The restaurant industry faced declining sales and weak customer traffic in 2018, while it is expected that 2019 may be worse. With rising food and wage costs rising, profits may stall and obstruct efforts to begin growth.
Even some of the industry’s most popular restaurants are dealing with these issues in such a fierce competition as it’s increasingly becoming more crowded. For example, Starbucks Corp. shuttered some of its U.S. locations amid “over-saturation worries.” McDonald’s, the world’s largest restaurant company, is also adjusting its value offering in hopes of staying relevant in price wars, as well as expanding its delivery with Uber Eats to increase sales.
Though it wasn’t all gloom this year. During the stock market rout, restaurant stocks actually fared better than the broader market, with major support from Domino’s Pizza Inc. and Chipotle Mexican Grill Inc. Even Chipotle, who is still quite far from reclaiming its position as a Wall Street darling, is starting to recuperate after its food-safety issues, which caused major damage to the brand for quite some time.
As American’s begin demanding delivery, it’s beginning to force big chains to step into the game – meaning costly technology investments are to follow. In addition, revenue collected from orders via a third party is typically shared, making it extra difficult to turn a profit from digital consumers. It also means that delivery doesn’t seem like the best strategy for low-cost items.
All challenges aside, it is difficult to ignore services that more and more customers are demanding. Starbucks attempted delivery earlier this year in Florida, in partnership with Uber Eats. The coffee giant now plans to expand it to nearly a quarter of its domestic company stores.
As more orders shift online, restaurants are working diligently to improve takeout and delivery containers to avoid poor food quality such as soggy fries. IHOP revamped its own pancake containers by adding side ventilation which traps the heat without the moisture, along with a box shape that keeps food from sliding around during transit. Its parent company Dine Brands Global Inc. even stated that the food will remain fresh for 45 minutes.