2024 Outlook: Restaurant Trends and Challenges, Part Three

Modern Restaurant Management (MRM) magazine asked restaurant industry experts for their views on what trends and challenges owners and operators can expect to see in 2024. Read the first part, here. For the second part, click here

QSRs Shift Focus from Slow-Paced Dining to Swift, Transactional Experiences

Quick Service Restaurants (QSRs) are reimagining their dining spaces to prioritize speed, convenience, and personalization over traditional, slow-paced dining experiences. This trend reflects the growing popularity of drive-thru and fast-casual dining, coupled with the demand for digital technologies such as QSR digital signage and QR codes.

– Jaime Bettencourt, SVP of Revenue Growth & Brand Strategy, Mood Media

Over the coming years, we can expect technology to play an increasingly pivotal role in the restaurant industry. The likelihood is that the existing technology will continue to improve, becoming even more seamless, including contactless solutions, AI, automation, enhanced data analytics, and improved software integrations. Consider, for instance, a scenario in which your Point of Sale (POS) system can forecast the popularity of a new dish based on historical customer behaviour. This capability can prove invaluable for refining pricing strategies, optimising ingredient and waste management, and planning forthcoming shifts, among other benefits. Other advancements include: integrating data from various sources, including social media, reviews, and loyalty programs, to gain a holistic view of customer behaviour as well as as well as the implementation of real-time analytics for immediate insights into customer behaviour and preferences.

The future of restaurant businesses will likely involve a hybrid approach, combining the efficiency of technology with the warmth and personal touch of human service.

An issue that may arise from this in 2024 is data privacy. The restaurant industry must emphasise data privacy and security through key steps: compliance with data protection regulations – such as GDPR and CCPA – with robust data protection measures and explicit customer consent, transparent policies that clearly communicate data handling practices, strong data encryption techniques for safeguarding customer data, data minimization to collect only necessary information, and conducting regular security audits to identify and address vulnerabilities.

The future of restaurant businesses will likely involve a hybrid approach, combining the efficiency of technology with the warmth and personal touch of human service. Staff will focus more on providing personalised experiences and addressing unique customer needs, while routine tasks can be automated. For example, there will be fewer human interactions when ordering takeaways during busy lunch hours, quick customer seating, or bill payments.

In 2024, staff shortages will force the hospitality industry to be even more efficient, adopting tech that streamlines all their processes, reducing the workload on their staff as much as possible. To tackle this pressing issue effectively, businesses must invest in staff training and development, vital for retaining and upskilling their existing workforce. Additionally, embracing automation for routine tasks will reduce the burden on staff, affording them more time to dedicate to customer interactions. Offering flexible working hours and remote work options can help attract and retain talent. During peak seasons, considering outsourcing certain services becomes a practical solution to ensure seamless operations. Prioritising employee well-being, mental health, and job satisfaction is also essential in curbing turnover and cultivating a content and dedicated workforce.

As the trend of digital nomadism continues to rise in the future, catering to this growing demographic becomes increasingly important. Digital nomads place a premium on seamless experiences and prioritise convenience. To capture their attention and loyalty, businesses, including restaurants, must prioritise easy access and convenience.. Restaurants looking to tap into the remote work trend can do so by providing co-working spaces with ergonomic workstations and high-speed internet, effectively turning their premises into attractive work hubs. The availability of reliable, high-speed internet throughout the property is also paramount to cater to this digital-savvy audience, ensuring they can stay connected and productive while enjoying the dining experience.

In 2024, the restaurant industry will witness a technological transformation driven by innovations like AI and contactless solutions, while also grappling with data privacy concerns. This shift will necessitate staff training and automation to deliver personalised experiences, and restaurants will cater to the rising trend of digital nomadism by providing high-speed co-working spaces, merging technology with human touch to meet evolving customer expectations.

– Corin Camenisch, Product Marketing Lead at SumUp

1 + 0 = 3: The New Math of Marketing!

