The State of QSR's in 2022: 3 Challenges and 3 Opportunities
Many quick-service restaurants across the globe are facing unprecedented challenges (and opportunities) in 2022.
Some of the challenges are likely temporary (such as supply chain obstacles), while others (such as consumer expectations and habits) will likely never return to their pre-pandemic status quo.
In this guide on the state of QSRs, let’s take a look in turn at several of the biggest challenges that QSRs are dealing with right now – then, we can look at some key opportunities for forward-thinking restaurants to come out stronger in 2022 and beyond.
Sales Are Up, But Traffic is Down
There’s good news and bad news when it comes to QSR customers.
QSR traffic was down 14% compared to 2019, and consumers aren’t as eager to dine out as they used to be. However, people still value restaurants – total sales have actually increased 8% from September 2019 to September 2021.
Where your restaurant falls on this spectrum is dependent on how you’ve set up your business.
The 3 Biggest Challenges for QSRs
1) Supply-chain obstacles
It’s been inescapable: ships stuck at sea, trucks sitting empty, goods piling up at warehouses. The supply chain has been in crisis throughout the COVID pandemic.
Why? It’s a two-fold problem.
First, the initial months of the pandemic forced people and businesses to restrict their activity, which sent off a cascade of business shutdowns and layoffs that these businesses have never fully recovered from.
Second, much of the world’s spending habits shifted toward online shopping, and the global supply chain was not prepared. Surging demand for supplies, food, and other products has consistently surpassed the capacity of manufacturers and distributors.
For instance, in the UK, McDonald’s temporarily stopped serving milkshakes, and Nando’s ran out of its famous peri peri chicken. The food outlet Greggs proceeded with plans to open new bakeries across the country but has been hit by supply disruptions as well, leading to higher costs and limited availability of popular products and ingredients, such as the vegan sausage roll.
No matter where you look, the supply chain has been in a state of flux. There are signs of improvement, but it’s likely to continue causing headaches well into 2022 or beyond.
2) Labour shortage
The other side of the supply-chain coin is a severe labour shortage.
A recent survey has suggested that the US labor shortage is permanent. In the US, the Chamber of Commerce polled 529 unemployed Americans who haven’t returned to work as of November 2021.
More than half (53%) said they’re somewhat active or not very active at all in their job search. A stunning 65% said they don’t expect to return to work before 2022, and a third of them don’t expect to return before April of 2022.
But the biggest takeaway just might be the 8% of respondents who “never plan to return to work.” A whopping 3.4 million people have left the labour force, and only about half of those were those retiring on time.
It’s no better in the UK, though the biggest reason here is due to Brexit. Post-Brexit, the government has put restrictions on immigration with an emphasis on “high-skilled” labour, but this has had a dampening effect on retail, hospitality, and transport.
With a tight labour market, available store hours may be restricted, and there’s upward pressure on worker wages and benefits. It’s likely to continue being tough for restaurants to retain and hire workers in 2022.
3) Consumers’ changing expectations and habits
Post-COVID, many QSR customers don’t go into the office as often – or at all – which has completely changed the game for commute-reliant segments, including breakfast, coffee, and casual eateries.
It’s a mixed bag for these QSRs. While some are suffering from fewer workers going into the office, many breakfast spots and coffee shops are seeing strong growth. In one survey, 15% of
respondents reported ordering from a breakfast spot “more or much more” compared to 8% in May 2021.
The pandemic has also changed how people choose to buy their restaurant food. Many customers don’t want to dine in, order in person, or have someone physically handle their credit card. That’s why multi-channel sales and contactless experiences are key.
More consumers have become interested in third-party delivery, curbside pickup, and in-store pickup options. This presents a challenge to restaurants that don’t currently offer these options – but an opportunity as well.
The 3 Emerging Opportunities for QSRs
1) Self-service technology and contactless experiences
Both for customers’ peace of mind and for safety, new options are popping up to serve customers and take payments:
- Self-service kiosks
- Contactless payment
- Curbside pickup
- Digital menu boards and signage
While some may look at these as unnecessary expenses, others are taking the change as an opportunity to invest in technology that can last for years.
For example, Inspire Brands – which owns restaurants like Arby's, Baskin Robbins, Buffalo Wild Wings, Dunkin', and Sonic Drive-In – has chosen to deploy self-service technology over the past two years. And the restaurant group Little Chef – which includes Coffee Tempo and Burger King franchises – rolled out a fully contactless system in 2020.
These innovations include mobile order ahead, pick-up lockers, and third-party deliveries, as well as a digital dine-in model that makes it possible for guests to manage their dining experience right from their mobile device.
Crucially, these changes aren’t just being driven at the restaurant level. In a consumer poll of 2,000 UK residents regarding quick-service and casual dining restaurants, 41% said that they would prefer to use a self-serve kiosk over a cashier. To compensate for staff shortages and address consumer demand, the vast majority (95%) of UK’s venues now plan to provide pay and order tech post-COVID, according to a poll of hospitality owners and management,
As a result of these innovations, many restaurants had their best years ever. Others managed to hold their own against competitors in a tough climate.
At the core of these changes were the products that made it all possible: digital signage, menu boards, and self-service kiosks.
2) Brand and social
In a world where fewer people are dining in at a restaurant, or even driving to and from work, online engagement is becoming a much bigger factor.
QSRs need quality customer reviews, an optimised local search listing, and a responsive website that supports online ordering and reservations. Like with digital menu boards and self-service kiosks, investing in digital marketing is a step toward a more future-proof business.
In a nutshell, many restaurants are now only as visible as they appear online. With less footfall and more online or mobile search, QSRs without a strong web presence are practically invisible.
Again, this can be seen as a problem, or it can be another huge opportunity. If you’re prepared to invest in reputation management, optimised local search, and social media marketing campaigns, your business has the potential to see a significant lift that lasts post-pandemic.
3) Multi-channel convenience and accessibility
More consumers are interested in third-party delivery, curbside pickup, and in-store pickup options than ever – and they’re not likely to be satisfied with fewer options once the pandemic subsides.
Adding channels for customers to engage with your business is essential (360-degree availability), both in restaurant or off premises. You don’t want to force customers to use just one avenue to get your product.
Customers also want options when it comes to their food. Whether that’s gluten-free, vegetarian, low-calorie, sustainably sourced… If you can get to know your customers preferences and deliver the options that are important to them, you’ll be positioned well in 2022.
The ultimate takeaway from all of this? You need to go where the customers are and give them the options they crave. If you don’t have first-party data, make it a priority to collect it and follow the data.
In the age of mobile devices, social media, and e-commerce, customer habits are changing rapidly. You can position your restaurant for success by leaning into this brave new world, with an emphasis on self-service technology, online brand development, and multi-channel accessibility.
Fortunately, we believe your restaurant’s future is bright, like a shiny new digital display. All you have to do is follow the signs.
If you’re ready to embrace the growing shift toward self-service and contactless QSR experiences, check out the digital displays at James Hogg Display and contact us!