2023 Outlook: Trends and Challenges Restaurants Will See, Part One

Modern Restaurant Management (MRM) magazine asked experts for their thoughts on trends and challenges that will affect the restaurant industry in 2023. For part two, click here. 

1. A tightly integrated technology strategy will be key to workplace satisfaction and profitability 

Restaurants will increasingly become more reliant on using their transaction data to inform and automate their businesses. This will manifest itself in several ways, such as informing robotics in the kitchen for food preparation, in addition to kitchen display systems (KDS) as restaurants kitchens seek to improve efficiency and better optimize for enhance prep station capacity management. This will enable brands to better manage off-premises orders and balance their hybrid operating models.

2. Operations will continue to be simplified despite digital experiences expansion

In a similar vein to tightly integrated systems across the business, we expect to see brands pursue simplification across all aspects of operations from how they manage payment processing to how they manage their digital expansion. End-to-end payment processing removes complexity and PCI compliance demands for operators. Having a single supplier and point of support for all the store technology and payment processing functions also reduces administrative burden and risk. In addition, we see the point of sales platform as taking on more of the master data management role of the business, and configuring all the content needed for any digital experience from a single platform. 

We see the point of sales platform as taking on more of the master data management role of the business, and configuring all the content needed for any digital experience from a single platform. 

3. The “restaurant anywhere” experience will expand

Restauranteurs will continue to experiment with the fundamental meaning of restaurant, and non-traditional competitors will simultaneously expand. From grocery to retail; offering an opportunity for consumers to linger or pop in to pick up a meal not only adds revenue opportunities but also foot traffic and consumer preference data. As mentioned before, this expands the need for loyalty programs, and also demands an agile technology stack that can go where customers are, as well as bring customers in. Restaurateurs may very well look to expand beyond the typical pop up, food truck, festival or off-premises event to more interesting, intimate venues like social influencer kitchens, dining rooms and gardens. Ghost kitchen and virtual brands are prime strategies for this growth strategy, both of which require a thoughtful approach to menu design, production and fulfillment. 

4. Loyalty will continue to get more personal and less transactional

The evolution of loyalty will continue to unfold as platforms like the metaverse gain popularity. Cultivating an authentic relationship demands an emotional connection that goes beyond transactional rewards. The objective for restaurants is to create more engagement and stay top of mind with customers, including when they’re not hungry. We’ll see companies move away from points and promotions, and toward more impactful moments for customers such as experiential dining and exclusive offerings.  Gamification will play a larger role in driving brand loyalty. Loyalty will focus less on discounts and more on deepening the brand-customer relationship and creating positive brand associations, separate of deals and dollar figures.

5. Self-service and automation will be a major focus area for QSRs

Across the industry, brands will increasingly look to technology to automate business operations. Technology like AI-powered voice will optimize phone orders and the drive-thru experience, while self-service kiosks will help take pressure off staff and offer customers additional customization options and flexibility during the visual ordering experience.  The concept of self-service will continue to evolve as consumers become accustomed to placing orders with devices. For example, self-service technology could soon be integrated within in-car digital assistants, letting individuals place a room service order at their designated hotel long before they arrive. Regardless of where self-service kiosks are installed, they will provide restaurants with immediate and future advantages.

– Chris Adams, VP of Strategy, Oracle Food and Beverage

"As we’ve witnessed over the past year, employees will continue to be selective when it comes to their job and gravitate towards companies that prioritize creating a positive company culture, including implementing initiatives that make their jobs more doable and enjoyable. For example, at Checkers & Rally’s, we recently introduced voice activated automated intelligence at the drive thru as well as our Fit Kitchen interior remodel to reduce multi-tasking, walking, and stress and streamline operations. 

•  As digital advances, guests will continue to prioritize speed, quality and convenience and decide where they eat based on these factors.
•  Development will be deliberate and strategic as supply chain will remain a challenge in the new year."

– Frances Allen, CEO of Checkers & Rally’s

"With consumer behaviors now firmly established around off-premise dining solutions due to the pandemic, off-prem will remain a prevalent option for 2023. That said, staffing will continue to be an obstacle for the restaurant industry in 2023. Restaurants will need to battle with both the struggles of decreased value based on negative satisfaction ratings from off-premise dining experiences as well as increased labor costs. In terms of off-prem dining, there is a real opportunity to improve guest sentiment based on food temperature and managing wait times for curbside pick-up, takeout orders and delivery for this essential part of business operations. Staffing, however, will require balancing increased labor costs with the trials of a possible impending recession."

