Experts Weigh In: What Are Key Challenges Restaurants Will Face in 2022?

Modern Restaurant Manaagement (MRM) magazine asked restaurant industry insiders to discuss the key challenges they believe restaurants will face in 2022. Here are their insights. 

Frances Allen CEO at Checkers & Rally’s

We know we are not alone in navigating the labor crunch restaurants are facing. Knowing this will continue into 2022, we are continuing to focus on implementing technology that will help on-site team members streamline and efficiently perform their work to the best of their ability. Our company welcomes technology that will help our team members maximize time and efficiency and make their jobs more doable and enjoyable, creating a better experience for them and customers alike. 

The challenges our teams have faced over the last two years specifically has made us value our employees now more than ever. We have historically and continue to offer competitive pay, thorough training programs, flexible hours and a fun work environment so that we can continue to staff our locations as we grow. We were among the first to offer our crews the opportunity to be paid the day after the shift you worked through a program called Instant Pay and will continue to identify and implement initiatives that will help us provide our customers the best customer service while retaining employees and keeping them happy. 

Clinton Anderson, CEO, Fourth Enterprises

Restaurants will continue to grapple with labor shortages and supply chain disruptions throughout 2022. These challenges pose the potential for inventory constraints, menu price increases, delays in service and more, impacting not only the hours restaurants can stay open but also the capacity at which they can operate.

With leaner teams and limited resources, brands must prioritize investing in a tech stack that helps navigate these obstacles and optimize operations while continuing to deliver a premium customer experience.

As it relates to the labor crunch, we’re seeing in restaurant brands across the board:

• An impact in top-line revenue because customers aren't being served
•  A drop in employee retention & difficulty in hiring
• The inability to turn tables quickly & efficiently as a result of insufficient staffing

Managers lack the tools to properly schedule employees and plan for shifting consumer demands, and as a result, businesses are paying for redundant overworked labor, or having to manage with inadequate labor due to hiring challenges. With leaner teams and limited resources, brands must prioritize investing in a tech stack that helps navigate these obstacles and optimize operations while continuing to deliver a premium customer experience. At the same time, keeping current employees happy is essential and offering easy to access benefits can help restaurants differentiate themselves from competitors. This includes implementing initiatives like early-access pay to benefit the employee long-term, rather than traditional band-aid solutions like sign-on bonuses that have failed to lure and retain employees. 

Rick Camac, Dean of Restaurant & Hospitality Management at the Institute of Culinary Education

Supply chain: Supply chain issues will be a key challenge in 2022. There will either be long waits for products, they are too expensive, or restaurants won’t be able to get everything they need.

Labor shortage: It’ll be tough for restaurants to find all the labor they need to operate at 100% operational efficiency and productivity.

Third-party delivery: Restaurants can generate cash flow but not profit; they’ll have to figure out how to make money using these services.

Smart Bar USA Founder Barry Fieldman

As we enter 2022, it’s extremely likely that we will see carryover and amplification of the current issues plaguing restaurants today — specifically staff shortages, increased labor costs, and supply chain problems affecting imported products and equipment.

Even with certain issues that fall outside of a restaurants’ direct control (increased labor costs and supply chain bottlenecks), the industry has highlighted its resilience and resourcefulness during the pandemic. There are plenty of solutions that can help ease the strain, such as domestically sourced products and equipment, as well as automated beverage dispensing systems, which minimizes wastage while maximizing output regardless of staffing level.

As we enter 2022, restaurants need to continue to stay as flexible as possible, learning from 2020 and 2021 while educating personnel and staying up-to-speed on current technological advancements and solutions that can help streamline operations and improve efficiency.  

Jay Fiske, Vice President, Powerhouse Dynamics

Staffing is the consistent theme we are hearing from our customers.  Recruiting and keeping staff has been even harder these days – and it’s always been a challenge in the foodservice industry.  When many restaurants were shuttered during COVID-19, much of the furloughed foodservice workforce found employment opportunities in other industries, so getting them back is hard.  Consequently, we see an uptick in demand for technologies that can alleviate workload demands on staff since many restaurants continue to be understaffed.  So, how can restaurants get more productivity out of fewer people?  Restaurants are asking us about using Internet of Things (IoT) to automate HACCP data collection, management of HVAC and lighting systems, and cooking equipment, such as recipe updates from the cloud.