First-party data remains a vital asset, but the ability to harness zero-party data through innovative strategies to enhance CRM/CDP systems with rich, comprehensive insights has become increasingly crucial, relevant, and achievable. Gamification, with its engaging techniques, has emerged as a compelling solution for obtaining ZPD by delivering a meaningful value exchange for consumers and enables brands to acquire deeper insights that can be utilized to optimize marketing efforts, enhance customer segmentation, craft personalized offerings, and deliver targeted messaging.

By injecting a sense of playfulness into their interactions with consumers, brands are creating unforgettable experiences that build lasting relationships. 

Not Quite Cyndi Lauper, but Brands Just Wanna Have Fun!

After a season of serious messaging during the pandemic (and for good reason), brands are throwing caution to the wind and embracing all things fun and lighthearted. This shift in attitude reflects the growing realization that humor and creativity are powerful tools for connecting with consumers. Whether it is on social channels, more traditional media or with creative promotions brands have realized that FUN can be SERIOUS business. By injecting a sense of playfulness into their interactions with consumers, brands are creating unforgettable experiences that build lasting relationships. 

Vanilla isn’t for everyone

In 2023, marketing took a cue from the ice cream parlor, embracing segmentation with the same precision as a sundae artisan. Systems and tools are now adept at handling segmentation and distribution, powered by a richer pool of 1P and 0P data. This data-driven approach is boosting relevance, fostering deeper connections from email openers to sales funnel progression. It's like stepping into an ice cream parlor where every scoop is tailored to your exact cravings. No more vanilla because brands know you love Rocky Road, Cookie Dough, or even Pistachio and if you want sprinkles on top! 

“Lions, Tigers and Fraud… Oh My”

In the ever-evolving landscape of marketing, fraudsters are like persistent adversaries, constantly devising new ways to exploit consumer trust. We, the good guys, must remain vigilant, fortifying our strategies with a comprehensive approach to fraud prevention. Who brands trust, how programs are architected, procedures and great communication matters…A LOT. Nothing is fraud proof. But our primary mission remains – engaging with consumers. We must continue to create captivating campaigns, deliver exceptional experiences, and foster genuine connections, but now with an unwavering commitment to consumer data protection and brand safeguarding.

– The CataBoom team

We must continue to develop our solution to provide more choices for employees. In the future, employees will have more and more control over the timing of their pay and how they receive their pay.

In 2024, we’ll continue to see growth in the payroll segment. Tip payouts and tips management will move faster in the restaurant space than EWA in other verticals. There will also be opportunities to use the platform we have built to manage other types of payouts across new verticals.

Within 5 to 10 years, we’ll see full gross-to-net solutions that provide with employees on-demand pay and tips instantly. Employees will continue to seek solutions where they can manage when, how, and where they receive their pay.

As the workplace evolves, employees will continue to pursue a flexible work environment, competitive compensation and the opportunity to craft their benefits, including their compensation.

– Tal Clark, CEO of Instant Financial 

Restaurant owners and managers are thinking about how to improve their bottom lines every day, especially with the continued increase in overhead and a hard labor market. One way these establishments try to increase profits is by cutting expenses, and for many businesses, the biggest offender is their credit card processing costs. With continued rate and fee increases from credit card processors, this line item is constantly expanding.

To deal with the growing financial burden, we are currently seeing a lot of restaurants push these fees to the customers using a cash discount, non-cash transaction fee model. Unfortunately, this has its own set of issues. The only Visa/Mastercard regulated program that Merchants can register for is a “Surcharge Program.” This program allows credit cards but not debit cards, to be charged a fee under the current stipulations, creating confusion in the process. Adding to the complexity is that most POS systems can’t run a true surcharge model, which leaves the restaurant with no other option but to offer these cash discounts or non-cash transaction fee programs or put a credit card machine on the side of their POS, which is less than optimal. 

In simpler terms, most of these alternative programs are surcharge programs in disguise. If a restaurant is caught doing it incorrectly, they can face significant fines, adding further unwanted expenses to their monthly overheads. In addition, consumers are becoming more conscious of these issues, and if a surcharge fee is applied to their debit card, they are issuing chargebacks through their banks. This hurts the restaurant as they not only lose the increased fee but they also get hit with a chargeback in the end.  

