On the Road to Relief: Restaurant Trends and Opportunities to Watch

Restaurant operators have faced stiff headwinds since 2020, with a near-constant swirl of inflation, supply chain and labor challenges. But if last year was any indicator, restaurant operators are on the road to relief in 2024. 

According to September 2023 numbers from the National Restaurant Association, 49 percent of restaurants reported year-over-year increases in same-store sales. And despite warnings of an imminent recession at the end of 2022, the U.S. economy demonstrated resilience in 2023—with GDP, employment rates and consumer spending remaining relatively stable or even growing. The restaurant equity market also showed signs of recovery, with healthy market debuts from Cava and Dutch Bros. Coffee in 2023. 

In 2024, we expect these trends to shape the restaurant sector. Here’s how restaurant operators can evolve with them. 

Adapt to Growing Price Fatigue 

Since the pandemic, controlling food costs has been a major challenge for restaurant operators. When prices for staple ingredients like chicken rose dramatically in 2023, restaurant operators were forced to increase their prices. Full-service menu prices climbed 4.5 percent between December 2022 and 2023.  

Despite price increases, data shows consumers still enjoy eating out. According to a 2023 report,  Americans eat at a restaurant three times per month and on average spend $166/person/month. While factors such as convenience impact that decision, the experience of dining out is important. In 2024, restaurants should make the dining-out experience worth the price tag. For example, operators can boost value perception and satisfaction by implementing a barbell strategy—appealing to budget-conscious consumers looking for affordable meals as well as giving high-end customers, who are willing to pay a premium, additional options to add on.  

Leverage Data to Personalize Experiences 

Every day, restaurants generate vast volumes of data from their point-of-sale (POS) systems. Savvy operators analyze that data to understand who’s coming through their doors, what they’re ordering and how often they’re ordering. 

They’re using that information for myriad purposes—from effectively managing inventory to launching new menu items. For example, restaurant operators can use POS data to develop tailored deals, specials and loyalty rewards. Customers want brands to deliver personalized messages, and BofA Global Research indicates that loyalty programs that encourage customers to engage with the brand can increase short-term spending. 

Some restaurant operators have employed data analytics and generative artificial intelligence (GAI) to help automate the upselling process during a transaction by suggesting meal upgrade options when customers input orders. When systems factor in inventory data, restaurants can shift recommendations based on inventory levels and help avoid selling out of key items during peak demand periods.  

Address Lingering Labor Shortages 

Pandemic-era restaurant labor shortages have eased—but not disappeared. In November 2023, the National Restaurant Association reported that full-service restaurant employment levels were still 4 percent below February 2020 readings.  

As restaurant operators grapple with lingering labor shortages, they’re turning to advanced technologies such as GAI to address daily workflow challenges. For example, they’re experimenting with using voice-enabled AI in drive-thru operations to take orders and even respond to frequently asked questions. The goal is to create an even faster, more frictionless experience while freeing up employees to focus on important duties, like fresh food preparation.  

Restaurant operators are also adjusting to new business realities by increasing wages and enhancing benefits to attract and retain employees in this competitive labor market. Data from the U.S. Bureau of Labor Statistics shows that the average hourly rate for U.S. restaurant workers has increased rapidly since the onset of the pandemic. California recently passed a minimum wage increase of $20/hour for fast-food workers. There will likely be sustained pressure to increase minimum wages this year, but operators should think beyond base pay when attracting and retaining workers. 

Adopt a Rigorous Approach to Fraud Prevention 

The restaurant industry used technology to streamline operations and meet customer needs before the pandemic, but seemingly overnight, technological solutions became even more critical to restaurant operations. According to BofA Global Research, restaurants’ IT budgets have doubled since March 2020 to account for up to 10 percent of gross revenue in June 2023. It’s a testament to the pivotal role that technology plays in the industry’s revival. That said, tech solutions also introduce the potential for cybercrime.  

Growth in digital sales at quick-service restaurants (QSR) via third-party apps, platforms and websites has left QSRs susceptible to credit card fraud, fraudulent chargebacks and compromised POS systems. However, back-office operations and accounts payable are just as appealing targets for cybercrime. Restaurants have complex supply chains and constantly add new vendors and suppliers to their rosters, which introduces potential access points for nefarious actors.