Our customers are also facing increasing costs in food and utilities.  This will not abate in 2022 and will accelerate as global supply chains continue to be challenged.  In the thin-margin foodservice industry, any increase in fundamental costs presents challenges.  Restaurant leadership will therefore look for creative ways to find relief in other areas of their P&L.  From our perspective, we are seeing more and more companies adopt technologies to better control equipment for reduced energy consumption and to use advanced sensors and cloud-based diagnostics to reduce the frequency and magnitude of expensive reactive equipment repairs.

In addition, equipment supply chain challenges will most likely persist.  Restaurants are seeing increased lead-times for procuring new cooking equipment, HVAC units, etc., forcing them to find clever ways to eke a little more life out of old equipment.

Steve Fredette, Co-Founder and President at Toast

Despite the many challenges with labor, food cost and shifts in where consumers are working, I think the future overall is bright for the restaurant industry in 2022. I suspect there is pent up demand to go out and see people again and enough consumer savings that will drive restaurant revenue in 2022 higher than pre-pandemic levels. However, even if

 2022 restaurant revenue ends up higher than pre-pandemic levels, many restaurants still desperately need relief to survive. For the sake of our community we hope to see congress refresh the RRF.

Robin Gagnon, Co-Founder of We Sell Restaurants

Restaurants will continue to struggle with the number one issue at the forefront now – labor.  This issue will carry into 2022 and beyond.  Hiring will become more competitive and there will be a race to implement any form of technology to assist in overcoming labor issues by replacing hours in the labor schedule with any form of an automated function.  As a result of the pressure on restaurants for staffing, they will continue to raise pay, increase benefits and become more creative in their hiring practices. 

Restaurants will lean more on younger employees to fill the gap with “Gen Z” or Zoomers taking on more shifts.  This will lead to training on apps that reaches “Zoomers” where they live, on their phones, to quickly train new concepts for fast onboarding.  There will be more employees per location all filling fewer hours as COVID has led to a migration out of the business for those seeking full time permanent roles. 

Noah Glass, Founder & CEO, Olo

Certain challenges from 2021 will continue to affect the industry in 2022, including impacts from the ongoing pandemic, labor shortage, and supply chain disruptions such as potential price increases and limited menu offerings. In addition, heightened competition within the industry as a result of increasing off-premise and digital operations will force brands to further innovate and invest in convenience to stand out and draw customers.

In 2022, restaurant brands will continue to create or enhance their technology stacks to help navigate these challenges, streamline operations, and optimize efficiencies.

In 2022, restaurant brands will continue to create or enhance their technology stacks to help navigate these challenges, streamline operations, and optimize efficiencies. For example, Olo’s solutions automate many transactional pieces of the dining experience, allowing staff to focus on more high-touch, face-to-face tasks rather than digital output, creating a more hospitable experience for both employees and the consumer. Olo’s delivery-as-a-service products, such as Olo Rails and Olo Dispatch, also solve the problem of driver availability for delivery service providing a national network of more than two dozen delivery service providers, alleviating delays and allowing restaurants to increase their output potential.

Scott Lawton, Co-founder and CEO, bartaco 

Unlike most restaurant groups, we are staffed up with a line of applicants. Our biggest challenge will be to get the right team members and develop a best in class training program to develop them. As our new service model evolves, it is critical that we find the best of the best to care for and interact with our guests. Supply chain will continue to be bothersome for at least the first half of the year and will need to continue to monitor that. Additionally, I think the industry overall will struggle with labor cost pressures and be forced to either raise prices or innovate. Those that raise prices too far will risk alienating some of their customer base.

Dmytro Kostyk, CEO of Interactive Restaurant Technology

Adaptation to non-sustainable and non-predictable traffic of visitors for dine-in locations. Solution: be not just about food, food is a must and this is something that I can order from a dark kitchen, but be a place with experience – unique, atmosphere, and a local attraction. And of course, fair enough, raise prices – because you're not just food anymore.

Labor – non-consistent working hours (from 7 PM to 11 PM let say) will be a challenge to hold the best people in a team with part-time. Solution: self-ordering, table-ordering from smart tables, something that does not devaluate your restaurant aka kiosk in QSR, but helps to solve this problem and add value and experience that is new for customers. 

