In the 21st century, we have access to more information at any given time than any other generation in history. This wealth of knowledge that is literally at our fingertips has enabled humans to learn more about whichever subject they desire than was ever possible before. Food, being a basic function for life and all, is a popular subject of conversation and research. Many famous documentaries about the food industry surfaced in the past decade, including Food, Inc., and Super Size Me.
Both of these were groundbreaking in nature and shed light on previously unknown sides of the food industry. We now know a great deal more about the production of our food and the health risks associated with many types of food. Our world is also the most educated in history, with a higher percentage of people in university and college than ever before. These students are not necessarily studying things related to food science, but we have a greater passion for education and the availability of information, and thanks to the Internet, we have the means to access it at any time. As a result, the veil has been brought down: the food industry lied to us, and we demanded change thanks to our newfound knowledge.
Enter the restaurant industry. Despite our newfound knowledge of the fast-food industry, we aren’t getting any healthier. Obesity continues to rise at an alarming rate, McDonald’s almost has 40,000 locations around the world, and our supply chains are already taxed as it is. Despite the push in the mid-2000’s to buy organic, and then the furthering of that campaign to forego organic and purchase local instead, as a whole, our society has not changed their taste for unhealthy food. Fast food no longer fools us, and yet we still continue to help these chains grow. But thankfully, we have slowed the growth of many fast food chains because of one key factor many of them lack: an experience.
According to Bloomberg, the fastest growing segments of restaurants in North America are: Cafes (this includes Starbucks), Asian restaurants (anything from sushi to Thai Express), Mexican (Chipotle, Taco Bell, hundreds of burrito places), Chicken (KFC, Chick-Fil-A), Sandwich (Subway, Arby’s), and frozen dessert (Ben & Jerry’s, legions of froyo cafes). Family sit down restaurants such as Cracker Barrel are declining, and burger chains are barely scraping by in terms of growth. When we break this list down, a few things become apparent.
Cafes are number 1 because coffee is king, but if you examine the types of cafes and their expansion, you’ll notice that Starbucks is leading the way, by quite a large margin. In Canada, Tim Horton’s is a cultural icon, but they are also losing ground to the coffee giant. Why could this be? It certainly isn’t because of the price or speed at which the product is delivered; Dunkin Donuts and Tim’s both have Starbucks beat there. What I think it equates to is the experience that cafes such as Starbucks provide in comparison to their cheaper counterparts. People are willing to pay more for a product if the experience of their purchase is better. Consumers have become a little smarter, and as a result, a little more demanding of the service industry. The type of experience I’m referring to is quieter, more welcoming, has more attractive interior design, and higher quality service.
Asian and Mexican Foods
2) The next two on the list are foreign foods (Asian and Mexican). This type of experience would qualify as a cultural one, because despite the fact that these types of chains are Americanized, watered-down versions of the real thing, they’re still more foreign than a burger and fries from McDonald’s. Both these types of foods are also perceived to be a lot healthier, and while that may be partially true depending on what you’ve ordered, the big draw here is the cultural experience of eating foreign food rather than plain ol’ burgers and fries. Recall that health is not a primary motivator for consumers despite the widespread knowledge of the dangers of fast food. It certainly is a factor, but the data would suggest that it’s definitely not the most important on the list. People are willing to discard health if the experience is worth it. Why else would Smoke’s Poutinerie be as successful as it is?
Traditional fast food restaurants have also tried innovating with more creative menu options to retain current customers and attract new ones. Many food critics cite innovation as one of the key trends in the restaurant industry moving forward, such as Wendy’s pretzel bun or Taco Bell’s Doritos Locos Tacos.
3) The sandwich industry is a steady one, but one former key player has been in the red for quite some time. Quizno’s was founded in 1981, and in ten years they had almost 5,000 locations across the continent. Gradually, the size of the chain actually decreased and the company recently filed for Chapter 11 bankruptcy in March, 2014; the chain has since stabilized, but it is a shadow of its former self. Why did this happen? The quality of the food was roughly the same as their two main competitors: Subway and Mr. Sub. Price was virtually identical. Same with wait time. Quizno’s expanded rapidly in the same vein that Starbucks did, but Starbucks remains today, bigger and better than ever. The difference between Quizno’s and their competitors is the experience: I like to call it product transparency.
