2024 Outlook: Restaurant Trends and Challenges, Part Two

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

Looking ahead, we’re focused on strategic, measured expansion and growing profitability. We will also continue to leverage our revamped ‘Restaurant of the Future’ model along with our advanced technology strategy and are eager for this next phase of growth for the company.

– Frances Allen, President and CEO, Checkers

Looking ahead to 2024, the restaurant industry will continue to feel the impacts of macroeconomic challenges such as inflation. At First Watch, we are confident in our brand, value proposition and one-shift, “No Nights Ever” approach that we believe helps attract best-in-business talent. In the year ahead, we will continue to offer our customers the true and authentic service our brand is known for, making sure they feel taken care of when visiting any of our more than 500 restaurants across the country. We look forward to another year of serving up fresh dishes and brighter mornings to every customer with care, openness and intention.

– Matt Eisenacher, Chief Brand Officer at First Watch

With international conflicts waging overseas, I believe the travel industry will continue to be affected in 2024. Despite having supportive local residents, Ocean City is still largely a destination town. We will rely heavily on the travel industry in 2024 to continue bringing us customers from local cities like Philadelphia, DC, Baltimore, New York, NJ, etc.

– Peter Elias, owner of Spain Wine Bar in Ocean City, Maryland

Looking forward to 2024, the landscape of customer engagement within the restaurant sector is poised for a substantial shift. The conventional approach of utilizing points-based reward systems is making way for a more personalized and gratifying model. I anticipate an array of tailored incentives for patrons, moving beyond predictable points. Prepare for surprise and delight offers, where customers will be pleasantly granted unexpected perks, discounts, or complimentary items to entice them to return.

Moreover, in the coming year, early access to novel menu additions is set to become a sought-after offering. Restaurants will entice their customers with the privilege of being among the first to savor new menu items, creating a sense of exclusivity and fostering anticipation. Unique experiential opportunities will further enhance customer engagement, providing memorable moments beyond just the act of dining. Think behind-the-scenes kitchen tours or insights into who the people are that work at the restaurant, offering patrons a chance to immerse themselves in the brand.

Restaurants are recognizing the power of genuine connection and involvement with their communities.

One of the paramount shifts in the approaching year will be a heightened emphasis on authentic community engagement and social responsibility efforts. Restaurants are recognizing the power of genuine connection and involvement with their communities. Expect establishments to actively engage with local causes, contributing a portion of their proceeds to charitable initiatives or partnering with local organizations. This shift not only resonates with the socially conscious ethos of Gen Z but also cultivates a sense of pride and belonging within the community.

As the restaurant industry continues to evolve and adapt to the changing expectations of its diverse clientele, the upcoming year promises an exciting array of personalized experiences and meaningful interactions. The fusion of technology with a focus on genuine connections ensures a dining landscape that not only meets consumer needs but leaves a lasting, positive impact on both patrons and the communities they serve."

– Andrew Glantz, GiftAMeal Founder/CEO 

Guest data is the key to driving hospitality at scale. Leveraging transactional, behavioral, demographic, and offline data from their most valued guests, operators can effectively personalize every guest interaction based on their likes, dislikes, dietary restrictions, preferred payment methods, and more, to drive lifetime value. In 2024, brands will continue to overcome the challenge of accessing and aggregating this valuable owned data to cultivate this level of hospitality and long-term brand loyalty. This includes investing in digital systems that integrate and communicate with one another as well as deploying Guest Data Platforms that can turn actionable data into real-time decisions. Additionally, it means enacting ways to incentivize guests to order from a brand’s direct ordering channels, with offers like exclusive items and pricing, to drive in-house digital sales and therefore retain owned guest data. The more a brand knows about its guests, the better positioned they are to provide a great, 1:1 experience on- and off-premises and deliver hospitality at scale.

– Noah Glass, Founder & CEO, Olo

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. 

Stored value will also emerge as a critical element in loyalty programs, offering added flexibility and customer benefits.

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. 