Nishant Machado, CEO of Dividend Restaurant Group (Romano’s Macaroni Grill, Sullivan’s Steakhouse)

As we look ahead to 2022, there can be no denying that the current labor challenges and subsequent shortages will continue to create challenges across the industry. With many people still navigating a reduction in disposable income due to the pandemic, operators will be hard pressed to attract top talent without further investment and offering unique benefits. Sales may be tempered as prices continue to rise over and above current inflation, which will, in turn, lead to domestic wage increases and tightening of already thin margins. 

Simon de Montfort Walker, Senior Vice President and General Manager, Oracle Food and Beverage

Rising customer expectations: Consumer demand for instant gratification has exploded, thanks in large part to increased use of mobile, online and self-service ordering options. This is especially true for restaurants where customers now demand multiple ways to place and pick-up orders. Restaurant owners and operators will have to continue to expand their digital presence to deliver the instantly rewarding, seamless customer experiences customers have come to expect both on- and off-premises.

An exceptionally difficult labor market: The restaurant industry continues to deal with one of the worst labor shortages of labor ever. It has affected restaurant operators on both ends as they are challenged with retaining and recruiting staff and serving customers with limited resources. To ease the pressures created by the situation, brands will need to utilize advanced analytics and machine learning to optimize schedules and offer employees the greatest flexibility and incentives for coming to work.

Supply chain disruptions creating increased need for agility and flexibility: The pandemic has disrupted global supply chains more than any other period in recent history. This disruption has highlighted the importance of agility within businesses. Companies must be able to respond quickly to the changing dynamics around us. Moving forward, consumer demand for more supply chain transparency will drive brands to adopt restaurant technology solutions to help maintain a healthy connection with their suppliers and help ensure supplier data integrity. We’ll also see increased adoption of sophisticated inventory planning and forecasting that can include machine learning and collaborative cloud solutions, to synchronize supply and demand, mitigate uncertainty, foster cost control, and reduce waste.

Hope Neiman, Chief Marketing Officer of Tillster

As we know, the pandemic dramatically accelerated digital transformation for restaurants. Brands quickly realized that omnichannel technology that provides actionable data and insights to create personalized, safe and accessible experiences is the next big thing for the sector. Consumers expect restaurants to have all the tools – physical, digital and mobile – that create the complete digital restaurant. As we look ahead to 2022, we expect that integrated omnichannel technology will continue to become the rule for success across operations.

We expect that integrated omnichannel technology will continue to become the rule for success across operations.

Here are some specific examples:

Technology: What does the future of technology look like for restaurant brands? It’s having all the tools needed for a complete digital restaurant. The pandemic changed the ways that customers want to engage with brands as they looked for those experiences that prioritized safety and convenience. In turn, restaurants continue to adapt their operations in response to changing needs (i.e., order & pay at table options). 

Marketing & Loyalty: Brands have new engagement tools at their fingertips to create loyal customers – all thanks to the data and insights provided by technology. Through efforts like digital coupons, personalization, brand-specific UI and much more, restaurants can provide customers with experiences targeted towards their changing needs. A brand’s mobile app, website, kiosks and loyalty programs can work together to paint a picture of every customer to understand where and when they visit, what they order and how they respond to offers, and to serve them offers that motivate action. Notably, with the deployment of a recommendation engine – as in, “customers like you also bought,” – one brand saw a 13% increase in average check size.

Off-Premise: Off-Premise are becoming more critical for restaurants as customers continue to focus on convenience. With this, it’s important that brands have effective and easy-to-use online and mobile ordering experiences to fulfill these orders. An increasingly important part of off-premise dining is pickup. An additional way to further optimize pickup operations is integrating updates into push and text notifications to give customers real-time updates into their order – an important offer in today’s world of e-commerce. Additionally, to control costs and the customer’s experience, taking last-mile delivery in-house is a growing trend that we expect will continue to gain traction into 2022 as it relates to off-premise. 