– Peter Boivin, Vice President and Head of Industry, Restaurant at Vericast

“As we move into 2023, BrewLogix and our customers are seeing trends that are worth exploring. From the increasing demand for low-to-no ABV draft options to the motivation behind rising consumer expectations, these trends have the power to impact the financial performance of the beverage program.

• Non-Alcoholic Beer in the On-Premise: With the rapid growth of the non-alcoholic and “beyond” beer categories (cider and kombucha, for example), BrewLogix expects even more local and regional players to enter the field of non-alcoholic beverage options early in 2023. Now thoroughly destigmatized, more bars and restaurants will include a dedicated non-alcoholic section on their beverage menus. These emerging products are expected not only to be offered as packaged goods in the on-premise, but they will take their place in the coveted draft program, especially where “local craft” is featured. Non- and low-alcohol options are a great way to increase ticket averages and responsibly upsell. This is a favorable trend customer-centric bars and restaurants will embrace. 
• Rising Keg Costs: When rising keg costs threaten to outpace retail pricing elasticity, beverage managers will focus more on managing keg yield through training staff on proper pouring techniques to minimize waste, using correct glassware to manage portion control, and embracing newer and more efficient data driven methods to improve ordering accuracy and beverage menu curation that maximize sales velocity. While rising keg costs are a concerning trend, better bars and restaurants will respond by dialing-in their draft beverage program to more accurately reflect the variety of styles and profiles their customers demand. 

An increased emphasis will be placed on journey mapping the entire guest experience and ensuring that value is added at every touchpoint.

• Rising Consumer Expectations: Recession fears will cause many consumers to be more discerning with their food and beverage budget, and bar and restaurant owners will continue to battle over wallet share. More inflation-resistant consumers will withstand increasing costs but will expect an ideal experience in exchange for their loyalty. As a result, an increased emphasis will be placed on journey mapping the entire guest experience and ensuring that value is added at every touchpoint. Winning strategies within this trend will include using technology to efficiently train customer-facing staff in product knowledge and food/beverage pairings and effectively manage kegged inventory (including using new tools for on-deck planning) to cost-effectively offer an attractive draft program customized to a location’s specific consumer preferences. 
• Emphasis on Group Sales: While household wallets may be tightening, corporate travel budgets are relaxing as employers push for a return to offices and face to face interactions. Bar and restaurant managers will aggressively target this revenue stream with dedicated group sales and catering managers, online ordering, and seasonal offerings such as holiday dinners, beer and wine tastings, and team building programming. 

– Lori Bolin, President of BrewLogix

• Traditional ghost kitchen businesses will continue to experience challenges having tenants break-even in their facilities
• Virtual brands will continue to expand with pick-up options for consumers who prefer that option
• DoorDash and Uber Eats will expand into other verticals beyond restaurants
• Consumers will desire more diverse selections as international cuisines continue to become more and more popular
• Restaurants that have slow day parts will embrace new virtual brands to supplement incremental order volume to maximize their under-utilized kitchens
• More international brands will continue to enter the US market through delivery-only models
• CPG brands will realize new opportunities in restaurants

– Alex Canter, CEO of Nextbite

• With malt-based beverages on the way out the door, I think we are going to continue to see a rise in spirit-based canned cocktails. Think crisp, clean cocktails like the Martini, not just ones that are sparkling. 
• In the canned cocktail category, classic cocktails that are well known to bartenders and beverage industry professionals will continue to come out as new favorites amongst the masses. 
• We should anticipate seeing growth in rum, as the category graduates from mainstream perception of Malibu and Captain Morgan. There's so much more to explore and its generally approachable. 

– Neal Cohen, CMO / Co-Founder of Tip Top Proper Cocktails

• Cabernet Franc continues to get hotter and hotter – both domestically and abroad. Because Cabernet Sauvignon is overplanted, winemakers have been replacing with Cab Franc, so that there’s more inventory. Consumers are realizing it’s a delicious wine with a good price point. 
• Etna in the mountains of Sicily is a region putting out beautiful wine, and people are starting to talk about it. East Coast Americans are growing more adventurous but still like a certain degree of brightness, and wines from Etna deliver that mouthfeel with complex fruit character and other components you don’t find in West Coast wines. Etna wines, like etna rosse, are also a great value compared to Italians DOCGs. Where a Brunello or Barola may retail for $50, an Etna is closer to $15.

– Bill Cox, Director of Wine at Counter-

• Differentiation: It’s no longer ‘OK’ to offer great food or great service. To differentiate your concept from another, you have to offer both. 
• Collaborations: Collaborations, such as partnering with a well-known designer on staff uniforms or bringing in guest chefs for special events and pop-ups, will continue to capture consumer attention. 
• Experiential: Guests need to come away with an extra sense of “wow.” We’ll see an increased focus on music (e.g., live performances, DJs), art installations, tableside service and more. 
• Sense of Community: The pandemic has left people craving interaction now more than ever, and this desire can be fulfilled by incorporating communal tables into a space or hosting diners that involve a social component.

