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Tony Smith, CEO and co-founder of Restaurant365, reveals that the majority of respondents from a 5,500-location study are planning digital, operational and physical investments.
This article was written by Tony Smith, CEO and co-founder of Restaurant365, and appeared in Fast Casual.
The restaurant industry is synonymous with resilience. Whether it’s the server, cook or manager working back-to-back doubles or an iconic restaurant brand or neighborhood favorite weathering years of unprecedented challenges, this business knows how to do more than survive. It knows how to innovate and thrive.
At the moment, there’s conflicting information about the industry’s performance. Financial analysts are watching the recent slowing in same-store sales growth at some of the nation’s largest brands. Meanwhile, the National Restaurant Association last week reported that November sales rang in at $94.7 billion, “up a solid 1.6% from October’s upward-revised volume of $93.2 and represented the ninth consecutive month of sales growth.”
As we all monitor economic indicators, Restaurant365’s State of the Industry Survey, which polled nationwide operators representing nearly 5,500 locations, found that many are optimistic and plan to invest across their businesses in the coming year to overcome lingering pressures while driving sustainable growth.
While rising food and labor costs continued to challenge restaurant leaders in 2023, our customers saw the pace of inflation fall considerably from 10% and 9%, respectively, to under 5% and even as low as 1% both food-cost and labor-cost increases in some cases.
Of course, with the inability to predict the future and cases like California increasing the minimum wage to $20 an hour, the industry never truly breathes a complete sigh of relief. Our customers said they’re expecting a host of challenges in 2024, chief among them staff recruitment and retention, sales volume, and food and labor costs.
Rather than rest, we know the industry wants to innovate and grow with profitable decision-making.
Respondents said they’re planning digital, operational, and physical investments to manage those expected challenges. Given concerns over falling same-store sales and broad menu price increases masking potentially lower sales volume, 76% plan to invest in some combination of loyalty and marketing technology. Nearly a third of all respondents said they’re prioritizing investments in solutions to drive greater customer engagement and, ultimately, sales.
We’re excited to see parallel investments coming for the workforce that will support and deliver those increased sales. About 49% of those surveyed plan to increase employee incentives, and nearly all plan to implement tools ranging from employee lifecycle management to scheduling and payroll.
Alongside sales efforts, there is a focus on making existing sales more profitable. This is the root of successful restaurant management. Restaurant leadership compensation is often tied to hitting targeted food and labor costs. We see that restaurant companies are increasingly interested in empowering leaders to do so by integrating restaurant reporting with technologies like accounting systems. Nearly half of those surveyed said they plan to implement a business intelligence tool, bringing the industry closer to being genuinely data-driven, as more than a third also plan to invest in integrated accounting and reporting.
Combine those with the 57% of respondents who plan to open one or more locations in the coming year, and you can expect some exciting growth.
We see restaurant owners and operators investing in their businesses with enthusiasm. Staffing, sales, and integrated technology that offers detailed, real-time cost and performance data are three essential pillars of the business. With so many plans for such significant investment in both, it’s clear that the restaurant industry is solidifying its position to grow profitably and sustainably, no matter the circumstance.
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