Waiter serving food to a group of friends

2020 Forecast for Restaurants: 5 Trends to Watch

5 min read • Dec 21, 2019 • Elizabeth Aldrich

The days when restaurants could get by doing the bare minimum—offering big plates of mediocre food at reasonable prices—are gone. Consumers expect a lot more from today’s restaurateurs, from ethically-sourced ingredients to hand-crafted meals to experiential dining.

While today’s social media-saturated environment can make the restaurant industry hyper-competitive, it can also make it more rewarding. If small business owners stay on top of what consumers want, they can go from one food truck to viral nationwide chain in no time. Here are the top restaurant trends to watch for in 2020.

1. Increased Labor Costs

From line cooks to hosts and servers, the restaurant industry relies heavily on minimum wage employees. At least 7 states have already passed laws to phase in a $15 minimum wage as early as 2020. The Raise the Wage Act, which would raise the federal minimum wage to $15 by 2025, passed in the House but died in the Senate. However, future attempts are certainly possible after the 2020 elections.

Either way, historic lows in unemployment mean that low-skill employees have more negotiating power than ever, and business owners need to compete for the best workers by offering higher wages and better benefits. All of which means that business owners in the restaurant industry should prepare to deal with higher labor costs in 2020.

2. Ethically-Guided Food Choices

The 2010s were a decade of increasing consciousness surrounding what we eat, and business owners can expect this ethically-driven attitude toward food choices to come to a head in 2020. Slapping an ‘organic’ label on the chicken is no longer good enough. Consumers are worried about a wide array of issues, from pesticides, hormones, and environmentally harmful crops to cultural appropriation to labor rights for agricultural workers.

While veganism is increasingly popular, “flexitarians,” or plant-based diets that include the occasional animal product, are also on the rise. Offering vegan and vegetarian menus is no longer relegated to niche businesses—they’re a must for restaurants that want to compete in today’s market.

3. Quality, Health-Oriented Ingredients without the Steep Price

In addition to ethical concerns, consumers are also increasingly health- and wellness-oriented. They want to see fresh, natural, additive-free ingredients and more plant-based options. However, weight loss is no longer the main focus—overall wellness is. This shift has triggered the rise of trendy superfoods and herbs and spices with niche health and wellness benefits. From kale and pomegranate to moringa and turmeric, these fads are constantly changing. Restaurant owners shouldn’t feel like they need to drastically change their menu every month to keep up, but offering seasonal specials is a great way to incorporate the latest ingredient craze.

Consumers are also more interested in consuming food that uses high-quality ingredients. Artisan cheeses, hand-crafted meats, and super fresh produce will continue to attract diners in 2020. That being said, today’s consumers are also more wallet-conscious than they were a few years ago, spending less now even as their incomes are increasing. Food brands that can strike a balance between quality and affordability will come out on top.

4. Localization, Specialization, and Ambiance Are Key

Casual dining chains like Applebee’s, TGI Fridays, and Ruby Tuesday suffered in recent years. Their reputation for serving big portions of high-calorie, low-quality food is certainly part of the story, but there are a few other factors at play.

Low wages and busy schedules aren’t one of those factors. Millennials love eating out—they value restaurant spending more than any other generation. What they don’t love are chains, which is great news for small businesses. They’re not big on the idea of big chains that do a little bit of everything, offering quantity and variety over quality. Instead, they prefer specialization. Rather than eating at a restaurant that has tacos, pad thai, and burgers all on the same menu, they like to go to an authentic Mexican spot for tacos, a Thai restaurant for their curry needs, and a burger joint for a big, greasy bacon cheeseburger.

Finally, there’s nothing millennials love more than a good atmosphere—something that chains like Applebee’s and Ruby Tuesday objectively fail at providing. When they dine out, younger generations want an experience. If there’s no experience to be had, diners might as well just order delivery from their phones. From themed restaurants to Instagram-worthy design to live music, there are plenty of ways to push your restaurant beyond the pragmatic to offer diners something memorable.

5. Fast Food with Personality

The death of casual dining chains doesn’t mean that consumers are done with fast food. On the contrary, fast food offers convenience, and convenience is still king. Today’s consumers are still willing to put aside preferences for local businesses and health-conscious foods in the name of convenience. The buzz surrounding chains like Taco Bell, Shake Shack, Chipotle, and Popeye’s, all of which have a cult-like following on social media, is evidence. The main thing that differentiates successful fast food from chains that are shutting their doors is that they engage with their customers.

Showcasing local ingredients and businesses in your cuisine is one way to give each location its own personality and engage with the local community. Even fast-food restaurants can do this. Shake Shack, for example, tends to offer specialty “concretes,” a frozen custard treat, featuring local ingredients. Their Istanbul location features pistachio concretes, while the Atlanta Shake Shack has a s’mores concrete that incorporates dark chocolate chunks from famous Atlanta chocolatier Cacao Atlanta.

Taco Bell is a prime example of how chain restaurants can build a brand around a magnetic personality, all the way down to their “think outside the bun” slogan. They used their “4th meal” (the meal between dinner and breakfast) campaign to win over younger generations as the place to chow down after a fun night out. Then, they took that a step further by opening Taco Bell Cantinas in select cities, which offer custom menus, shareable appetizers, and alcoholic beverages. Most recently, Taco Bell opened a pop-up resort in Palm Springs called The Bell Palm Springs – A Taco Bell Hotel & Resort. Reservations sold out within minutes.

Trends can feel fickle sometimes, but restaurant owners would be amiss to ignore them altogether. Listen to your customers, and they’ll reward you.

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Elizabeth Aldrich

Elizabeth is a freelance writer covering personal finance, business, and travel. Her writing has appeared in The Motley Fool, Business Insider, Yahoo! Finance, LendingTree, Student Loan Hero, FOX Business, and more.