Overview
In 2023, small restaurant owners faced challenges but stayed strong, supported by loyal customers and robust spending. The economy defied expectations, avoiding a downturn, thanks to successful efforts by the Federal Reserve. Job opportunities expanded, with over 2.6 million jobs added nationally.
Entering 2024 brings uncertainty but holds hope for growth. The restaurant industry’s optimism rests on customer loyalty, with 9 in 10 consumers considering dining out an essential lifestyle choice. Despite ongoing cost pressures, the industry is expected to expand. Consumers play a crucial role in 2024, with expectations of lower interest rates and controlled inflation. However, challenges persist with rising prices across various categories, potentially impacting household budgets.
While restaurant sales are predicted to rise in 2024, high operational costs will limit profit margins. Intense competition looms as consumers face a growing number of foodservice choices.
Sales and Economic Forecast
Independent restaurants bore the brunt of the pandemic, with approximately 10% closing in 2020 compared to 2.5% of chains.
The industry has seen significant movements, from BRIX’s franchisee agreements to Wow Bao’s expansive ghost kitchen venture. Subway’s acquisition by Roark Capital and Olo’s strategic moves mark a dynamic period of growth and evolution.
Sales are projected to rise, but the higher cost of doing business will challenge margins.
Trends and Predictions
In the ever-changing restaurant industry, the projected $1.1 trillion in sales for 2024 signals strong economic activity. With expectations for one million outlets and a workforce of 15.7 million employees, the sector remains a key player in the global economy.
Workforce Trends
Looking ahead, the industry anticipates adding 200,000 jobs in 2024, showing the workforce’s resilience. An impressive 88% of operators plan to hire, highlighting the industry’s commitment to growth. Additionally, 47% foresee increased reliance on technology to address labor challenges, while 45% acknowledge the need for more employees to meet rising customer demands.
Operational Trends
Operational strategies are adapting to changing consumer preferences. A significant 90% of restaurant operators notice a shift in customer behavior, marked by increased value-consciousness. Technology plays a key role, with 76% acknowledging its impact on gaining a competitive edge. Moreover, over 80% of adults are willing to capitalize on dining discounts during off-peak hours, offering businesses opportunities to optimize operational hours. Additionally, 81% of potential consumers express likelihood in joining loyalty programs, signaling a growing appetite for personalized and rewarding dining experiences.
Food and Menu Trends
Consumer preferences and economic dynamics influence food and menu trends. A substantial 9 in 10 consumers enjoy discovering new dishes and beverages at restaurants, emphasizing the pivotal role of innovation. However, the industry grapples with challenges, as 76% of operators report higher average food costs in 2023 compared to the previous year. To navigate these challenges, 60% sought new suppliers, showcasing a proactive approach to cost management, while 53% trimmed menu items in response to increased food costs. Looking forward, 7 in 10 operators plan to maintain the same number of menu items as the previous year, balancing continuity and adaptation.
Guest Trends
Reflecting on 2023, 65% of patrons prefer the seamless convenience offered by kiosks over traditional in-person ordering. This shift underscores a growing acceptance and preference for automated, self-service solutions. Speed emerges as the top priority for customers, highlighting the crucial role of swift, reliable service and a compelling value proposition.
Marketing Trends
In marketing trends, strategies focus on adapting to higher food costs through off premises options and promotions. Leveraging social media and communication, along with dedicated websites, becomes essential. Standing out is addressed through personalization and loyalty technologies, exploring innovative avenues to capture customer attention.
Technology Trends
In technology trends, the industry anticipates leveraging AI to automate tasks and streamline operations. AI’s role in omnichannel order management is seen as the future of the point of sale, offering valuable insights from consumer data.
Off Premise Trends
The off premise landscape assumes a pivotal role in 2024, reflecting a significant shift in consumer behavior. A noteworthy 52% of consumers, including 67% of millennials and 63% of Gen Z adults, consider ordering takeout as an essential part of their lifestyle. In 2023, 49% of all restaurants reported higher off premise sales than in 2019, emphasizing its substantial contribution to revenue dynamics. Looking ahead, 31% of operators expect total off premise sales to surpass 2023, with 55% foreseeing steady sales and 14% anticipating a decline. Delivery methods vary across age groups, with Gen Z adults relying more on third-party services, and 70% of operators exclusively opting for third-party delivery services.
Harnessing Technology for Growth
A significant 62% of restaurants admit that their current workforce struggles to meet demands, highlighting the need for technology-driven solutions to improve efficiency and overcome workforce challenges.
A strong 76% of restaurant operators recognize the important role of technology in staying competitive. However, many feel the need to keep up with the latest tech trends. Only 13% believe their restaurant is a leader in using technology, while 23% think their operations are falling behind. This awareness is driving more operators to invest in technology to keep pace with the ever-changing industry.
Looking ahead, an optimistic 88% of restaurants plan to expand their offerings in the next 12 months, seeing technology as a way to innovate and adapt in a competitive landscape.
Responding to changing consumer preferences, 92% express a desire for personalized experiences from Quick-Service Restaurants (QSRs). Investing in technology becomes crucial for delivering tailored and memorable interactions.
The data highlights the financial benefits of technology adoption. Online orders, on average, are 20% larger than in-person transactions, while engaged customers spend an impressive 67% more. This makes technology adoption not just a smart choice but a profitable one.
Efficiency takes center stage as restaurants aim to simplify tech solutions, moving away from complex systems and multiple vendors. This effort extends to operations and menu management, with a focus on avoiding manual menu adjustments across platforms.
Addressing the challenge of complex technology, integrating systems reduces the difficulties linked to managing multiple platforms. Striking the right balance is crucial to avoid overwhelming technology while ensuring integrated systems enhance operational efficiency.
Simplifying technology translates into tangible cost savings. By reducing labor costs and operating expenses through streamlined integrations, restaurants can allocate resources more strategically, strengthening financial sustainability.
Creating unified dashboards, reporting mechanisms, and account reconciliation processes provides enhanced data visibility. This simplified approach empowers restaurant operators with clear insights, enabling data-driven decision-making and informed strategies for future growth.
Conclusion
In summary, the restaurant industry in 2024 stands at the intersection of resilience, innovation, and adaptability. Navigating challenges, embracing technology, and understanding evolving consumer preferences will continue to be key drivers for success in the dynamic and competitive landscape.