On-Premise: For those guests still opting for on-premise, things have certainly been updated as restaurants optimize operations to improve efficiency and experience. A notable example of this is the adoption of Order & Pay-at-the-Table technology and QR code menus. These are tools that help customers feel a little safer in today’s world. And they’re easy to launch and manage, giving brands a straightforward way to begin digital transformation efforts on-premise. An additional on-premise effort that continues to drive results is, of course, kiosk and tablet ordering. In fact, ordering kiosks give the restaurants that deploy them a 10-30% increase in average check size. Additionally, this self-service technology can replace counter employees entirely, allowing onsite employees to engage with customers and create a sense of hospitality while removing the need to stand close and take orders, which is especially important as we continue to adapt to the COVID-19 pandemic.

Michael Osanloo, President & CEO, Portillo’s

There are a few industrywide challenges I expect will continue into 2022. First, supply chain issues and an increase in commodity prices, such as the beef used to make our Italian beef sandwiches, will likely have an ongoing impact. It will be critical that restaurants maintain strong relationships with vendors and suppliers to minimize disruption. Additionally, the current labor market will continue to impact restaurants’ ability to staff locations. Fortunately, we have an unbelievable team of family members. We are incredibly proud of our committed Team Members who show up to take care of our guests every day.

Mike Rypka, Founder and CEO, Torchy’s Tacos

As staffing challenges persist amidst the tight labor market, restaurants will need to prioritize putting their people first in order to retain standout talent. At Torchy’s, we’ve built a people-first culture where our team members are our top priority and believe our strong internal culture along with a focus on offering competitive wages and benefits that support not just team members, but their families have helped us to successfully navigate the labor crisis so far.

 In addition to a competitive wage and tip share, we’re focusing on offering a total benefits package that includes access to healthcare benefits, food and lifestyle discounts and access to on-demand pay, while creating an environment that’s supportive of team members, with flexible schedules, development tracks, mentorship and a culture that encourages being yourself.

Savneet Singh, President & CEO of PAR Technology Corp.

I could say a lot of things like labor or how to make money with all the new innovative technology out there, but really the headline will be about creating a single digital guest experience. In the last few years restaurants have added a number of new software tools, but today few of them play nicely. For example, we get thousands of customer support calls for technology that isn’t ours – it must feel like a cat and mouse game for customers trying to solve simple technology bugs. Nobody wants an experience where vendors are pointing figures at each other while the restaurant’s software is down. We believe 2022 will be the year where restaurants take this challenge head on to get their software working well together.

Accept digital as the new normal. There is no going back to the way things were. So it’s not about embracing and moving all in towards a hybrid future.

Accept digital as the new normal. There is no going back to the way things were. So it’s not about embracing and moving all in towards a hybrid future.

Making sense of the mess! Restaurants have sprinted to add an immense amount of new technology, yet none of it was meant to work together. The challenge isn’t so much about adding more, but getting what you have to work right.

Buck Sleeper, Director, Innovation Consulting, EPAM Continuum

Explaining the models of virtual restaurants and ghost kitchens to diners who'll discover and fall in love with a concept online but may still find it a struggle because they can’t actually visit in person. 

Passing along the expense of delivery to customers when they've all gotten used to having that cost (mostly) folded into their meals.

Building the world-catastrophe-proof venue. Designing a restaurant in which channels can quickly rebalance between on- and off premise so that any disruption, local or global, can be overcome with grace.

Chris Tomasso, President & CEO, First Watch Restaurant Group 

Heading into 2022, we can expect the industry to continue to experience headwinds as a result of the labor shortage. Restaurant brands will need to continue to invest in their teams in order to attract and retain the best talent.

At First Watch, we’ve operated with our You First culture since our founding in 1983, putting our team members at the forefront of everything we do. This, coupled with our compact hours of 7:00am – 2:30pm and “No Night Shifts Ever” approach allows our team members to build a career in the hospitality space while still having time for their personal lives – driving high employee satisfaction and retention as a result.

Mike Wallace, CEO & Founder, Perfect Company

Restaurant operators are facing challenges on many fronts, but I think everyone would agree that the biggest challenge in today's restaurant industry is labor. Skyrocketing labor cost and a much more transient workforce require operators to focus on recruitment, efficiency and retention more than ever. Stated simply, operators need to improve labor’s experience. Luckily, we’ve seen significant progress on this front over the last year, but there is still a lot to do and technology will no doubt be part of the solution.