Defining the Restaurant of the Future

Defining the Restaurant of the Future

The U.S. restaurant industry has faced some interesting challenges in recent years. An industry that was once called “Amazon proof” now navigates a host of third-party food delivery services. Consumer tastes and spending habits have continued to shift – sometimes in favor of restaurants, and sometimes in favor of competitors like grocery stores or meal prep services. And a pandemic has disrupted the way restaurants have operated for generations.  

It’s easy to point to today’s emphasis on drive thrus and food delivery and say that it is all the result of the pandemic, but that isn’t entirely true. Many of the trends that we’re seeing today have been emerging for a number of years; the pandemic simply accelerated them.  

This all raises the question, what does the restaurant of the future look like and how will that shape real estate strategies?  

The reality is that there are too many unknowns to provide a truly accurate prediction. The length and severity of the COVID-19 pandemic will in part determine whether these changes are temporary or permanent. Still, as QSR magazine recently reported, some patterns have started to emerge that can provide restaurant real estate teams with insights to guide decisions.  

Prediction #1: Some Brands Will Find New Opportunities in the Suburbs 

Not too many years ago, we were writing about an urban renaissance as consumers and brands raced back to urban centers. Pre-pandemic, we were already starting to see a shift. The young consumers who were leading the revitalization of many urban neighborhoods were settling down and beginning to see the value of a quieter suburban life. High cost of living drove others away. And now, the pandemic is forcing many urban dwellers to question whether their high-density neighborhoods are truly better than the more socially distanced suburbs.  

This doesn’t mean that all consumers will turn to the suburbs or that the change will be permanent. Still, real estate teams would be wise to re-evaluate lower density markets that had previously been rejected and closely track where their core customer base is living and working.   

Prediction #2: Real Estate Requirements Will Shift 

Pre-pandemic, third-party delivery services were already making waves in the restaurant industry and many brands were rolling out their own technology for online orders. The majority of sales still happened in the restaurant, but off-premise dining represented a growing percentage of sales for many brands.  

With the pandemic, suddenly off-premise became the only revenue source for many restaurants. Brands that had not figured out off-premise sales are investing in it now, and consumers who previously hadn’t tried online ordering or delivery options are having to learn the systems too. As brands and consumers both become more comfortable with online ordering and delivery, it is reasonable to assume that off-premise sales will represent a larger percentage of unit level sales even after the pandemic concludes.  

A shift in consumer behavior in favor of delivery and pick-up could mean a few important changes in restaurant design and location requirements:  

  • Restaurant designs may place a renewed emphasis on drive thru lanes. 
  • Unit layouts and parking lots will include designated areas for picking up orders – for both consumers and third-party delivery representatives. 
  • Units may shift to less indoor seating and a smaller footprint, although parking space (for online order pickup) may become more important. 

The right decisions for your real estate team will depend on the preferences and behaviors of your unique customer base. Still, as leases come up for renewal and new units are planned, it may be wise to consider properties that offer these types of characteristics.  

The Bottom Line 

The pandemic accelerated many of the changes already taking place in the restaurant industry, but the full extent of the changes is yet to be determined. It’s more critical now than ever for real estate teams to understand their brands' consumer base and how consumer behavior is changing. With the right insights, your restaurant’s future can finally become clear.  

Need help understanding your customers, re-evaluating your current real estate portfolio, or spotting your market opportunities? Buxton can help. Explore our solutions for the restaurant industry.