Quick Service Restaurants: An Overview of the Major Industry Trends
The quick-service restaurant (QSR) industry is just that, quick. Not only is it a fast-paced industry by nature, but it’s also fast-growing and fast-changing. The last year alone is indicative of how quickly things can shift, but in reality, the last five years have seen tremendous evolution in the QSR sector.
According to Allied Market Research, the global fast food market is expected to reach $931.7 billion by 2027, rising at a CAGR of 4.6% from 2020 to 2027.
In this article, we’ll explore the top three trends influencing the QSR industry today, so you can start implementing changes to your own brand, to stay on top of trends and not fall behind the competition.
1. Location just isn’t that important anymore
The physical footprint for QSRs has transformed rapidly, predominantly in response to the COVID-19 pandemic that has reshaped many industries over the last 18 months.
During this time, one of the biggest things we’ve learned is that QSR brands wield the powers of innovation and creativity, proving that they can adapt quickly to major changes and disruptions in order to not only survive, but prosper.
The new brick-and-mortar model
The ways that QSRs are serving their customers in person has seen a dramatic shift in recent years, but the industry’s evolution has been greatly accelerated in response to the pandemic. QSRs have quickly implementing changes such as:
- Adding more new drive-thru systems with multiple lanes and app-only lanes
- Creating more flexible dining with smaller indoor eating areas and a much larger (if not entirely new) outdoor * space
- Limiting in-store interaction by creating more options such as curbside pickup, walk-up pickup windows and app-based ordering to cut down on close-up interactions between guests and staff members
The rise of ghost kitchens
Ghost kitchens are restaurants without a physical store that a customer can walk into and order food from. Spooky? Not so much. Instead, brands hire the space of an existing restaurant or food preparation facility to make their food, which is available only for delivery (or occasionally for pickup).
Ghost kitchens can give big and small brands the ability to experiment at a low risk because:
- Big brands can leverage these to innovate and build a virtual brand concept
- Smaller brands can go to market without the investment of a brick-and-mortar footprint, and can benefit from partnerships with other brands
This shift in physical restaurant requirements means that brands will have to work to keep consumers engaged digitally, meeting them not only where they eat, but also where they live.
Accelerating delivery options
An increase in hybrid or permanent work-from-home options, coupled with more people moving out of urban areas and into the suburbs, is creating a shift in where restaurants are setting up shop and a demand for different locations than before.
Location does still matter – but not in the way it used to. Restaurants who are closer to their customers can boast faster delivery times which can translate into more frequent deliveries. And quicker, and more frequent deliveries translates to more return customers!
This brings us back to the importance of investing in accelerating more app and delivery options, because the people are just simply not where they used to be.
2. Taking business online
Let’s be honest, we are all extremely reliant on technology and probably spend more time than ever scrolling through our smartphones. In the US alone, people spend an average of three hours a day on their smartphones (more than on TV).
The power of virtual brands and partnerships
It’s not just ghost kitchens that are giving big brands the opportunity to experiment more in this space, but the digital landscape also gives them the ability to launch entire virtual brands with zero physical presence.
Here’s a few examples of what some brands have been doing:
- Pizza Express launched its first (delivery only) virtual brand a year ago under the name of Mac & Wings
- Bad-Ass Breakfast Burritos, created by Dog Haus, focused on creating a virtual brand entirely around breakfast items
Online-only brands are also leaning into platforms like Instagram to connect, present menu items and build a foodie community with customers that historically wouldn’t have happened in a more traditional QSR environment.
All in all, there's a massive opportunity to connect and partner with smaller brands, build excitement around menu innovation, new items and more with less overhead than ever before.
Major chains will continue to experiment with online-only offerings to leverage the power of digital branding and partnerships. Adding virtual brands has benefited many QSRs, and it’s a trend that will likely stick around even after dining in becomes ‘normal’ again.
3. Plant-based and sustainable menu innovation
We’ve talked about the physical store locations and we’ve talked about the digital advertising space — but what about the actual product is changing in the QSR industry?
Topics like health and sustainability are things people say they want more of. But in practice, once those initiatives are launched, customers (especially in the quick-service space) can be quick to reject them because they still want to indulge in that fast-food environment.
You can have your fast food (and stay healthy too!)
The plant-based trend started a few years ago and has been growing since. One familiar example may be Burger King’s Impossible Burger in 2019. Now in 2021, the exponential shift in consumer behavior has moved other brands to start integrating these options within their menus.
In 2018 when the “Rebel Whopper” came onto the scene as the first plant-based menu item, people were skeptical. Now, we’re experiencing a meat-free menu takeover — most fast food menus have at least one item (if not many more) that feature plant-based alternatives from burgers to burritos.
Brands who have embraced this trend are now finding a balance between giving customers their delicious fast food they crave while having the benefit of being able to feel like they are able to choose a healthier option in that same environment. Win, win.
Packaging that’s better for the planet
This is perhaps more of a challenge for QSRs than any other sector in the dining industry: how to be more environmentally friendly with packaging and recycling initiatives.
In a LinkedIn Pulse article by Rosann Ling, Founder & Creative Director of Prism Creative, she shares that 87% of consumers worldwide would like to see significantly less packaging on products, and in the US and the UK, over 70% of them are very concerned about waste production.
But, what are brands doing about it?
- Burger King is currently testing green packaging across the US
- Taco Bell has recently launched an initiative to recycle hot sauce packaging
In a sector where it’s difficult to bring “reduce, reuse, recycle” to life, it takes a commitment on behalf of QSRs to solve environmental challenges. But it is something that is certainly worth investing in, for both our planet and your consumer.
Time to get sustainable
The increase in demand for plant-based menu options is not only so customers can feel like they’re making healthier choices, but also to support a less harmful impact on the environment.
Consumers are becoming more and more aware of the environmental impact of food, and fast food is seen as a major culprit with a large carbon footprint. Legacy perspectives that fast food is poorly farmed, cheap and has less-than-ideal supply chains still exist.
Brands will have to continue to work hard to overcome that reputation from consumers by offering transparency into how they are not only environmentally friendly, but what work they’re doing to combat existing issues from single-use packaging to poor farming practices.
Why? Because consumers are pushing brands to be accountable and open about what they’re doing to help the environment, reduce waste and cut down on their carbon footprint, and brands today have no choice but to listen.
So what's next?
These three areas of change have given the QSR industry a lot to think about, without much time to pivot. Now that the global environment is starting to find its footing again, quick-service restaurants need to look deeper into the opportunities and challenges to refine their strategies and assess long-term shifts.
Here’s a recap of where you can start:
- Get closer to customers through new dining formats such as curbside pick-up vs. third-party delivery, online-only products, brand partnerships, etc.
- Leverage consumer insights to evaluate the potential plant-based alternatives in your menu, and by using biodegradable, compostable or recycled materials in your packaging designs
- Use social media to grow the business’ fanbase, strengthen existing relationships and test responses to new on and off-menu ideas
- Keep your brand relevant and consistent by integrating your online and offline presence
Author: Elana Heffley