– Zach Goldstein, Founder/CEO, Thanx

As we look ahead to 2024, companies will continue to meticulously scrutinize their expenses and be more selective when it comes to how they’re allocating their dollars, as they work to provide quality guest engagements like live sports programming. As consumers continue to seek out unique dine-in experiences, the bar and restaurant operators who capitalize on live sports and entertainment at their establishments to drive traffic and retain repeat customers will have a leg up.

– Joe Hand Jr., President, Joe Hand Promotions

Artificial intelligence has been on everyone’s minds, no matter the industry, and I think we will see some unique applications of the tool in 2024 and beyond to help cut costs and redundancies. There are a number of key areas where AI has already made an impact.

Machine learning is capable of organizing menu items in a way that incentivizes customers to order promoted items – an adaptable menu.

For example, the adoption of voice ordering through AI-powered technologies has proven the power of AI to help operators navigate today’s labor constraints, but also enhance customer experience through speedy service, tailored recommendations and lessening the chance of human error in the order-taking process. Looking ahead, machine learning is capable of organizing menu items in a way that incentivizes customers to order promoted items – an adaptable menu, if you will. The future of AI in the restaurant industry is undeniably promising.

– Peter Kellis, Founder and CEO of TRAY

As consumers continue to prioritize convenience, we believe the expectations that restaurants offer an accessible and seamless experience will continue to rise, particularly in the fast-casual category. 

Over the last few years, Portillo’s has seen consumer interest in convenience grow in terms of off-premise channels. We’ve paved the way for drive-thru operations for decades with our two-lane model, and our off-premises operations have only expanded in recent years. We launched our Portillo’s Pick Up shelves, for delivery drivers and guests who order online to quickly come in and grab their meals. We will open our second Portillo’s Pickup location this year, which is a restaurant format with no dining area that only serves our off-premises channels. In 2024, it will be important for operators to keep a close eye on potential new channels to meet customers where they are and continue to offer the convenience they’re looking for.

–  Garrett Kern, VP of Strategy & Culinary, Portillo's

In 2024, operators that still want to run full-service restaurants need to get ahead of the curve. Direct and indirect operating expenses will continue to rise, and without creative thinking and holistic business evaluation, operators will still be stuck fighting the short game rather than planning the long game.

– Chef Bin Lu of Blue Rock in Washington, VA 

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

It is a balancing act though and with exciting solutions such as interactive QRs, self-ordering Kiosks and AI, restaurants must thoughtfully select the right tools for their business model to effectively improve the guest and employee experience, without creating unnecessary steps or complications. For example, a guest shouldn’t be forced to order items via mobile device if their server is in plain sight. Hospitality in large part is dependent on this balance. In an industry with ever-changing challenges and new customer expectations, restaurant tech providers need to be able to adapt their offerings to help partners further optimize operations, alleviate everyday challenges and enhance the guest-centric experience.

– Tim McLaughlin, Co-Founder and CEO, GoTab

The market and economy constantly impact the consumer’s perception of value. Consumers will reliably spend their dollars where they see the greatest value, especially in today’s unique job market and looming threats of recession. Our challenge, as well as that for all of our industry peers, is to remain credible and valued by our customer base each and every day. That means remaining kind, and focusing on human capital. That kind of mentality will serve us (and of course, our guests) well in the near-term and for many years ahead.

– Nicole Miller Regan, CFO, 7 Brew

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 

2024 will be a year of tech “normalization.”

  • After a hard sprint of tech adoption through the pandemic, restaurants will start to revisit their “tech stacks” to see what really makes sense, what is not needed, what should be combined, and where opportunities exist to get leaner.
  • Tech companies themselves will consolidate as venture capital money is tight and many companies are more like products – they belong together not apart.
  • Holistic tech companies with native features and direct integrations will begin to gain share.  We will start to hear more about what an integrated piece of tech can do and less about open APIs.  

