Restaurant Articles

Top Four Challenges QSR Will Face in the New Year

By July 26, 2016 No Comments

Prepare for changes in QSR 2016 trends: Technology, health, and more.

While the quick service restaurant (QSR) industry continues to be the fastest-growing sector in the restaurant market, the road in 2016 could be bumpy. With constant change and growing challenges around every corner, the hurdles that QSR restaurants will face in 2016 are looming larger every day. Even the most seasoned restaurant pros could be awake at night thinking about these challenges and how to surmount them.

Here are four of the most dynamic scenarios facing seasoned QSR executives.

  1. DIY Health
    We see it every January; resolutionists coming in droves to join the gym, start a diet, or otherwise take care of themselves better. With tons of new gadgets to help people track their health like the new Apple Watch and Fitbit wristbands, do-it-yourself health is on the rise.

    People are also trying to eat healthier which presents a challenge for restaurants that are trying to preserve shrinking margins. Health-minded customers often gravitate to QSRs like Chipotle that have invested major advertising dollars to broadcast their healthy offerings. Chains are also testing specialty products like gluten-free bread.

  2. Real Estate
    No matter whether your QSR is located in Boulder, Colorado or Portland, Oregon or the heart of San Francisco, real estate is at a premium in most markets these days and landlords have the upper hand over small restaurants with high turnover. Because QSRs tend to sell their products at a low market rate, it gets harder and harder to justify paying thousands of dollars in rent just to make increasingly short margins. Landlords in the most competitive markets are threatening to create “food deserts” where groceries or reasonable fast food is unavailable because they are charging more than restaurants can bear. For leaders in QSRs, aggressive negotiating skills are going to be a key skill during the coming year.
  3. Fuel Prices
    What went down eventually has to come back up. Fuel prices are lower than pre-recession levels even in the most competitive markets but the reality is that fuel prices will eventually go back up. On the bright side, the current low fuel prices tend to boost consumers’ disposable income, which they can then spend on fast food. At some point, though, political impetus and the stock market will drive prices higher in order to protect the profits of major oil companies.
  4. The Technology Arms Race
    The major focus for QSRs in 2016 is going to be the strides towards mobile platforms. Fast-casual executives are going to have to carefully watch social media trends in order to allocate resources appropriately. Developers are increasingly combining these apps into a single solution, adding an additional layer of convenience that will be critical to the success of QSRs. These applications often integrate mobile ordering with a brand’s loyalty programs, let customers customize orders, offer payment via mobile platforms like Apple Pay, and save a consumer’s favorite items. Because of these multiple factors, the opportunity for restaurants to capture customer data could be a potential treasure trove of marketing data. QSR leaders have a responsibility to start investigating mobile platforms now before they find they are irreversibly behind the curve.