When you’re ordering at Subway or Mr. Sub, you get to choose everything you want to put on your sandwich, and you can see it being made right in front of you; you’re in control. At Quizno’s, this was not the case, as the sandwiches came with preset formulae, and additionally, the ingredients are mostly hidden at the beginning of the ordering process. This creates a feeling of dishonesty and breaks trust between the employee and the customer. The number 1 rule of sales is honesty; people like to buy, they do not like to be sold. If your buyer trusts you as a seller, then you’ll have a much higher chance of selling, and the experience will be favourable. If I’m getting a sandwich at a fast food place, the expectation is that I get to be in control of what I’m ordering, so when I feel out of control, that tends to alienate me as a customer.
Product transparency and consumer trust is also why frozen yogurt chains have expanded so rapidly. Froyo first experienced a brief boom in business during the health craze of the 1980’s, and to go alongside their copy of Sweatin’ to the Oldies, many consumers also indulged in a healthier treat: frozen yogurt. Chains such as Yogen Fruz got their foothold here, but growth was largely stagnant, and now many of these companies have all but disappeared. The reason? Product transparency and consumer trust. At Yogen Fruz, you’re not really in control, and you don’t totally trust the people making your food. At frozen yogurt cafes, you are in control; the ingredients, the toppings, the amount – everything is up to you. Yes, health was a factor in their expansion, but many of the toppings that these places have are candy. The hidden factor behind all of the success is the fact that the more knowledgeable consumers of the present like to feel like they’re in control, so by gaining their trust through product transparency, you’ll experience a greater deal of success.
While burger chains are far from hurting, they did undergo some major rebranding to compete with the changing consumer tastes. For example, McDonald’s launched a rebranding of many of its restaurants in the past 5 years. The rebranding included investing $1 billion in an entire decor change from the plastic, diner-esque setting it was known for to a more comfortable, lounge type of feel. This included adding in McCafe stations to all of its locations beginning in 2010 in an effort to steal business away from Starbucks, Dunkin Donuts, and Tim Horton’s. Wendy’s has recently followed suit with a similar decor upgrade. This was all an effort to improve the customer’s experience when they visit the restaurant.
Many burger chains have also resorted to installing LCD/LED TV screens in their locations to display menus or sweeping shots of their products. While these installations are actually a bad thing in terms of the store’s electricity bill and cost, it does provide the stores with a more glossy finish and also allows for a quick turnover with regards to menu choices.
The Birth of the Gourmet Diner
In addition to the fast food industry’s shift, a new niche of restaurant has emerged: the gourmet diner. These types of restaurants serve the same type of food that fast food places traditionally serve, but by putting a unique spin on things in terms of their product and by cultivating a unique atmosphere, these “in-betweener” types of restaurants have been popping up more and more lately. The gourmet diner offers higher quality food than most fast food restaurants sell at a slightly higher price and a longer wait. These restaurants satisfy consumer’s need for a tastier meal than a fast food place can provide, but at a much lower price than they would pay at most other sit-down restaurants.
The experience at a gourmet diner is what sets it apart: many have honed in on a specific type of food and jazzed it up a great deal. The portions are large, the food is creative, and the atmosphere of many of these gourmet diners (even if they have since become chains), are unique in the restaurant world. Two prominent Canadian examples include the gourmet burger chain The Works and aptly named Smoke’s Poutinerie. While the mission of each of these chains is slightly different, their modus operandi is similar: take an “unhealthy” product, make it look and taste awesome, add in a cool atmosphere, and you give people an unforgettable experience.
Both The Works and Smoke’s offer fairly unhealthy options, but as I have mentioned before, despite what we know about the adverse health effects of fast food staple items like burgers and fries, we will throw all of that out the window for a cool experience and a tasty meal. Both of these places have capitalized on new consumer tastes (pun intended) with regards to the food industry.
More and more restaurants are popping up that are offering a gourmet spin on fast food staples such as burgers, fries, and pizza. People are sick of having the same old cheap fast food, so they are willing to pay slightly more for something infinitely better in terms of experience and taste. Both of these chains have expanded quite rapidly throughout Canada, and I’m sure America’s vast restaurant industry has its own fair share of examples.
Moving forward, we can only hope to educate ourselves further about our food. I would like to see a bigger push for a new group of healthier gourmet diners, but unfortunately, the worst foods for you are often the cheapest. It is encouraging that we are exploring new avenues of dining, and that many fast food chains are slowing their growth, despite what minor facelifts they may be employing. It is my hope that this trend continue, as it pushes innovation on many of the industry heavyweights and forces them to improve their practices. One thing remains clear: as more educated consumers, we are now in the age of the food experience. Our restaurants need more than good food to attract us, and it will be interesting to see what types of restaurants emerge as a result.