 Restaurants will reinvest margin in value products, pricing and messaging

  • 2024 will start to see first-party ordering AND first-party delivery take flight.
  • For consumers who value the convenience of delivery, getting it cheaper, faster and better will be irresistible.  As more cuisine types implement the pizza model, they will gain share from the third parties.
  • 2024 will be a year of value and beverage innovation.
  • Consumers are inflation fatigued and restaurant profit margins are at an all-time high.  Is it any wonder transactions are declining industry-wide?  Restaurants will reinvest margin in value products, pricing and messaging
  • Alcohol and CSD (carbonated soft drink) consumption are both in decline.  These have been the two check and margin enhancers for the restaurant industry for the last 50 years.  Restaurants will invest in beverage innovation to give consumers choices beyond alcohol and CSDs.  This started years ago with the fast casuals, but everyone will start to adopt beverage innovation widely.

– Meredith Sandland, Empower Delivery CEO

The FDA has passed amendments to the Food Safety Modernization Act (FSMA) that will go into effect in 2024. These new regulations will significantly impact the way restaurants and other food service operators approach food safety in the years to come, shaping the future of food storage, preparation and service on- and off-premises. Unfortunately, restaurants are not ready to adapt to these changes at scale, which will involve an overhaul of their current procedures and the massive undertaking of retraining all of their team members to follow the new mandates correctly.

In order to avoid what is poised to be a major challenge in 2024, brands must consider modernizing their back-of-house health & safety procedures with digital tools that are designed to ensure both state- and nationwide compliance. Not only will this help prepare employees in the midst of changing regulations, but it will also safeguard operators at a time when brands can’t afford costly shutdowns. Through its innovative suite of digital health and safety solutions, PathSpot is already helping hundreds of brands navigate these new expectations.

– Christine Schindler, CEO, PathSpot

I predict that we will be in actual recession in the first quarter and we’ll be managing our prime costs to begin the year.  The election year will have a bunch of politicians spreading fear and uncertainty and the good operators will continue to earn their market share,

– Mike Sebazco, Famous Toastery President

The age of automation and reimagining customer service in restaurants is here. From Sweetgreen implementing robots to help speed up service to Wendy’s redesigning its restaurants for a more optimized output, the restaurant industry is poised for continued growth and innovation in 2024.

As restaurants embrace technology to reduce costs and increase efficiency, they need to ensure that they are putting an increased focus on interacting with and leveraging real-time customer feedback. AI-powered technology is making it possible for brands to uncover insights from large volumes of structured and unstructured data that represents the voice of the customer. Through this data, brands can access a treasure trove of actionable insights and opportunities to improve the customer experience. What’s more, access to this information makes it easier than ever for large, multi-location brands to monitor local-level performance, address issues earlier, and discover revenue opportunities and best practices that they can replicate across locations. 

Without the AI-powered insights, brands will struggle to keep up with their competition. With consumers less loyal than ever (92 percent of consumers don’t consider themselves brand loyal), restaurants can’t afford to not manage their brand image and online reputation.

– Cynthia Sener, President GTM of Chatmeter

One of the main challenges we will likely see in 2024 is restaurants needing to do more with less. While this is certainly not a new phenomenon for operators, they will need to make budgets go farther than ever before as pricing of food and labor continue to rise. 

– Matthew Tucker, Head of Tock

Looking ahead to 2024, our commitment to pushing the boundaries of innovation remains unwavering. Based on our observations from the past year, we are planning for an increased focus on innovations related to spices, chiles, and international cuisine. 

The quest for healthier and more sustainable alternatives to traditional ingredients will persist.

Additionally, I foresee a resurgence of health-conscious consumers, reminiscent of the trend we witnessed pre-COVID in 2019. Many consumers are becoming more interested in the origins of their food and its ingredients, and we aim to meet this demand with our fresh, quality menu items.

The quest for healthier and more sustainable alternatives to traditional ingredients will persist. This includes protein focused or protein forward ingredients, alternative tortillas, and innovative substitutes for common allergens. These alternatives will not only cater to new consumers but also clean eating habits. 

– Chef Venecia Willis, Velvet Taco Director of Culinary

In terms of challenges, as we head into 2024 we may see people become more selective when it comes to where they’re spending their money. We believe restaurant systems that reward customer loyalty, like our free Potbelly Perks program, will be increasingly important in creating a personalized and positive experience for customers that fosters a better connection to our brand and alerts them to timely deals that offer the value they’re looking for.

– Bob Wright, CEO, Potbelly