Annual State of the Restaurant Industry Survey for 2024
Restaurant365, the leading all-in-one restaurant enterprise management platform, today released findings from its annual State of the Industry Customer Survey. Restaurant operators representing nearly 5,500 QSR, fast casual, casual dining, and fine dining locations across the nation shared their top challenges and opportunities for 2023 and 2024 alongside plans for investment in AI, marketing and sales, and workforce tools, programs, and benefits.
2023 Sentiments
Food and labor costs continued to increase in 2023, although slower than in recent years, according to survey data. Of the more than 80% of respondents who said food costs rose over the past year, more than half said it was in the 1% to 5% range. Last year, R365 customers said food costs rose about 10% while labor climbed approximately 9%. Of the more than 89% of respondents who said labor costs grew in 2023, over half said it was in the 1% to 5% range. As the increases pressured margins, operators worked tirelessly to drive sales and efficiencies to offer customers fantastic experiences while supporting growth.
"Restaurant operators continue to show resilience and creativity as they find new ways to move their restaurants forward," said Restaurant365 CEO and Co-Founder Tony Smith. "We're seeing continued focus on the guest experience and a heavier focus on overall business operations. Expanding the use of integrated technology to drive efficiency, cost savings, and growth have propelled many restaurants throughout the year."
On a positive note for consumers, menu price inflation appears to be slowing, with 61% of respondents planning price increases in 2024, well below the 82% who said they planned to increase prices in 2023.
Looking to 2024
As restaurant leaders innovate to ensure success in a more expensive operating landscape, many also plan to invest across their businesses to enhance everything from sales and marketing to back-office efficiency to the all-important employee experience and retention. Survey participants predicted the latter to be the most pressing challenge in 2024, with more than 38% ranking employee experience and retention first in a list of six potential challenges, followed closely by sales volume (24%) and labor costs (18%).
Operators are planning to manage these challenges with additional marketing technology, promotions, and loyalty programs, as well as investment in the back-of-house tech stack, and salary increases and recruitment.
"It's a testament to the restaurant industry that a year after many braced for uncertainty and a potential downturn, leaders are now planning to invest in critical functions across their businesses to bolster every aspect of this essential sector of the U.S. economy," Smith said. "As the pace of change in innovation, consumer preferences, and the economy speeds up, operators that embrace efficiency-and-value-adding technology, whether in the back office, the order counter, or the dining room floor, are the ones best positioned to flourish."
To meet those changes, nearly half of survey respondents said their investment priorities for 2024 include business intelligence and analytics, alongside employee lifecycle software (36%), integrated accounting and reporting (34%), and a host of artificial intelligence tools.
While which AI tools will provide the most value to the industry is yet to be determined, 41% of R365 customers surveyed said they planned to invest in AI sales forecasting and scheduling, 33% plan to roll out AI-driven guest marketing, and 31% have plans to implement AI inventory and purchasing tools.
Finally, brick-and-mortar growth looks to be steady in the coming year, with 57% of respondents planning to grow, compared to 60% in last year's survey. Twenty-five percent of respondents reported plans to open one location, 28% are planning two to five locations, and 4% are planning six or more locations.
Restaurant365 is an industry leading all-in-one, cloud-based accounting, inventory, scheduling, payroll, and HR solution developed specifically for restaurants. R365's restaurant enterprise management software simplifies day-to-day management for operators, allowing them to control food costs and optimize labor. Integrations and open APIs enable Restaurant365 to connect with other systems, including POS providers, vendors, and banks. The result is accurate, timely reporting that provides a clear and complete view of their businesses. Restaurant365 is based in Irvine, California with an office in Austin, Texas. The company is backed by Bessemer Venture Partners, ICONIQ, KKR, L Catterton, and Serent Capital. Additional information is available at restaurant365.com.