The entire philosophy of passing the fee on to the customer also jeopardizes the long-term reputation of restaurants and is a major pain point that restaurant owners will look to amend in 2024. As the economy continues to push individuals to have less disposable cash, more and more people will start to look at these fees as a nuisance and may start to go to other places with fewer unwanted expenses.

In the next year, there are several solutions that restaurant owners can employ to address these issues. The smartest way to cover these costs would be for the restaurant to simply increase their prices by two percent, five percent, or more, there are no laws against increasing prices. If they want to offer a discount for cash-paying customers, they don’t need to look to their credit card processor for help; instead, simply discounting the total bill by using features in their point-of-sale systems can streamline the payment process and alleviate many customer concerns. 

In 2024, restaurant owners will need to become more aware of what they should or should not count on their payment processors to do; with a greater understanding of what they can control in terms of price hikes and swipe fees, they will be better equipped to drive profits and reduce costly overhead along the way. 

– Eric Cohen, Chief Executive Officer and Founder at Merchant Advocate

Restaurants will need to prioritize loyalty programs in 2024 and leverage AI to make them effective

Despite dining out being a regular part of social life in the U.S., restaurant loyalty programs are often  rank lowest in quality compared to other industries. AI will help restaurateurs in 2024 to increase the rate of repeat and engaged customers. Generative, predictive and prescriptive AI tools will significantly aid in personalizing communications and recommending rewards, leveraging first-party data and so much more, while automating key processes that allow restaurant owners and marketers to spend their time on in-person elements that leave a lasting impression on customers.

– Matt Elders, EVP, Revenue, Cordial

2023 served up a year of resilience and innovation for restaurants, as they adapted to shifting landscapes and embraced new dining paradigms. We’re seeing strong and growing interest in IoT connectivity and automation in the back-of-house – especially for multi-site operators.  In 2024, we anticipate a continued evolution, where technology and sustainability will play pivotal roles in reshaping the culinary experience. As the industry navigates challenges, the spirit of creativity and adaptability will remain the secret ingredients for success in the ever-changing world of dining.

– Jay Fiske, President, Powerhouse Dynamics

Looking ahead to 2024, we anticipate more change. AI-powered segments and generative AI are poised to gain even more traction, with businesses capitalizing on these advanced technologies to refine their marketing strategies. As AI continues to evolve in 2024, we expect to see a shift in how regularly people use AI and capitalize on its capabilities. 

The coming year will also witness a doubling down on loyalty, with an increased focus on ROI and the ability to refine loyalty programs for optimal results.

I anticipate a heightened emphasis on the ease of use in targeted and data-driven marketing, which goes hand-in-hand with the success of loyalty initiatives. Stored value will also emerge as a critical element in loyalty programs, offering added flexibility and customer benefits. There's a growing recognition that mobile apps alone cannot cater to all aspects of loyalty, paving the way for alternative solutions like kiosks and more integrated loyalty program structures. 

The coming year will also witness a doubling down on loyalty, with an increased focus on ROI and the ability to refine loyalty programs for optimal results. Seamless transitions from one program to another will be key to the enhanced loyalty area. 

Centralization of data-driven marketing will also become increasingly critical, including streamlining processes and providing businesses with a comprehensive view of their data to inform strategic decisions.

– Thanx Founder/CEO Zach Goldstein

It has been nice to fall into more "normal rhythms" and to feel like the pandemic was behind us for the first time," said Nate Hybl when looking back on last year. "2023 has still been less predictable than we would have hoped for.

Coming out of the unpredictable nature of the pandemic, and given the unpredictable nature of the economy & global political environment heading into 2024, the only thing we are certain of is uncertainty. The focus of our brand is going to be on the humans of gusto!…our teammates. It's crucial to invest in ourselves, in particular, in this transitory time to take care of our own and to help us focus on four-wall economics.

