Facing The Restaurant Industry Challenges

RESTwithEU, a European Parliament Pilot Project

Supporting the implementation of digital tools for the restaurant sector

RESTwithEU is an 18-month project initiated by the European Parliament and commissioned by the Directorate General of Communication Networks, Content and Technology (DG CNECT) of the European Commission to support the implementation of digital tools for tourism and more specifically the restaurant sector.

The overall objective of the project is to identify and develop digital tools and solutions that meet the needs and diversity of the restaurant sector and to promote innovation by generating strategies for the future so that the sector remains competitive and succeeds.

This pilot project promoted by the European Parliament aims at initiating the development of user-centric digital innovations for SMEs in the restaurant industry around the EU for the following three topics:

• Changing leisure and travel behaviour
• New ways of working
• The sustainable management of food

Lyon, the gastronomic capital of France

Choosing the host city for the Facing The Restaurant Industry Challenges Stakeholders Workshop

We wanted to highlight a European location motivated by the idea of taking advantage of SIRHA – The World Hospitality & Food Service Event scheduled on those dates, an event related to the Food Sector in order to give more visibility, affluence and success to our workshop.

Lyon is the bastion of French haute cuisine. The late Paul Bocuse (chef of the century, according to some) was the city’s most famous son, but many locals are just as committed to their craft. You see the same passion for fantastic produce in the baker, the fishmonger and, indeed, in the customers at restaurants all over town. Lyon’s proximity to Alpine farms, the vineyards of Burgundy, even the day’s catch from the Med, means that only the finest and freshest ingredients are selected.

Often hailed as the gastronomic capital of France, Lyon was the center of the French nouvelle cuisine movement led by legendary chef Paul Bocuse that sought to “lighten up” French cooking—in terms of both calories and pretention. (Of course, “light” is a relative term; while heavy cream sauces fell out of favor, this is a far cry from spa food.) If you want to splurge, you have 16 Michelin-starred restaurants to choose from.

However, traditional local restaurants known as bouchons offer great value, and the best are officially recognized by the Chamber of Commerce and easily identified by a seal in the window. Open-air markets also offer opportunities for inexpensive dining—and excellent people-watching. A great European city to bring together and strengthen the relationship between the experts, where we could share time, exchange impressions, knowledge and contacts for this and future projects.

Facing The Restaurant Industry Challenges

A workshop to connect all European countries for the project’s success, increasing support for future initiatives

RESTwithEU has considered from its beginning the necessity to make a good network among all European Countries for the project’s success and increase support for future initiatives.

Knowing that, when stakeholders are identified, and their needs are taken into consideration, the project outcomes are more likely to meet their expectations. This as well can lead to increased satisfaction with the project’s results and increased support for future projects. Engaging stakeholders and their interests in the project planning and execution process can increase their greater participation and contribution which finally can result in a more understanding, trustful and successful project.

For a project like RESTwithEU where the capillarity of restaurants is so immense and the difficulty of reaching them is a challenge, managing a good network of stakeholders from the start is fundamental. Therefore, one of the first objectives of the project has been to bring together the best experts from the outset and to build up a network of international experts to cover the objectives of the project in all its phases.

One of the main goals of this Stakeholders Workshop is to validate the conclusions of the research of the industry. The workshop provides an opportunity for stakeholders to review the findings and provide feedback on their validity, relevance, and potential implications.

Another key achievement is to identify potential opportunities and challenges related to a specific topic or issue. The workshop can facilitate discussions and new innovative approaches to address the restaurant sector challenges.

Stakeholders workshop can help build consensus and collaboration among experts with diverse perspectives and interests, providing the opportunity to share experts’ views and concerns, exchange ideas and work towards a common goal: the project foster greater trust and succeed.

The Enriching and Validation of the Final Results

The motivation for sharing handouts and resources with experts is to provide them with the necessary information and tools to effectively contribute with their views and concerns in the workshop. By providing experts with the relevant information and tools, they can make informed decisions, coming up with valuable insights, and contributing to the project’s success.

Sharing handouts, information, and resources also helps to ensure that all stakeholders are working towards a common goal.

By identifying the strengths of an industry, businesses can build on their competitive advantages and leverage them to gain market share. By recognizing the weaknesses of an industry, businesses can take steps to address these shortcomings and improve their overall performance.