– Cultivate Hospitality founding partners Sam Bakhshandehpour and Peter Peterson

"2023 will be about what brands are doing to thrive, despite a difficult environment. Consumers aren’t going to be promiscuous with their dollars or seek out new and different places; They’re going to frequent brands they trust. Brands that offer value and consistently deliver on the fundamentals of hospitality will undoubtedly do well. The strong will get stronger."

 – Matthew Eisenacher, SVP Brand Strategy & Innovation, First Watch

"The looming recession will lead to a dining tradeoff. Americans have a long standing love affair with restaurants that may be tempered by recession but won’t be stopped. Those dining in full service restaurants who aren’t facing an impact to their lifestyle from the economic slowdown will continue to dine at the high end of the paradigm. Those who traditionally favor casual dining chains with full service may trade down to fast casual while those who typically dine in fast casual may dip into lower price points at fast food. Overall, however, the household’s share of wallet devoted to dining will remain relatively consistent though the home may have fewer dollars available overall for restaurant spend.

Fast casual will continue to shine as it has since the pandemic generating the highest asking prices in the marketplace.

Operators have spent years adapting to the labor crisis. That could now ease somewhat as the recession forces some who have been on the sidelines back into the labor market as families need to make ends meet. Restaurant labor overall, however, may continue to morph over the coming years into more of a gig economy rather than the stable workforce of old aided by technology, especially in fast food and fast casual. Workers will access apps to take a shift or two rather than working a consistent schedule. They will also demand (and get) payment upon completion. Technology aids this evolution in every way possible including: ordering kiosks, quick training apps, AI powered drive throughs and computers or robots cooking the food.

Fast casual will continue to shine as it has since the pandemic generating the highest asking prices in the marketplace. The ability of this segment to more efficiently staff, deliver and apply technology has paid off for this segment of the industry and their growth will continue."

– Robin Gagnon, We Sell Restaurants 

"When the pandemic hit, many restaurant workers either left the industry or were burned out. To make up for the staff shortage, the industry had to figure out solutions without sacrificing service, quality of food, and overall guest experience. Potential solutions include:

• Robotics: Robots can help prepare and even serve food. With a sharp focus on food safety since the pandemic's beginning, robots remove the need for human touch and cross-contamination. While robots cannot account for all variables like guests who require a gluten-free preparation or request extra salt, they can help with the overall efficiency when serving and preparing food.
• On-Demand Apps: “On-demand” apps can allow cooks, servers, and/or bartenders to see which restaurants or bars are in need of help each night, giving them ad-hoc access to jobs. Through these apps, they are also given an option of when they would like to be paid, e.g. at the end of the shift or at the end of the week. Many people who are searching for more flexibility in their professional lives find this avenue helpful."

– Richard Garcia, Remington Hotels

"We think that “honesty” is a trend and hopefully it is not just a trend but it is a cultural change that is here to stay. We work with many prominent established chefs and although their background and style are quite different there seems to be a common denominator that ties everyone together. Honesty in the food means being able to surprise and stimulate the senses by using fresh locally and sustainably sourced product combined, juxtaposed and paired in unexpected ways. Plates are simple, beautifully balanced compositions aimed at showcasing every ingredient on the plate. The cultural background of the chef is seamlessly fused with the locale to deliver genuine experience and sense of place. These are the same principles that we use as the foundation of the design concept of the space."

– Beatrice Girelli,  Indidesign

"There is a lot of positive movement towards lower ABV styles, in particular lagers. Creature Comforts has the #1 Craft Lager and #1 Craft Pilsner in Georgia with Classic City Lager and Bibo, respectively. These are beers we have been making for a long time, even when it wasn’t cool to do so. They are such beautiful beers, and it is great to see consumers coming back around to respecting these styles and purchasing them."

– Chris Herron, CEO / Co-Owner of Creature Comforts Brewing Company

"Talent/Hiring: Attracting top talent will continue to be a major area of focus in the restaurant and hospitality industries in 2023. Brands will need to continue to think about the full rewards package to attract the right teams, by investing in benefits and programs that reward positive performance and enable career growth. Portillo’s will continue to focus on delivering an unrivaled team member experience, in part by treating its team members like family and building a strong, values-based work culture. This commitment to culture and values is what has allowed Portillo’s to be fully staffed and see industry-leading turnover rates."