The first gusto! location debuted in Midtown Atlanta in 2014 and the brand has since opened 11 other locations around metro Atlanta. The brand’s menu offers a fresh take on global cuisines, introducing guests to unique and bold flavor combinations they may not have experienced before. The choice begins with a bowl or wrap, then guests select a base, protein and gusto, or signature flavor profile. From the smoky Chipotle Mango Avocado to the creamy Tzatziki Lemon Artichoke, the gusto! team has mastered the bowl- and wrap-making science, delivering meals in 30 seconds or less.

– Nate Hybl, CEO and creator of gusto!, an Atlanta-born, quick service restaurant brand

Advocating for Accessibility in Restaurants: Adaptive stemware and cutlery will increase accessibility for restaurant goers. Rather than solely ensuring a facility is physically accessible, Lars predicts that restaurants will emphasize the importance of making the dining experience accessible and inclusive for patrons of all abilities with adaptive silverware and more. 

Focus on Design and Ambiance for Social Media: Although this is already a big trend in the industry, Lars believes that restaurants will continue to emphasize overall design and ambiance. Crafting an elevated, high-end ambiance that diners will want to share via highly-visual social media channels like TikTok and Instagram. Thirty-eight percent of TikTok users have even patronized a restaurant after seeing it on the platform, further proving that the overall aesthetic of a restaurant drives sales.

Robot servers, QR-Code Ordering and Even More Tech!:  From robot servers to QR code ordering, the sky's the limit for technology in the restaurant industry. Lars recognizes the importance of convenience in the restaurant industry, but believes that elevated experience is key. Selecting technology that will meet both needs is important and that is what 2024 will focus on.

– Lars KristiansenVP Food and Beverage of Oasis Marinas

Next year, although getting better, I anticipate continued labor shortages to persist, impacting management, the kitchen and front of house. The continued rent increases add another layer of uncertainty for operators, raising the importance of careful economic planning, precision and efficiency across all levels of restaurant operation including labor, inventory, food costing and the onboarding process. 

– Matt Luckey, opsi co-founder

A destination rich with diverse culinary encounters brings many dining trends. From emphasizing locally sourced ingredients to exploring global flavors, restaurants are tuning in to their city's vibrant gastronomic evolutions. At Citrus Club, our goal is to craft not only meals but also meaningful and personal experiences, and that's a trend that we expect to see explode in 2024.

– Citrus Club Executive Chef Chris McKenna

In today’s customer-driven market, restaurant franchise owners are seeking equitable ways to connect with their audiences and differentiate themselves from the competition. To achieve more significant customer engagement, build customer loyalty, and increase revenue, restaurants may need to reignite their community presence and focus on successful strategies such as local store marketing activations.

Customers are craving more touchpoints and experiential opportunities to connect with brands in person.

Customers are craving more touchpoints and experiential opportunities to connect with brands in person. Studies show that our emotions drive decisions and retention through our core senses, so being able to visually taste, touch, and experience a brand on the spot provides restaurant owners with incredible ways to build brand recognition and connect with their customers. After all, this business is all about people, with customers at the forefront of every decision. McDonald’s founder, Ray Kroc, once said, “Look after the customer, and the business will take care of itself.

– Bolt PR Vice President Laura Murphy

Every year something that doesn't change in the restaurant industry is high turnover rates and the need to find reliable and skilled staff. Tech has come into play by creating strong operational systems and making the job more approachable so that hospitality is a more enduring career choice. 

Another challenge I see emerging is the increasing desire for a more consolidated tech stack. As more and more tech companies enter the marketplace, operators are finding it difficult to choose what is the best solution  for their individual needs.

An uncertain economic outlook is going to play a factor in all of this. Operators need less tools to do more and are going to find an even increased need to reduce their turnover rates and make onboarding a smoother and more efficient process.

– James Passafaro, opsi co-founder

Unfortunately, 2024 is gearing up to be an even more difficult year financially for small and medium-sized businesses due to the continuing rise of interest rates, inflation, and staffing shortages, as well as tougher loan qualification criteria required by banks. Additionally, Economic Injury Disaster Loan (EIDL) payments will all have officially commenced by 2024, which will expectedly be detrimental to numerous small businesses.

