Is COVID-19 Pushing Restaurants to a Netflix-Style Revolution?
In 2008, watching a movie had a different meaning. Customers had one of five options: theater, rent-in-store, rent-by-mail, buy or download. Then, Netflix introduced streaming and the game was changed.
During this time, America was in the middle of a recession. Many people were steering away from theaters and staying inside. A single $15 ticket at the theaters would translate to many more movie on the TV. Renting movies was more affordable, then streaming was introduces and the process became much more convenient. Netflix has evolved since its early days, but none of this would have happened if people didn’t change their viewing habits.
In 2020, life has changed drastically due to COVID-19. While Netflix continues to thrive, other industries have taken a hit. One industry hit the hardest: restaurants. Social distancing has made it impossible to sit in a dining room to be served a meal, but many restaurants remain open for business. Third party delivery services like Uber Eats and Door Dash may allow customers to place orders, but the traditional experience has changed.
For restaurant owners, it’s hard to know whether or not this will have a longterm impact. Google Trends data reveals terms like “Uber Eats,” “DoorDash,” “Grub Hub,” and “Postmates” have seen a rise in popularity during late March and April. Diners know these deliveries are their best options, and many deliveries are to first time users.
Now customers have delivery apps on their phones. Eventually restaurants will be able to resume regular operations, but forced exposure to the apps could have a longterm impact on customer’s expectations at restaurants.
The casual dining experience follows the same routine at most restraunts. Check in, get a table, place drink order with server, place meal order with server, wait for food, receive food, get checked on, get plates cleared, pay bill and tip, leave. For better or for worse, I expect all of these steps when I go out to eat.
While take out is typically an option, it’s never the main focus of the dining experience. In fact, I’ve barely questioned this process throughout my entire life. When eating out I expect to get food, be served, and pay. Some technology has been introduced, particularly during the payment process, but I generally know what I’m getting myself into when I go to a restaurant.
Truthfully, this experience could be improved, but restaurants have had little reason to reinvent their processes. The existing model works well for the restaurant industry and provides a familiar experience for customers. For the most part, people accept the aspects of the dining experience they dislike. They will sit there while the server reads the specials, even though they’re just going to get chicken tenders. They will wait for the server to swipe their card, even though the register is on the way to the exit. Social norms have dictated our experiences, even if changing the process would be mutually beneficial for customers and servers.
Conveniences from Delivery Apps
People miss restaurants because they miss the social aspect of the experiece. Delivery will never encourage conversations like sitting down over dinner and drinks.
Once people migrate back to restaurants after being exposed to delivery, they may begin the miss some of the conveniences associated with delivery. The immediate benefit: payment. At a restaurant, wrapping up the experience can be more challenging than necessary.
Thanks to the mobile apps, customers will be familiarized with the process of setting up an account and tapping to pay. It’s much faster than handing the card to the server and waiting for the check to come back. God forbid you want to split the bill, you need to explain the process to the server. Paying digitally lends itself well to splitting a bill, as the customer can pay a portion then see the remaining balance.
People are currently buying coffee using apps and picking it up within minutes. Technology has been ready for instant payments for years, and food delivery apps have forced customers to use that technology. Once the server has been removed from the payment process, it’s hard understand why we continue to involve another human, especially when that human dictates our experiece.
We’ve all been to a restaurant with a group of people. Half the people know what they want to order, the other half “will go last,” and make their decision at the last second. There’s also the smart people who look at the menu beforehand, and prepare their order before they even sit down.
Preparing your order is nothing new. Most restaurants have menus online and they’re now built into delivery apps. The real game-changer comes through the customization options available through the apps.
Customers might want to hold the mayo, have dressing on the side, or swap their side dish. For many people, customizing their order holds a certain stigma. They don’t want to come across as rude or demanding, especially because their behavior can dictate service. Even when people customize their orders, the margin for error remains higher than when ordering a standard dish.
There really isn’t a need for the server to be the middleman. Of course customers want servers to bring out their food or respond to questions, but do we really need to tell them our order just so they can punch it into the system? Delivery apps have proven customers can send their orders straight to the kitchen. Everything will be fine, and the server will have more time to actually serve.
