The new decade is well and truly underway, and for franchisors, it brings with it a host of fresh challenges. Whether it’s new flavours or formats on the horizon, change is inevitable in the hospitality sector. So, what are the key industry trends that are set to redefine food franchising in 2020 and beyond?
While tried and tested offerings like burgers and sushi are likely to survive the evolving industry conditions, it doesn’t negate the need for franchisors to stay abreast of the latest market trends.
Preparing franchisees for incoming digital and technological advancements is one challenge, but charting the often-fluid consumer preference list is another. It’s an interesting time for the food franchising industry, Scott Nicolai, executive general manager of hospitality equipment supplier and financier Silverchef explained.
“The Australian hospitality industry continues to evolve and expand, despite some significant challenges,” he said.
“Stifled wage growth has limited the amount of spending money in consumer pockets; meanwhile, younger consumer expectations of an Insta-worthy experience are higher than ever. Combined with the complexities of compliance, accounting and increased operational costs, running a hospitality business is not always smooth sailing.”
In its inaugural Future Grazing Report released earlier this month, Nicolai and Silverchef predicted that the future of food franchising, and indeed the entire hospitality industry would look decidedly different moving forward.
Through extensive consumer and supplier research, Silverchef uncovered a series of trends that are likely to significantly impact the sector. Here, we detail four of the most important changes set to hit food franchising over the next 10 years.
1. Wellness credentials
While health food offerings are by no means a new concept, demand for affordable and nutrient-rich concepts is likely to swell even more over the next decade.
Back in September, the CSIRO revealed that the health and wellness food space could be worth as much as $25bn by 2030, buoyed by a rising prevalence for plant-based protein and alternative meat.
“As consumer demand for healthy foods and foods with added health benefits increases, foods such as enriched yoghurt and fortified breakfast cereals are likely to claim a larger chunk of the $25 billion pie,” Dr Katherine Wynn, senior economic advisor at CSIRO Futures said.
According to Wynn’s research, the health and wellness, sustainable solutions, and premium segments’ growth (3.6 per cent per annum, in real terms) will outpace Australia’s thriving food and agribusiness industry as a whole (2.4 per cent per annum).
The prediction may seem bold, but the projections stack up. Silverchef’s research went on reveal that 86 per cent of Australian diners consider health and wellness important when selecting a restaurant or café.
It follows a substantial rise in the popularity of alternative diet options. According to the Silverchef report, more than one quarter (28 per cent) of all Australians, the equivalent of 5.5 million people, consider menu options such as vegan, vegetarian, gluten-free, dairy-free and paleo as important.
Operators in the food franchising sector are already responding, with more than one third of Aussie restaurant owners considerably increasing their health and wellness menus over the last year. As the millennial and Gen X markets take hold however, franchisors would be wise to bolster their stocks to accommodate.
2. Ethical focus
Sustainable food practices and ethical supply arrangements are likely to dominate food franchising operations in the 2020s. Silverchef noted that four out of five Australian diners look for locally-sourced ingredients when eating out, revealing a stronger community focus was brewing.
Additionally, 82 per cent of Australians reported wanting pesticide-free food, a figure that was mirrored by the rate of Australians who demand unprocessed whole foods.
On the ethical side of the spectrum, 78 per cent of Australians revealed they want to know if the establishment they dine at supports animal welfare.
3. Trust and transparency
Franchisors have always been encouraged to demonstrate transparency within their supply chain, however in the decade to come, the value of brand trust will increase tenfold.
Silverchef’s report revealed that trust, not price or convenience was the most important consumer factor in choosing where to dine out.
More than one third (37 per cent) of Australians ranked trust and transparency as most important, ahead of price (35 per cent) and convenience (28 per cent). However, this also represented a major disconnect with food franchising operators, of which nearly half (47 per cent) believed trust and transparency was the least important element for consumers.
“In the future, it will only become harder for food manufacturers to substitute unwanted ingredients. However, the research shows that, compared to 12 months ago, less than one third of hospitality businesses are being more transparent about the origin of their ingredients,” the report read.
4. Personalisation
The final trend that is likely to make a massive impact on the food franchising sector is the rise of personalisation. While some chains have already weighed into the market through menu offerings, many, such as McDonald’s Create Your Taste initiative have failed to hit the mark.
Silverchef suggested that the 2020s will see a rise in menu personalisation, however, experience-driven innovation was also predicted to play a significant role.
“Personalisation is already seeing cut-through in Australia, with almost half (46 per cent) of hospitality owners saying they offer more customisable options or experiences than 12 months ago. From custom-made beer and wine based on the customer’s DNA, to 3D food printing, technology is accelerating the advent of personalisation,” the report said.
By combining artificial intelligence and virtual reality implementations such as facial recognition, restaurants will be able to tailor special offers and products to customers based on their previous ordering habits.
“A customer walking up to the kiosk, once recognised, can order enhanced versions of their previous purchases, a special treat if it is their birthday or anniversary, or only those menu options that avoid their registered allergies.”
It may sound like a dystopian fever dream, but Aussie consumers are apparently happy to take up the offer. Silverchef also reported that 42 per cent of Australian diners were in favour of virtual reality headsets to see meals in 3D, with 54 per cent responding positively to the idea of social media reviews being linked to interactive menus.
Food franchising in 2020 and beyond
Food franchising has come a long way since the early days of KFC and McDonald’s, and while the industry faces a specific set of challenges, such as meal delivery aggregators and complicated award structures, there is still a wealth of opportunity out there.
A reliance on new technology to improve the ordering process is certain to bolster the customer journey, taking more customers away from Deliveroo and UberEats, in favour of the traditional dine-in experience.
Further, a focus on healthy options, sourced from local suppliers and relayed with transparency will serve the food franchising sector well. Customers are becoming far more knowledgeable and stringent on their dine-in restaurant choices.
Franchisors that want to not only survive, but thrive this decade are best encouraged to flaunt their transparency, rather than their price-point. In 2020 and beyond, trust is a must.