The last few years have seen unprecedented disruption for restaurants. Closures, supply chain problems, labor shortages, technology, and inflation are just a few of the challenges operators have faced in recent years. So, what could the coming year possibly bring when the last few have felt so unpredictable?
I see a few things on the horizon as part of the ongoing evolution of the relationship between restaurants and technology. Guest experience is more important than ever as a likely recession increases competition for business. Technology acquisitions will drive consolidation, which coincides with demand from operators. The need for new or unified technology will drive more franchisors to add technology fees.
Here are six things I see coming in 2023:
Labor pressure is easing, but operators are still looking for labor management
The immediate 2022 labor crunch has been extremely painful for operators. The worst of the labor problem is beginning to ease. Labor will remain competitive, but the relentless recruiting cycle and wage pressure has begun slowing down.
However, operators who didn’t have a labor management system in place will prioritize finding one. Labor will not go back to pre-pandemic levels and controlling labor costs will be crucial to maintaining profitability. The best time to implement a system is before labor peaks again, and smart operators will ensure they have one in place.
Operators will continue incentivizing in-house delivery and in-app purchases
After years of pushing audience growth across multiple platforms, restaurant brands are trying to regain an audience on owned media. An increasing number of brands are launching apps, and incentivizing customers to order through them.
Bringing delivery back in house as much as possible is also a priority for many brands. With third-party apps creating an expensive, inconsistent experience for customers, operators want more control over the experience again and are offering free delivery or discounted items for ordering through the brand’s website or app. Some companies are still working with partners to fulfill delivery but see this as a way to reduce costs for their guests and gain better insight into guest behavior.
Acquisitions among restaurant technology companies continue driving consolidation
We continue to see M&A activity both among restaurant brands and restaurant technology vendors. Moves in 2022 such as PAR’s acquisition of MENU Technologies, Olo’s acquisition of Omnivore, Square’s acquisition of GoParrot, and Toast’s acquisition of Sling signal ongoing consolidation among restaurant technology companies as they seek to provide the most expansive services as possible.
Many operators are also looking for fewer platforms after building a tech stack out of multiple “best of breed” solutions and struggling with integration.
Automation moves forward (but still isn’t as advanced as operators want)
Automation has been a topic of discussion in the industry for years, but it’s only been in the last year or so that it’s really catching up to the vision that operators have for it. As automation evolves in the coming year, I see more operators getting on board to manage food and labor costs.
Zerrick Pearson, Five Guys CIO, said in a recent episode of The Tech Chef podcast, “Automation is coming; it’s been coming for a while. I have not yet seen it get the traction I think it will over the next 12 months. Partly driven by labor, but also folks just looking to innovate. If it helps you scale, it might be a good solution for some brands.”
The coming recession will force a focus on experience to compete for fewer dollars
A likely recession in 2023 is already leading consumers to cut back on restaurant spending. With more competition for fewer dollars, restaurants must look for ways to offer a better experience and more loyalty options than their competitors.
Consumers who have a poor experience in one store are less likely to be forgiving when they have a tighter budget. Technology that helps standardize and audit a high-quality experience across the brand is helpful to ensure every visit is a good one.
Similarly, loyalty systems are likely to bring in business. With less to spend, customers are looking for deals, such as points that give discounts, free items with in-app orders, perks for birthdays, and more.
More franchisors will add technology fees
According to a FranConnect analysis, nearly 60 percent of all QSR franchisors now collect technology fees to better add, update or upgrade required tools. As the industry becomes increasingly competitive and technology plays a larger role in giving brands an edge, more operators will add a technology fee to make it possible to keep their tech stack up to date.
After a tumultuous three years, the restaurant industry is getting a small reprieve, but we are still in the middle of disruptive period for restaurants. Technology can ease the transition into a different restaurant landscape, but careful evaluation and implementation are key.