– Garrett Kern, Vice President, Strategy & Culinary, Portillo's 

“I hope the longer growing seasons we’ve seen this year for peppers and tomatoes stick around. I also think there are a lot more kitchen gadgets coming out in 2023. I am excited to play around with those.

I foresee a rise in Counoise! Traditionally used in the Southern Rhône, this wine is super adaptable to dryer soil types, and doesn’t take long to be an effective yielding grape. While it is often thought of as a boring blending grape to increase volume and lower the tenacity of a wine, on its own, it’s light, juicy, and a bit peppery. It is perfectly adaptable to the growing taste for lower priced chilled reds. "

– Executive Chef + Co-Owner: Victor King, The Essential, Bandit Pâtisserie, and Bar La Fête 

• Closed loop logistics: guests are increasingly wanting healthier and more transparent foods and it is on the F&B industry to bring trust back into the food system. Figure 8 sees restaurants investing in a closed loop system, bringing all the pieces together – locally sourced food, reusable packaging, in-house delivery services – to create a more sustainable and desired dining experience. After all, feeding the world isn’t a production issue, it is a distribution issue.
• Financially sustainable delivery: now that restaurants have built online ordering and delivery systems, it is time to make them financially profitable and make sure the technology is working for them, not the other way around. Integrating tech stacks will consolidate costs and menu optimization will increase check size, helping restaurants get the most out of every order. This will become increasingly important as people continue to watch their pocketbooks.
• Delivery driver fleets are rising up: drivers will continue to fight for their rights and unionize. The F&B industry needs to realize logistics includes the people delivering the food, and need to provide them with benefits – especially given they have one of the riskiest jobs in the entire industry.  

– Scott Landers, cofounder of Figure 8

• A large focus for operators will be protecting margins without overcharging guests. As operators continue to grapple with inflation, rising labor costs and guests' increased sensitivity to price increases, it will continue to be a challenging time for restaurant brands.
• When it comes to holding on to EBITDA, operators need to focus on ensuring your brand’s labor model and product utilization are seamless and efficient, minimizing costs wherever possible without disrupting the guest experience and team member benefits.
• Operators should utilize technology to manage the aforementioned challenges. Solutions such as smart KDS, digital ordering, dynamic pricing, and more will all be essential tools to maximize profit in 2023.

 – Scott Lawton, CEO & Cofounder, bartaco

"In 2023, I expect to see restaurants acting as an extension of people's private dining experiences. As a result of COVID, many customers are still a bit uncomfortable in large crowds, and we've seen an uptick in restaurants looking to create more personal, intimate dining spaces for customers. Clients are looking to feel a higher level of comfort – similar to what they felt when dining at home – and these smaller spaces provide an enhanced, less overstimulated hospitality experience where they can connect versus being in a large, loud dining room. 

Clients are looking to feel a higher level of comfort – similar to what they felt when dining at home – and these smaller spaces provide an enhanced, less overstimulated hospitality experience where they can connect versus being in a large, loud dining room. 

Humans have an innate need for nature and are craving outdoor connection more than ever. Customers want to feel outside while dining inside, and we're seeing a significant trend toward integrating plants and trees and overall attention to interior landscaping.

Lighting is considered one of the most critical aspects when designing a restaurant. We're now seeing lighting that you'd find in high-end homes make its way to hospitality as these establishments evolve and look for more ways to integrate cutting-edge technology, create dimensionality within their space, and serve as extensions of our homes. In our work, we've been integrating smart lighting systems such as Ketra as they provide endless customization, natural lighting to bring the outdoors in, and personalization for any activity, mood, or dining experience."

–  Julien Legeard, Founder, Legeard Studio

"Many restaurant brands, especially QSR and fast casual, are investing in mobile apps, online ordering, and adjacent technologies to foster a quick and convenient customer experience on the mobile channel. If people just aren’t traveling as much, eating indoors as often, or ordering at the counter when they don’t have to, the element of human interaction is often completely removed. This growing trend means limited opportunities for thoughtful in-person communication between brands and customers, yet customers are still expecting personalized, efficient service. 2023 will be the year of optimizing technology to bolster the cross-channel customer experience and create enhanced personalization, loyalty, and convenience wherever and whenever the engagement happens.

Brands can use tactics like rewards and loyalty programs—powered by zero- and first-party data—to encourage customer loyalty and drive that highly tailored experience across their digital channels. Restaurant brands that adapt to the changing landscape quickly, remain agile, and rethink how they’re marketing to, and communicating with, consumers will be set up for a successful boom in customer spending in 2023."

– Alex May, Associate Director of the Travel, Hospitality, & Food Services Strategy at Movable Ink