Predictions for 2020 by Think Hospitality

10th January 2020

Predictions for 2020 by Think Hospitality

We have spent the void between Christmas and New Year wisely at Think Hospitality Group headquarters, with our partners formulating predictions for 2020 ranging from increased competition from the retail sector, mass adoption of customer technology, and brands upping their game when it comes to their environmental impact.

Here are our six predictions for the restaurant and bar sector for 2020.

Environmental concerns to affect consumer choice

We saw the plant-free movement become mainstream in 2019, not only an increase in veganism but also a greater proportion of the population deciding to eat less meat. The “Greta effect” will help to make 2020 the year consumers act with their feet and wallets and aim to make a real difference.

Plant-free is only part of the conversation, however, as publishers have a raft of new-wave “sustainable” cookery books in the pipeline for 2020 on topics such as using leftovers, cutting food waste, and creating planet-friendly menus for the family. This will lead to the rise of “sustainable gastronomy”, where consumers will ask: “How can we change and adapt what we’re doing in the kitchen to help tackle the climate change emergency?”

There will be further discussions on the environmental impact of fad ingredients such as avocados, nut butter and soya and the long term, non-reversible devastation of rainforests and other natural ecosystems.

Angela Malik predicts that with even more awareness and education, consumers will increasingly question the environmental practices of the places they dine at or order from in 2020 – and ultimately expect more.

Competition in the most unlikely of places

The face of retail is changing – and quickly. In the UK we saw a plethora of major retail brands enter CVAs in 2019, while the property market remains tough. Boxing Day reinforced the changing dynamic of the British high street, with footfall down 10.6% year-on-year – the biggest decline on any Boxing Day since 2010.

The same can be seen in many places around the world as e-commerce and changing consumer behaviour have an impact on physical stores. In New York it was reported 11 of Manhattan’s 17 major retail corridors experienced year-on-year falls in asking rents in 2019, while India’s sluggish economy saw a 35% drop in retail leasing during the year.

The pressure is on to attract consumers to spaces by giving them multiple reasons to visit. Coupled with the need to fill underused space, this has resulted in retailers seeing food and beverage and experiential leisure as the answer.

In the past few years we’ve seen major supermarkets up their game regarding food to go, department stores give over more footage to food halls, bookshops add coffee shops, and fashion brands bring bars into their stores.

Michael Ingemann predicts we’ll see even more of these type of developments in 2020, with increased competition from retailers that diversify their proposition.

Going head to head with the gig economy

Living in the Brexit bubble, it has been easy for UK employers to blame a lack of job candidates on the departure of EU workers. Through our work around the world we see a global crisis emerging to find and retain great employees. In 2019 we saw restaurants in Amsterdam close due to staff shortages while Ireland eased its rules around work permits for chefs in December to solve a national shortage.

It’s fair to say the gig economy is scooping up many of the part-time and casual workers who would traditionally consider hospitality. This is big business – and growing too. In Britain the gig economy has more than doubled in the past three years, accounting for 4.7 million workers, while in the US more than 7% of all workers are expected to work in the gig economy by 2021.

This pressure on the workforce is forcing change in our sector, from de-skilling kitchens to offering better pay and improved working conditions.

James Hacon predicts companies will work even harder at becoming great employers in 2020 and increasingly turn to marginalised groups to fill the recruitment gaps such as training youngsters from disadvantaged backgrounds and people who are homeless. We’ll also see the first major brands trial gig economy-style employment options offering greater flexibility, which will be fascinating to watch.

Pay to dwell

There has been a 159% rise in remote working in the US since 2007 and it’s estimated almost half the UK workforce will work remotely by 2030. It’s the way of the world and likely to increase as remote working aligns closely with what people want. In a report published recently by the Great Place To Work Institute, out of the top-ranked companies three-fifths (60%) actively promote remote working.

This change in the way people work is resulting in a changing dynamic for the hospitality sector, not least a challenging time for contract caterers and less after-work drinking. A negative for some sub-sectors is creating a boom in others. For hotels and members’ clubs, remote working has brought new customers but not necessarily more revenue amid long dwell times and low spend. During the past few years we’ve seen many attempts by hotels to maximise revenue from this source such as implementing co-working spaces and memberships but lobbies remain full of laptop-tapping workers who aren’t necessarily paying their way.

Hotel chain Citizen M paved the way for “paying to dwell” last year by charging a fee to use space and Wi-Fi in their properties. Heleri Rande predicts we’ll see more of these pay-to-use solutions developed for busy lobby spaces in 2020. This will be accompanied by even more co-working spaces in hotels. We also predict this will be the year rural pubs and bars investigate the remote-worker opportunity.

Mass adoption of customer technology

We saw McDonald’s start to roll out kiosks in 2015. Last year the business spent big on two technology acquisitions – Dynamic Yield and voice assistant system Apprente. Some reports suggest the company is seeing increases of up to 30% in order value alongside a reduction in labour costs.

Coupled with the sector-wide increase in online ordering and delivery, it’s clear consumers are increasingly becoming used to using technology to transact.

With recruitment tough and minimum wage on the rise, James Hacon predicts 2020 will be the year in which smaller brands see the benefit of investing in customer technology that’s focused on pre-ordering or in-store digital ordering to reduce labour, collect more customer data and drive up average spend.

Food delivery comes of age

Food delivery has been the top trend of the past five years, with some figures suggesting the market has grown up to 20% in the US. It’s hard to argue when you see companies such as Deliveroo report its sales surged 72% last year, albeit with growing losses.

We certainly saw movement in this aggregator market in 2019, with continued consolidation. Going into 2020, we’ve seen the battle between two competing interests to acquire or merge with Just Eat. Deliveroo, meanwhile, has been tied up in challenges with the Competition and Markets Authority surrounding Amazon’s sizeable investment – but what about the restaurants? In the past few years almost every brand has jumped on this runaway train, seeing it as an add-on to bolster business with few really committing to it long-term.

Michael Ingemann predicts more brands will take a strategic approach to the delivery opportunity in 2020, with an increase in the appointment of dedicated senior leaders to head up this revenue stream, improved proposition dedicated to delivery, and a more active approach to operationally delivering the service efficiently and profitably. This may lead to more companies taking delivery in-house, splitting their business between providers and in turn seeing cuts to commission levels.

It will be interesting to see how many of our predictions become reality. We’ll keep a close eye out, that’s for sure!

Angela Malik, Heleri Range, James Hacon and Michael Ingemann are partners at Think Hospitality