Capitulating customer counts year after
year and relying on menu price increase in order to find sales is not a
business formula, they would ever teach at any business school. Sadly, it
appears to be the state of the restaurant industry once again. Remember that
the status quo is not in the minds-eye of the consumer.
Regular readers of this blog know that Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® routinely,
regularly, and repeatedly has call on restaurant to evolve their business
models, stating, “if your restaurants today look more like 1990, 1998, or 2015
than a restaurant of today or tomorrow your sure to be capitulating year over
year customer counts.
Even the National Restaurant Association forecast in its annual
“2023 State of the Restaurant
Industry” report released last week, the association expected sales to
increase $60 billion over the $937 billion last year, which had exceeded the association
forecast of $898 billion.
Noted that the 6.4% increase in forecast sales over 2022 includes
“high rates of menu price inflation,” said Hudson Riehle, the
association’s senior vice president of research, in an interview. Here is that
interview:
“Sales in uninflated dollars have yet to return to 2019 levels,
before the pandemic was declared in March 2020. “If you go back and track it
from 2019 through this year, the real sales are down by 8.6%,” Riehle said. “So,
it basically is the new normal.”
The industry’s “new normal” demands innovations, he said.
Among other findings in the annual study:
• The foodservice industry workforce is projected to grow by 500,000
jobs, for total industry employment of 15.5 million by the end of 2023. The
association said employment in the industry was 15 million in pre-pandemic
2019. “In the second-half of 2023, the industry recovers to a level that is
higher than it was before the pandemic,” Riehle said.
• About 70% of operators said business conditions have settled
into — or are on the path to — a new version of normal.
• About 84% of consumers said going out to a restaurant with
family and friends is a better use of their leisure time than cooking and
cleaning.
• Inflation continued to dog the industry, with 92% of
restaurant operators saying the cost of food is a significant issue.
• In 2023, 47% of restaurant operators expect competition to be
more intense than last year.
Revenue streams will continue to expand, Riehle said, citing
subscription plans, loyalty programs, meal bundles, outdoor dining and prix
fixe offerings.
Alcohol to-go for table-service concepts has been especially
popular, though some communities have tightened restrictions as pandemic
concerns ebb , Riehle said.
“Particularly among the younger age cohorts,” he said, “the
ability to add alcohol to that off-premises order is a big deal.
At least four in 10 operators in each of the three
limited-service segments — quick service, fast casual and coffee/snack — said
the addition of drive-thru lanes will continue to be more common in 2023, the
forecast found.
Technology continues to be at top of mind for operators, the
report found. More than four in 10 operators planned new investments in
equipment or technology to increase front- and back-of-hour productivity. Most
of those investments will be in the order and payment arena rather than
automated systems like robots to prepare food, association surveys found.
“The report is quite clear that consumers are extremely
comfortable with using technology in their daily restaurant encounters,” Riehle said, adding that
younger consumers expect some technological savvy, be it smartphones, kiosks or
video menu boards.
The report found:
• Among fine-dining restaurants that offered delivery during the
pandemic, 79% added it for the first time; and eight in 10 of those planned to
continue it.
• Two-thirds of adults said they’re more likely to order takeout
food from a restaurant than they were before the pandemic.
• Off-premises-only locations were expected to grow in popularity
with more than four in 10 limited-service operators saying they would more
common this year.
• 69% of adults said they like the option of dining outside.
Riehle said many brands are finding new revenue streams in
branded merchandise such as clothing and other retail products.
The forecast noted that the restaurant and foodservice industry
added 2.8 million jobs over the past 24 months, bringing the industry total to
15 million at the end of 2022. The foodservice industry remains 400,000 jobs
below pre-pandemic levels. With hiring in 2023, Riehle expects employment to
return to 2019 levels later this year.
Association surveys found 87% of operators said they will likely
hire additional employees during the next six to 12 months if qualified
applicants are available.
Between 2023 and 2030, the foodservice industry is projected to
add an average of about 150,000 jobs a year, with total staffing levels
projected to reach 16.5 million by 2030.
Surveys found only one in 10 restaurant operators said
recruiting and retaining employees will be easier in 2023 than it was in 2022,
with about 58% of operators saying that use of technology and automation to
alleviate labor shortages will become more common in their segment in 2023.
Riehle noted that operators said technology is generally complementary to human
labor and primarily intended to enhance, rather than replace, workers.
Operators are in an “uncertain environment,” with the federal
debt ceiling increase and other issues on the horizon for 2023, Riehle said, but the
pandemic had the largest impact.
“I don't think anybody ever in any of their models anywhere
could have predicted such a substantial impact,” he said. “For the restaurant
industry, among all the industries in America, it was the industry that was
most severely impacted in terms of employment and sales declines.”
Riehl added that “2023 is in many ways still a transitional
year, but it is a year in which that ‘new normal’ has gained a greater presence
of mind — both in the mind of the consumers as well as the operator.”
Operators plan to respond to trends, which include a majority of
operators across all segments expecting to keep their menus in 2023 similar in
size to last year and to enhance eco-friendly business practices, which appeal
especially to Millennial customers.
“The major tenet that holds the whole thing together — and this
was true even during the pandemic — is that consumers love to use restaurants
in their daily lifestyle, and sometimes that's on-premises sometimes it's
off-premises,” Riehle concluded. “They prioritize that spending. … We asked
them about how essential is the industry in their daily lifestyle: They're very
large numbers, particularly among younger consumers.”
Customers see restaurants as part of their standard of living
and prioritize spending toward the foodservice industry, Riehl said. “That's
not true of a lot of other industries in America,” he added.”
In case you did not know, the full 2023 report can be
accessed from the
restaurant association’s website. The
association, founded in 1919, includes nearly 1 million restaurant and food
Don’t under estimate the consumer. Consumers are dynamic, not static. Do not
accept the status quo.
Don’t over reach. Are
you ready for some fresh ideations? Do your food marketing ideations look more
like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your
retail food brand while creating a platform for consumer convenient
meal participation, differentiation and individualization? Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the
following links: Facebook, LinkedIn, or Twitter
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