2015 Hospitality Business Trends

January 30, 2015

From the Desk of: David Corsun, PhD

Fast food flops, fast casual booms, craft distilleries soar, climate change alters wine and tipping takes a tumble.

David CorsunDenver, CO—While Panera and Chipotle will show record earnings in 2015, traditional “legacy” brands like McDonalds and Burger King will struggle for market share, predicts David Corsun, Ph.D., director and associate professor at the Knoebel School of Hospitality Management at the University of Denver’s Daniels College of Business. The business model of tipping to augment minimum wage will be transformed, and wine producers already anticipate how climate change will impact them. These are just a few of the trends to watch in 2015:

  1. Fast Food vs. Fast Casual: Dr. Corsun says that Millennials demand more authenticity and customization in their lives, extending to what and where they eat. “The legacy model of fast food in a staged, scripted and inflexible environment manner doesn’t interest them,” he says.  “They are demanding more and more ‘traceability,’ and expect to know the sources of food on restaurant menus. They’re also looking for healthier options and are willing to pay a little more for higher quality. Panera and Chipotle’s robust earnings combined with clever award-winning advertising have made these restaurant companies a tremendous success. The wildly successful Shake Shack IPO—despite all the competition in the deluxe burger sub-segment of fast casual is testimony to this shift in consumer preference.”
  2. Craft distilleries reign: The craft distilled-spirits business exploded in 2014, and will boom in 2015 throughout the country. “While locally sourcing food is now standard practice for restaurants, and sought by consumers, consumers’ attention has shifted to include craft spirits and beer,” says Dr. Corsun. “Where the contents of our cocktails originate has become a focal point for consumers of all ages and it’s changing the hospitality marketplace. You’ll see more attention being paid to the setting, environment and ingredients of artisanal liquors. The importance of creative cocktailing in restaurants is definitely not going to wane anytime soon.
  3. The wine industry anticipates climate change: Warmer temperatures throughout the world have hastened grape ripening. “In the short term, winemakers see changes to grape yields and challenges to maintaining wine quality due to climate change,” maintains Dr. Corsun. “In the long term, winemakers see longer, warmer growing seasons, along with more extreme weather events like hail and wind. Drought conditions in some premium wine growing regions also pose challenges. The critical impact of farming on wine quality grows as do the challenges posed by weather change.” 
  4. No longer “tipping as usual”: “In 2013, the U.S. Bureau of Labor Statistics reported that the average annual turnover rate in the restaurant and hospitality industry was 20 percentage points higher than all other private sector jobs—a significant barrier to restaurant success. This is a major reason why you will begin to see the American model of tipping change in 2015,” Dr. Corsun believes. “Some owners say that an increased minimum wage for servers will result in layoffs or raised prices. But others argue that it will result in more loyal, productive employees. In improving the quality of employees, you then create a consistently better customer experience. Some restaurant owners are already making the change by eliminating tips, increasing the cost of items (and making it clear why they’re doing so on the menu and check), and increasing server pay and benefits. As local and national minimum wage laws change you’ll see more follow this model.”   

For more information or to set up an interview with Dr. Corsun, please contact Kristal Griffith at 303.871.3379 or Kristal.Griffith@du.edu.