– Patterson & Company CPA founder & president Bob Patterson

Restaurant brands that continue to grow and thrive will hone in on how to further differentiate their guest experiences, which includes playing the right music at the right time. Because music is the most cost-effective way to differentiate a brand and its overall experience, we anticipate more restaurants will leverage custom made-for-business tools such as music scheduling, affordable curation and the greatest depth of music catalogs to achieve the ideal brand-fit playlists and variety, so employees won’t hear the same songs on repeat.

 – Ola Sars, CEO of Soundtrack Your Brand 

A sense of psychological safety and financial security are both integral to an employee's level of satisfaction – and that’s not changing in 2024. We’ve seen that providing access to earned wages, through Instant’s earned wage access (EWA) program, would motivate 79 percent of people to feel more trusting of their employer.

– Chelsea Searan, HR Lead at Instant Financial

In 2024, I think restaurants will focus more on utilizing technology to connect with consumers. Having the opportunity to connect directly with our guests and personalize their experience before they even enter our restaurants with the launch of our new app and rewards program has been key to our continuous growth. I think operators are realizing the importance of leveraging technology, especially as consumers remain selective when dining out, and we will see more of that next year. 

– Alex Smith, CEO of Atlas Restaurant Group

Restaurants will begin to adopt the Amazon customer experience in 2024

For diners, the QR code menus and pay-from-your-phone conveniences they enjoy today will uplevel with personalized recommendations next year. As a result, 2024 will be the year we’ll see restaurants begin to further explore and adopt an Amazon experience model: you buy an item, and it suggests other items you might want based on your habits and preferences. In this case, you order something at a restaurant, and when you come back, the interactive menu recommends other dishes and drinks you might like. Over time, you build a taste profile. It makes everything easier. 

The ‘restaurant of the future’ will take shape in 2024

More and more, people are seeking experiences that provide instant gratification, and this will lead to more restaurants embracing carry-out and mobile ordering in 2024. This shift is going to change how labor processes are organized, how employees are trained, and what technology they use on the job. Generative AI and algorithmic recommendations are going to become commonplace. The ‘restaurant of the future’ will take shape next year, and it will be grounded in interactive technology experiences.

– Michael Spataro, Chief Customer Officer at Legion Technologies

The price of many staple items, such as chicken, seafood and olive oil, has been rising throughout 2023 and is expected to grow into 2024. While you can not always control the commodity pricing, you can control how you manage it by reducing waste, optimizing efficiencies and leveraging margins. For instance, every year around the holidays, chicken wings double in price, and they stay at that yearly high through the Super Bowl. Operators can try to shop around for cheaper pricing, but that involves time and effort that they can’t afford to sacrifice. Instead, focus on reducing waste by not overordering the wings and ensuring teams understand proper portioning and serving of key items. Another solution is to change the customers’ ordering behaviors to items with a higher margin in the interim. 

Now that we are a few years post-pandemic, catering and parties are becoming more popular. Focus some of your efforts on preparing your catering menu early for the 2024 holidays to beat the rush and avoid becoming overwhelmed when demand hits.

Many industries, such as rideshare services, gas stations, event tickets and more, utilize dynamic pricing due to supply and demand. Dynamic pricing may be more of a necessity as we move into 2024 due to the current state of the industry, as prices continue to increase and margins begin to thin. The introduction of dynamic pricing has many benefits for operators, including the ability to increase revenues, better manage inventory and protect profit margins. Operators should invest in the technology to help them effectively use dynamic pricing to beat the rush once the majority realize how beneficial slightly fluctuating pricing will be for their margins.

In regards to jobs, it is projected that there will be 15.5 million jobs in the food industry by 2024. With this influx, it is now more important than ever for operators to invest time in training their employees and treating them well; otherwise, disgruntled employees will be more likely to leave for better-paying positions or companies with a healthier culture.

AI will be even more prevalent in the industry going into 2024. Operators need to plan now and learn how to make the technology work for their needs, instead of playing catch up in a few months.