By seizing opportunities in the industry, businesses can develop new products or services, expand into new markets, and capitalize on emerging trends. By mitigating threats, businesses can take proactive steps to minimize risks and protect their operations from external factors such as economic downturns, natural disasters or changes in consumer behaviour. For this reason, the SWOT Analysis for the industry provide valuable insights to support Restaurants SMES stay ahead of the competition, adapt to changing market conditions, and make well-informed strategic decisions.

The RESTwithEU SWOT Analysis

Scoping the project and their external and internal environments to identify areas of opportunity, and mitigate potential risks

Enriching and Validating the S quadrant: Strengths

• Great resilience in the sector in terms of creativity and adaptability due to the diversity of existing businesses and value propositions.
• Being a leisure sector means that restaurants can create different value-added proposals.
• Digitalisation is a tool that promotes the generation of personalized experiences.
• It is a sector that is prone to sharing its own experiences and adopting external ideas.
• A wide variety of solutions on which to build customer experiences and the internal management of restaurants.
• It is a very permeable sector to innovative solutions (digital tools) once they confirm that it works.
• Relation with other industries (diplomatic view of the sector and cultural diversity).
• Diversity of the workforce and job opportunities. Sustained demand.
• Digitalisation as a whole (not only with customers). Resilience of the sector.
• People in the industry should be the focus. Creativity and adaption capacity.

Enriching and Validating the W quadrant: Weaknesses

• As it is not a sector of first necessity when there are economic shocks, it is the first to suffer.
• A priori, resistance to change due to the lack of innovative culture and the low margins of the sector that prevent risks from being taken.
• All of this makes the sector have a low level of digitalization in general.
• Lack of competencies adapted to the digital world. Unqualified staff for the professional needs of the sector. It is a sector with low productivity.
• High regulatory burden and complex administrative processes. High presence of informal and undeclared work.
• Reputational risks of the sector associated with the perception of workers.
• The high fragmentation of the sector makes coordination efforts difficult.
• This makes there a lack of negotiation power with the rest of the value chain.
• Inability to develop their solutions due to a great dependence on third parties.
• Not always the first front to experience negative economic effects (it has been severely impacted by COVID, but not always in the same way).
• Skills are variable across the sector (young people bring new digital skills) and it’s connected to the workforce wellbeing and how much time restaurants spend on training
• Labour shortage, low wages and lack of training opportunities
• Low profitability, in terms of not only reduced productivity, it increased labor costs and a decline in the quality of service.
• Dependence on other players such as suppliers, customers, competitors.
• Lack of financial channels, limited access to funding for expansion or renovation, managing cash flow.
• The high failure rate and the seasonality of some of the businesses.

The lack of diversification in the restaurant industry can have both advantages and disadvantages for restaurants. The main advantages are specialization, focusing on a specific type of cuisine and differentiate themselves from competitors, building a strong brand identity or limiting their menu offerings they can better manage their costs. It has, as well, disadvantages such as a limited customer base, limited revenue streams and the lack of diversification can also increase competition among restaurants that offer similar dining experiences.

To conclude, this is a challenge for restaurants to differentiate themselves from competitors and attract new customers.

The other items on discussion were the High fragmentation as some experts commented it should not be only a weakness, as it has some good points such as:

• Diverse options: With so many restaurants operating in the industry, consumers have a wide range of dining options to choose from. This can be a significant advantage for restaurants that offer unique menu items or dining experiences.
• Lower barriers to entry: The high fragmentation in the restaurant industry means that it is relatively easy for new restaurants to enter the market. This can provide opportunities for entrepreneurs who are looking to start their own businesses.
• Local focus: The high fragmentation of the restaurant industry also allows restaurants to focus on the needs and preferences of their local communities. This can help restaurants build strong relationships with customers and establish themselves as important members of their communities.

Enriching and Validating the O quadrant: Opportunities

• Wide potential for automation in both management and administration.
• Continuation of the trend towards the development of gastronomic culture.
• Increasing professionalization and training in the sector.
• New training solutions taking advantage of the offer provided by startups.
• Possibility of improving efficiency with the value chain, promoting greener businesses.
• Leveraging digital technologies to develop new business models and new experiences for consumers.
• Understanding and adapting to new channels of communication and bidirectional interaction.
• As it is a strategic sector for the economies of many European countries, governments support its development by promoting cooperation between companies, universities, and research centres.
• Take advantage of lifestyle changes to generate new business models and new experiences.

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