Tennessee Restaurants: An Evolving Industry Segment

Over the past eight months, COVID-19 has swept the American restaurant industry with an unprecedented impact. With that, restaurant trends are rapidly changing as restaurateurs innovate to address the needs of their evolving markets.

A shift on the menu

Pre-COVID, healthy menus were a huge trend on the rise. These menu items remain popular as consumers seek healthy options while they are quarantined and have had to modify their lifestyles to incorporate physical activity in new ways. Something new to this era is the increase in demand for menus that satisfy the whole family. Both local restaurants as well as national chains have added family meal deals of bulk food items that normally come at a discount. This structure meets the demand of families who are tired of cooking dinner every evening, but need an affordable takeout option with kid-friendly food options.

It’s all in the details

Restaurants have begun to pay attention to details that may not have been as important eight months ago. Since the ability to dine-out has greatly decreased, many people are opting to order food for delivery or pickup through third-party services and apps. Because this capability has become such a major source of market penetration and consumer expectation, restaurants have paid more attention to the way their menu appears on these apps and websites. It’s not just about adding convenience and increasing market share, rather, there is increased priority to represent their restaurants in the most visually appealing and easily navigable way.

Tennessee in particular

After exploring national restaurant trends in times of crisis, it is also interesting to look at the larger Tennessee markets specifically.

In Nashville, outdoor dining is very popular along with normal delivery and pick-up orders. Restaurant chains prioritize Nashville for expansion because their chance of success is much higher due to our relatively mild climate and demographic growth fundamentals.  Knoxville is very stable, as restaurants continue to expand and view the market favorably. Chattanooga is the epitome of innovation, with new restaurant concepts coming in and diversifying the offerings to cater to growing population and palate diversity. Memphis, however, lacks in new concepts as the population declines, and thereby relies on more traditional, local restauranteurs to serve the market.

Overall, success is found in the regions that embrace the cultural influence of food from both California and New York City – and these often coincide with the overall trend toward healthier menus.

Changes for good?

Though all of these strategies are proving to help restaurants, not all are able to remain open in the pandemic environment. The national percentage of independent restaurants failing has less impact in Southern markets. There are more chains in the region, more established regional concepts that are well-funded and very stable. We have less frequency and lower concentration of independent restaurants when compared to other major cities in different regions of the country. One could predict that only 20% of independents will shut down here, compared to the national projection of 75%.

The restaurant industry has always been driven by consumer behavior.  Understanding present trends toward adaptation, and cultivating a deep knowledge and appreciation for market fundamentals ensures the sustained, targeted growth of the Tennessee market for restaurants.

Please feel free to contact Joey Valenti, author and Centennial Retail Services broker, to talk restaurants any time you’d like.