Navigating the Culinary Landscape: A Look into the Future of Restaurants in 2024
In a world where opinions often clash, there's a surprising area of consensus among 90% of Americans—they love dining out. This shared sentiment took center stage at the National Restaurant Association's annual State of the Industry press conference, where Hudson Riehle, Senior Vice President of the association's Research and Knowledge Group, highlighted the industry's resilience and the challenges it faces in the coming year.
The Growth Trajectory
Brace yourselves for some good news! The restaurant industry is gearing up for a record-breaking year, with overall sales projected to hit a staggering $1.1 trillion in 2024, according to insights from the NRA. The majority of operators are optimistic, foreseeing increased or steady sales compared to 2023. While the growth may be gradual, it's a testament to the industry's vitality.
The Labor Market Influence
Behind this anticipated growth is a flourishing job market, evidenced by the addition of over 350,000 positions by U.S. companies in January 2024. Riehle pointed out that gainfully employed individuals tend to opt for restaurant dining, driven by both time constraints and increased disposable income.
Shifting Consumer Habits
The way consumers interact with restaurants is undergoing a transformation. In just a few years, off-premises consumption has skyrocketed from 61% in February 2020 to a significant 74% of all meals sold by restaurants in December 2023, as per NRA data. Notably, 52% of consumers, including a significant majority of Millennials and Gen Z adults, consider ordering takeout an essential part of their lifestyle.
Operational Challenges
Despite the positive outlook, operators are bracing themselves for a challenging operating environment. Only 27% of operators expect increased profitability in the face of escalating costs, including a more than 20% surge in average food costs and a staggering 30% increase in average wages since 2019. Labor-related concerns, particularly recruitment, are top-of-mind for 33% of operators.
Industry Employment and Technological Shifts
To meet the demands of a growing industry, the restaurant and foodservice sector plans to add 200,000 jobs in 2024, reaching a total employment figure of 15.7 million, according to NRA projections. Yet, 45% of operators express concerns about meeting customer demand due to staffing shortages. In response, operators are turning to the gig economy and technology, with 47% anticipating increased use of technology and automation to address the current labor shortage.
Investing in the Future
Technology emerges as a critical player in overcoming these challenges, but it requires investment. In 2023, 48% of operators made technology investments to enhance the customer experience. Looking ahead, more than half plan to invest in technology to improve guest experiences, streamline service areas, enhance kitchen productivity, and fortify cybersecurity.
Community Connection
Beyond the numbers, restaurants remain community cornerstones, with over 84% of operators making charitable contributions since the onset of the pandemic. Michelle Korsmo, President and CEO of the NRA, emphasizes the industry's adaptability and resilience, showcasing its ability to respond to challenges, foster community bonds, and contribute significantly to the nation's economic landscape.
As we step into 2024, the restaurant industry stands at the intersection of challenges and opportunities. From shifting consumer preferences to rising costs and technological advancements, the landscape is evolving. What remains constant is the industry's ability to adapt, innovate, and continue serving as a vibrant thread in the fabric of our communities. Cheers to a flavorful and forward-looking year ahead!