Comfort is the Real Threat
The meal ordering apps present some conveniences, but the biggest of them all is the fact that customers can stay in their own homes. When we’re all stuck at home, leaving the house sounds really appealing. Eventually the restrictions will be lifted and people will be able to go back to restaurants.
Three months after this, people will get sick of driving, parking, and putting on pants. Those delivery apps on their phones will start to look appealing again and customers will order in.
This isn’t all bad for restaurants. There is potential for customers to get the same meal in takeout for instead of dining in. There’s also potential for customers to be swayed toward cheaper options. When you’re not being served, Chipotle might be more appealing than other Mexican restaurants, and this could hurt Chipotle’s competition.
The fact that customers can get restaurant meals without leaving the house has potential to hurt businesses that are not preparing for a shift. Take-out business is still business, and restaurants who embrace the apps by offering their menu for delivery will be taking the first steps. Next, they will need to learn to compete with lower-priced fast food restaurants.
Restaurants who traditionally rely on dine-in customers will have to offer unique products to differentiate themselves from fast food. When McDonald’s exists, customers are unlikely to pay a premium to buy a basic burger from the bar restaurant down the street. If that restaurant has a speciality burger, customers may be compelled to spend a little more and skip McDonalds.
Experiences also compel people to put on pants and eat in a restaurant. Group specials or happy hours provide a level of service you can’t get at home. If you’re going for a burger and a beer, you can order in and get a whole lot more beer at the grocery store for the same cost as a single pint at the restaurant. When the restaurant encourages gatherings and promotes products and serves the customers can only get on-site, people might forgo the delivery. The restaurants who are prepared to adapt will feel less of an impact.
Is a Netflix-Style Revolution Coming to the Restaurant Industry?
We are not at the point were the traditional dine-in experience is going to disappear. Sit-down restaurant are not going extinct like Blockbusters, but they’re also not going to go back to normal. Consumer trends are changing, and adaptation of delivery apps just accelerated.
Uber Eats can’t replace restaurants the same way Uber replaced the taxi industry. Uber Eats can emphasize the luxuries of ordering in when customers feel lazy. Now, they don’t have to do the dishes or drive to a restaurant. Restaurants can drive to the customer!
Restaurants will start adjusting to customer trends, and mobile devices are likely to be part of this revolution. When everyone already has payment information in their phone, the customer experience becomes enhanced when customers can pay without a server running their card. Technology can also let customers talk straight to the kitchen, improving efficiency and allowing picky-eaters to get the meals they want. Once someone becomes accustomed to these services through apps, the traditional restaurant experience starts to lose its luster.
The real losers will be the chains who don’t offer anything special, specifically casual dining chains. Restaurants like Applebees will struggle because there’s nothing inherently special about their experience. They’re more expensive than fast food, but they’re less unique than a local burger restaurant. More people will choose to have dinner delivered than drive to an Applebees.
These restaurant have been successful because of their uniformity, and because they’ve always just been there. Applebees can promote their menu in TV ads and most people will just drive by an Applebees. It doesn’t matter if it’s on the west coast or east coast, their model works because they’re a safe and familiar option.
Now that delivery apps allow people to explore options from the comfort of their couch, they don’t need the dependability of an Applebees. They can try something new and take time to look at menus. The uniformity of their experience isn’t as appealing when there’s the possibility of trying something new without leaving the house. Unless Applebees can convince people they need to get in their doors, most people will find a meal elsewhere.
Restaurants have already felt an impact from delivery apps, but COVID-19 has accelerated the adoption of these apps. Longterm, more people will be using them, and restaurants will need to find ways to compete. The food service industry is changing, and technology is making the process more convenient than ever.
Fortunately, these apps don’t mean restaurants needs to lose business, they just mean the experience is going to change. So, they won’t shut down most restaurants like Netflix shut down Blockbusters. Restaurants who embrace delivery and offer unique experiences will survive the shift. Those who resist change will fade into the background until they’re gone all together.