– Russ Spencer is the Senior Director of Restaurant Success at Craftable

In 2024, hygiene will continue to be a high priority for guests. With expectations for hygiene, sustainability and guest experience higher now than ever, operators, managers and chefs will look for solutions to help make sure staff have the tools they need to improve the guest experience. Staying organized and having an established hygiene workflow throughout the restaurant—in the front and back of the house as well as in restrooms—can mitigate service interruptions before they even happen.  

This past year, staff were frustrated by service interruptions: Tork recently found that 77 percent of restaurant employees agree service interruptions affect guest experience and 3 out of 4 kitchen staff would be happier if their workplace was more organized. In 2024, it will be critical for leaders to leverage simple hygiene solutions that can help them to improve staff retention, minimize costs, and do more with less throughout their restaurant while improving overall guest experience in all areas of the restaurant.

– Marissa Tekirian, Regional Marketing Manager, Professional Hygiene, HoReCa

In 2024, we see the rise of Generation Alpha as they are becoming old enough to influence and make purchasing decisions. It’s important for restaurants to understand the different demands Gen Alpha has, as they are more aware, tech-savvy and have the internet at their fingertips to learn how to make the food they are looking for. To cater to Generation Alpha in 2024, restaurants must adapt to this generation’s need for authenticity, background story, quality and experience. 

2024 could be a breakout year for fast casual restaurants. The minor adoptions and shifts that fast casual restaurants can make to scoop up fine diners and younger generations will be key in staying relevant and surviving in a shaky economic environment.  

While trading down was a big trend in 2023, in 2024, we will continue to see this trend, however, customers will expect better quality at a lower price point. Consumers will no longer accept poor-quality food from fast food or fast casual restaurants. Instead, they will expect different food from an upscale dining establishment but will similar quality. 

In 2024, technology will become more important, and we’ll see restaurants understanding the need to control their technology rather than waste money outsourcing tech to third parties. 

Robots and Automation will play a big role in 2024. We will start to see examples of automation that actually works and becomes widely available.  This will be driven by the higher labor costs and the need for consistency and faster turnaround. 

Virtual and augmented reality will matter more in 2024 as Apple and Meta release new VR headsets, and we’ll see more VR and AR menus across more restaurants and dining establishments. Restaurants will leverage these technologies to expose guests to a wider range of menu items and to provide sensory appeal to the next generation of tech-savvy guests.

Artificial Intelligence will play a bigger role in restaurants whether it’s taking orders, managing customer service or doing some of the back of the house work. This trend will be driven by the low cost of AI adoption since a lot of it can be deployed purely as software.

As restaurants enter into an exciting 2024 that’s filled with a lot of new technologies and ideas it’s very important to remember that ultimately guests go to restaurants for the food! Cooking food that people want while using technology to reduce the friction of the guest experience is the ultimate formula for success.

– Bob Vergidis, Chief Vision Office, pointofsale.cloud

Looking ahead, restaurant businesses will need to consider opportunities to create financial stability by preparing for any changing trends in customer spending and supply pricing. Growth will need to include strategies for efficiency and a plan for cash management that accounts for any potential fluctuations among restaurants or suppliers. In the year ahead, short- and long-term planning with banking partners can help adjust plans for current conditions and successful futures.

– Kamil Wozowicz – SVP, Relationship Manager, Enterprise Bank & Trust, Member FDIC

As we look ahead to 2024, restaurants will continue to face the economic burden of pandemic-related costs such as new technology, labor, supply chains, and delivery. At the same time, they will also be dealing with strong headwinds caused by inflation and new labor issues, such as the California minimum wage legislation. 

Although inflation is slowing, consumers may still be hesitant to eat out since Food at Home pricing is now 4-5 percentage points lower than Food Away from Home. This has historically affected restaurant traffic. 

Labor participation is almost back to pre-pandemic levels. Furthermore, the higher check and lower traffic model trend means less staff is required, which will benefit restaurant performance in the short run. 

Given these conditions, restaurants must work to effectively gain market share in 2024 by understanding shifting consumer behavior, analyzing their local competitors, determining what loyal customers value, and how value perception is evolving.

– Jana Zschieschang, Chief Brand Officer, Revenue Management Systems