Thank you to all our amazing customers who participated in the R365 State of the Industry Customer Survey. The results below share the top challenges of 2022 and represent over 10,000 QSR, Fast Casual, Casual Dining, and Fine Dining participating locations across the United States.
Key findings include:
- 93% of surveyed restaurants experienced an increase in food costs with the average increase being 10%.
- 87% of surveyed restaurants experienced an increase in labor costs with the average increase being 8%.
- 92% of surveyed restaurants increased their menu prices in 2022 with the average increase being 8%.
When asked “What was your top challenge been in 2022?” the answers ranked as follows:
Recruiting and retaining staff: 50%
It’s no surprise that recruiting and retaining staff was a top challenge for 50% of our survey respondents. Labor recruitment and retention has been an issue for our industry even before the pandemic. Workers have been hard to retain due to the long hours, low pay, lack of benefits, burnout, and more. The pandemic and accompanying shutdown merely shook things up to the point that restaurant workers have been able to exit the industry with no intention of returning.
To help with staffing issues, one customer stated “We increased our kitchen pay to be the highest in our market to gain and retain staff. We have increased our menu prices to what we think is top of the possible range and are still taking less to the bottom line with all of the increased costs. As an opportunity, we are going to increase all staff to full minimum wage rather than the lower tipped minimum wage so that we can begin tipping the kitchen and hopefully create a culture where people want that job, as it seems to have become undesirable.”
If you also found recruiting and retaining staff as the biggest challenge of 2022, download this free guide for top strategies to support your short-term and long-term hiring and retention goals: Guide to Hiring and Retaining Restaurant Staff.
Food costs: 19%
Increased food cost is another huge industry issue that sharply increased in 2022. Average wholesale prices jumped 17.8% between 2021 and 2022, representing the largest 12-month increase in nearly five decades. We recommend that operators conduct regular and frequent cost reviews through the week, not just at the end of the month. If things seem out of balance, check supplier contracts to make sure vendors are abiding by them. In extreme cases of increased food costs, some menu items might need to be eliminated.
“In a recessionary period where restaurant dollars per customer are shrinking, the simple fix of raising menu prices may not be an option. Restaurants now need to focus on value engineering their menus to ensure that profitability is met with a lower per person spend,” shared a survey respondent.
If you’re not getting the highest profit margin from your menu items this free guide will walk you step by step through the menu engineering process: The Ultimate Guide to Recipe Costing and Menu Engineering.
Supply chain: 10%
Supply chain issues were caused throughout the year due to lack of workers, crop failures, high gas prices, and other issues. While the issues tended to ebb and flow depending on the product, most operators have felt the pinch at some point on proteins, fruits, vegetables, milk and more. Many operators have turned to expanding their number of suppliers, creating smaller menus, getting creative with their recipes, and tightening control over their inventory to work around these issues.
“For us, the biggest challenge is using the supply chain to our best advantage. Having several vendors on-hand for like products to maintain consistency will be huge, which creates headaches on the accounting end but a better guest experience driving revenue if done correctly,” commented one customer.
If you’re hesitant to expand the number of vendors you use due to the extra work it might create for your AP department, don’t worry. With R365’s AP Center, users can review and approve invoices, manage workflows, and send payments with one click, consolidating tasks, increasing speed and accuracy, and removing administrative burdens. Read this blog to learn more.
Sales volume: 9%
Nine percent of respondents struggled with sales volume during 2022. While this number is relatively low compared to the other challenges, there are steps that all restaurants can take to increase sales. Menu engineering is about maximizing profitability by promoting your most profitable menu items and encouraging customers to buy them. Your menu’s design has more power than you may realize. Small changes can increase your revenue by up to 35%.
“I see the biggest challenge being sales volume overall. I think the increased pricing that took effect in 2021-2022 will result in even sales, but overall, less customers or lower check averages,” states a noted a customer. “I do not think households have gotten past the peak inflation in some areas and until that works itself out of people’s budgets at home, we will see less being spent for going out to eat.”
Statistics show that 65% of a company’s business comes from its existing customer base, making customer retention vital when it comes to sales volume. Learn more about retaining customers in this insightful article: 5 Ways to Drive Customer Retention in a Post-pandemic World.
Looking to expand your customer base? Appealing to Gen Z by is also a great way to grow sales volume as this generation now accounts for approximately 20.66 percent of the U.S. population. This article share great tips on How To Attract Gen Z Customers to Your Restaurant.
Disconnected technology: 3%
Restaurant technology includes everything from QR codes, kiosks, to robotics so not all technologies speak the same language. But when it comes to an all-in-one, cloud-based accounting, inventory, scheduling, payroll, and HR solution developed specifically for restaurants, R365 has you covered by seamlessly integrating all of your data.
Looking to the future, one customer shared, “2023 will be a year to lean into technology and innovation to analyze our business and operations while we enter an era of restaurant growth and brand expansion. Flexing our technology muscles will be essential to measuring our success and protecting our margins.”
If you’re feeling a disconnect in your technologies, this free guide is designed to help you navigate the growing number and types of technologies available in the restaurant industry – so that you can make choices based on your growth objectives: Restaurant Tech for Scaling.
As we say “goodbye” to 2022 and “hello” to the new year ahead, we are here to help your restaurant thrive. Whether you like to watch, read, or connect, R365 has a growing menu of information to keep you up to date on restaurant news and best practices. Search our full hub of hundreds of blogs, guides, webinars, case studies, ebooks, videos, and calculators.