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Restaurant operators have faced stiff headwinds since 2020, with a near-constant swirl of inflation, supply chain and labor challenges. But if last year was any indicator, restaurant operators are on the road to relief in the second half of 2024.
The U.S. economy demonstrated resilience in 2023—with GDP, employment rates and consumer spending remaining relatively stable or even growing. According to the National Restaurant Association, 49 percent of restaurants reported year-over-year increases in same-store sales. And, increasing prices are expected to drive many of the food industry trends in Houston this year, including streamlined menus and deals as well as the shareable bites renaissance.
We expect these trends to shape the restaurant sector. Here’s how restaurant operators can evolve with them.
Adapt to Price Fatigue
Controlling food costs has been a major challenge for restaurant operators, with many forced to increase prices when costs of staple ingredients rise.
Despite price hikes, trends indicate that the Houston culinary scene thrived last year, with more patrons foregoing regular work lunches in favor of higher-priced weekend meals. While factors such as convenience impact that decision, the experience of dining out is important. Restaurants should make the dining-out experience worth the price tag by boosting value perception and satisfaction for both budget-conscious and higher-end customers.
Leverage Data to Personalize Experiences
Restaurants generate vast volumes of data from their point-of-sale (POS) systems. Savvy operators analyze that data to understand who’s coming through their doors, what they’re ordering and how often.
They’re using that information for operational purposes like effectively managing inventory and launching new menu items. Restaurant operators have also employed data analytics and generative artificial intelligence (GAI) to help automate the upselling process during a transaction by suggesting meal upgrade options. When systems factor in inventory data, restaurants can shift recommendations based on inventory levels and help avoid selling out of key items during peak demand periods.
Address Labor Shortages
Pandemic-era labor shortages have eased—but not disappeared. In November 2023, the National Restaurant Association reported that full-service restaurant employment levels were still 4 percent below February 2020 readings.
As restaurant operators grapple with labor shortages, they’re turning to technology to address workflow challenges, like using voice-enabled AI to take drive-thru orders, with the goal to create a faster, more frictionless experience while allowing employees to focus on duties like fresh food preparation.
Operators are also adjusting to new business realities by increasing wages and enhancing benefits to attract and retain employees. Data from the U.S. Bureau of Labor Statistics shows that the average hourly rate for U.S. restaurant workers has increased rapidly since the onset of the pandemic. There will likely be sustained pressure to increase minimum wages into this year, but operators should think beyond base pay when attracting and retaining workers.
Evaluate Fraud Risk
Technological solutions have become even more critical to restaurant operations. According to BofA Global Research, restaurants’ IT budgets have doubled since March 2020 to account for up to 10 percent of gross revenue in June 2023. It’s a testament to the pivotal role that technology plays in the industry’s revival. That said, tech solutions also introduce the potential for cybercrime.
After a few irregular years, the restaurant industry seems to be rediscovering a sense of balance. Operators who can effectively implement these strategies while remaining adaptable to the constantly changing landscape will be in a strong position for growth.