The Future of Restaurants

The restaurant industry has been adapting to new technology at a rapid pace -- but we hardly notice, and that’s a good thing. New technology is a risky proposition. Sudden shifts can alienate consumers who are not interested in adapting to new ways of doing things. Over time, however, we’ve seen restaurants adapt to technologies that now seem commonplace -- online ordering, crowdsourced reviews, tablet-based POS systems (Toast, Square), and so on.

For example: last year, I recall Clover making the decision to only accept credit cards at their food trucks. At first, I was appalled. No cash? Think of how many people might not have their card or a card! Earlier this week, however, Sweetgreen announced their decision to go cashless, citing the relatively small number of their cash transactions, the expense of safe cash transportation, the labor cost involved with managing and counting cash, and the hygienic concerns around handling germ-covered bills before making food. The move also improves safety, as the absence of cash means there’s nothing there for a would-be robber. 

Though there are concerns that cashless practices unintentionally exclude “customers on the lower end of the economic spectrum who may not have debit, credit, or even prepaid cards,” Sweetgreen touts the added convenience of a streamlined system, and it’s hard to disagree with their reasoning. Clover and Sweetgreen aren’t the only ones trying to cut out cash, however, as Mulberry & Vine (NY), Eatsa (CA, NY, D.C.), and the Kenmore location of Amsterdam Falafelshop have all renounced bills.

In a move that goes hand in hand with the cashless movement, some of these restaurants have also been rolling out order ahead apps, where consumers can place their order and have it ready by the time they arrive. Clover’s is in beta, while Sweetgreen, Chipotle, and Boloco all have order ahead functionality in their respective apps. 

The nascent movement of cashless business is but one piece of the restaurant industry’s changing strategies. Recently, a new trend has seen notable restaurants begin to test out no-tipping policies. Tipping has long been a cornerstone of the industry, allowing restaurants to keep food prices lower by shifting the responsibility of front-of-house labor costs to customers. Though tipping has its advantages -- for example, making it possible for service staff to make a livable wage -- it has a fair share of downsides as well. Restaurant labor is lopsided, with laws in place that prevent back-of-house staff from receiving tips. Tip-pooling practices that aim to distribute tips evenly, though a good idea, cause their own problems -- uneven work, lower wages, etc.

The no-tipping movement aims to fix these issues by giving servers a living wage, often built in as a percent-based service charge. Increasing numbers of prominent restaurants such as Riki, Dirt Candy, Alinea, and Park Kitchen, have adopted no-tipping policies, with mixed results. Some restaurants have had to deal with service staff turnover, as many leave to go to tipping restaurants, where they can make more money. In the case of Thad Vogler -- of Trou Normand and Bar Agricole in San Francisco -- a no-tipping experiment ended early because service staff kept resigning to work for tipped establishments.

In any case, growing awareness of restaurant industry economics can only be a good thing. Whether the future is tipped or not, ensuring staff are remunerated fairly is a excellent starting point in reforming an industry that has a spotty history of labor practices.

If the idea of sitting down for a tip-less meal that you can only pay for with a credit card has you pondering the future of the humble restaurant, consider something else: delivery-only.

With Ando, which recently closed a Series A financing round with $7 million, David Chang has jumped on a relatively new trend -- delivery-only restaurants. Start-ups with a similar concept have been gaining ground, too. Look at companies like Munchery and Sprig. Instead of investing capital in real estate, design, and labor, delivery-only food promises the chance to run a “restaurant” at a much lower cost. Since there is no retail space, all you need to invest in is a team of cooks and drivers, a chef, ingredients, and a space large enough to house an industrial kitchen. The typical restaurant concerns -- prime real estate, service staff, and decor -- mean nothing.

In urban areas, this concept shows a lot of promise. Imagine being able to order fresh, delicious, and constantly changing food at prices that seem comparatively low. Keep in mind, this segment of the market is still very new. However, delivery-only food has immense potential to disrupt the traditional ways that restaurants operate.

And yet, even these trends are but a small sampling of the many ways that restaurants are changing. Other futuristic trends, like designing a restaurant to be “instagrammable”, increasing automation, and growing a part of your restaurant’s produce, are growing in popularity as well, and what’s clear from all of this is that the restaurant of the future is going to be very cool.