The franchise ecosystem has seen an explosion of growth over the past two years, and with that comes impressive, game-changing innovations that are shaping the future of the F&B industry.
After spending a week with some of the top leaders in the restaurant sector at the Global Restaurant Leadership Conference (GRLC) in Dubai, it is apparent that advancements in the food and beverage sector are top of mind.
The pandemic fast-tracked innovation out of necessity, and deciphering what trends are here to stay has yet to be determined. However, one thing is for certain: technology advancements bred out of the pandemic are making the food and beverage industry better and more efficient, and ultimately, changing the way businesses interact with their customers.
Two of the most notable areas of innovation that leaders continue to point towards are mobile ordering and the adoption of artificial intelligence (AI) technology – each revolutionizing the food and beverage industry across the globe – but it doesn’t stop there. Here are seven key ways the sector is advancing rapidly.
1. Data fast-tracks success
At the GRLC, I had the privilege to moderate a panel on the Keys to Seamless Global Franchising with quick service restaurant executives representing some of the top brands in Europe and Asia. One question I posed was about the use of data analytics and AI technology in franchising and how they’ve used it to benefit their businesses. What I learned is that the biggest operators in the global franchising space are collecting data from every area of their business, from customers to inventory to pricing, and using it to improve the efficiency and products within their business. The most timely, accurate data, plus local market knowledge, are some of the most notable insights that industry leaders shared as a must-have to be a successful international franchise.
2. Reaching customers via their cellphone
Although they aren’t the majority of franchises, Quick Service Restaurants (QSR) are one of the first lines of business that come to mind when people think of franchising. The rise in mobile ordering in the QSR industry has helped companies find new ways to reach customers – opening the restaurant industry to a wealth of marketing innovation and insights into customer behavior.
Loyalty programs and exclusive in-app promotions have become ubiquitous in the mobile ordering space, with the biggest names in the industry leading the way in adopting these new forms of connectivity to the customer.
The popularity of online ordering lines up with the direction of dining trends – and there was common agreement among the QSR executives at GRLC. In 2021, 47 per cent of global restaurant sales were off-premise.
That means that nearly half of all transactions came through nontraditional channels for customers who were not dining in. That wouldn’t be possible without the evolution and development of mobile ordering since 2020. It’s changing the way customers interact with businesses and empowering the customer with options in ways they’ve never had. Whether it’s mobile ordering through a restaurant’s app or through third-party apps, more and more customers are using their phones to place food orders. The growth in this space and the adoption of remote ordering globally has proven that it’s universally embraced and only expanding further.
While more restaurants were moving toward online and mobile ordering before the pandemic, it’s now a mainstay in the food and beverage industry. We, as consumers, got used to the luxury of picking up and dining out without ever having to wait in line or leaving the comfort of our homes. Using delivery apps and ordering food to-go from our favorite restaurants took center stage during the pandemic, becoming habitual for many food lovers – and ultimately becoming another option after the return of in-person dining.
3. Next-level customer experiences
Focusing on creating the best possible customer experience, whether it’s on-site or off, is integral for the success of any restaurant. This includes having knowledge of local markets and understanding the customers you’re catering to. The companies and brands that have invested in a user-friendly interface that translates across languages and cultures have been successful, and there is no doubt that investing in developing consumer-facing technology is going to continue to be essential to a brand’s success.
Since mobile ordering has taken off, companies now have more information on customer behavior than ever before. The use of data analytics and AI technology has helped the franchise industry build businesses to greater heights and meet their customers where they are.
4. Insights across franchisor networks
Franchise brands have led the way in understanding the importance of and implementing data analytics and AI technology into their business models and across their systems. After all, one of the most significant benefits of franchising is having a system of support and using the systems and data in place to gain insights on a global scale – from restaurants of all sizes, locations, and output. This unlocks an added ability for franchisees globally to reach customers and better serve them. Whether you’re a QSR franchise owner in the Philippines or Canada, the tools and resources provided by these data insights will serve both owners, even in wildly different markets.
5. Evolving the drive-thru concept
The evolution of the drive-thru in recent decades is a perfect example of ways companies are using AI and data analytics to innovate. The drive-thru has always been one of the most profitable areas for fast food. Insula Research projects that somewhere between 50-70 per cent of QSR sales come through the drive-thru.
Now with AI technology, brands have found ways to make the drive-thru more efficient and convenient. More and more QSR brands, like McDonald’s and Chick-fil-A, are dedicating drive-thru lines or parking spaces to mobile ordering, eliminating long lines and improving the speed customers get through the drive-thru. Waze, the popular GPS app, uses geo-locations to help customers find restaurants on their route while they’re on the road, making it easier for customers to find food on the go and easier for restaurants to find new customers. A broader investment in technology, connectivity, and advertisements by global brands helps the individual, local franchise owner as much as the global brand.
6. AI is forecasting the future
An additional critical application of artificial intelligence is projecting supply needs and prices for the future. AI technology is used by brands to project future supply needs and even forecast popular menu items based on user’s behavior and preferences. Even further, sensors with artificial intelligence have been deployed to monitor the freshness of perishable food like fruits and vegetables, learning and measuring the size, weight, and ripeness. This helps deliver the highest quality product to the customer and eliminates waste. For restaurants and franchise locations across the globe, this technology helps guarantee the same customer experience, no matter location or country.
7. Learning from each other
The conversations from GRLC and our leading restaurant brands helped bring to light some of the latest and most valuable insights in the food and beverage sector, showing how much these businesses have evolved to the needs of today and how much more we have to learn.
Attending conferences is always a great way to meet other industry leaders and connect on what issues are facing the franchise world, in this case globally. We look forward to continuing the conversation at the IFA Annual Convention in February in Las Vegas, where we will further unpack topics and trends that are changing the industry in every line of business. Franchising is everywhere we turn, and as a sector, we can achieve the most when we learn from each other.
The franchising sector continues to lead the way in adopting new technologies and using them to improve businesses and customer experience.
Globally, local market knowledge is key for franchise operators to have when considering opening a new location – and using that knowledge to meet the needs and behaviors of their customer base.
As the food and beverage industry continues to evolve, the International Franchise Association is here to support its innovation and help foster an environment for growth by protecting, enhancing, and promoting franchising.
5 key F&B trends for 2023
- Using data to meet customers where they are.
- Consumer-facing mobile ordering.
- New generation drive-thru experiences.
- Combining local market knowledge with customer data.
- Recruiting AI to forecast supply needs and eliminate waste.
Matthew Haller is president and CEO of the International Franchise Association (IFA).