Restaurant operators remain concerned about labor costs and interest rates and are investing in technology to protect themselves from a potential recession.
But that doesn’t mean they’re not optimistic. Two-thirds of restaurant operators, in fact, told TD Bank they are optimistic about the future of the restaurant industry amid the current macro environment. The bank took the survey during the recent Restaurant Finance and Development Conference in Las Vegas.
More than half, 55%, said they were confident their businesses would get higher traffic next year.
To be sure, traffic has been so difficult in 2023 that it’s hard to imagine it getting a whole lot worse. But it also suggests that a majority of operators expect to get more customers next year, which either means they have some serious marketing planned or they aren’t anticipating aggressive price increases in 2024.
The level of optimism is somewhat surprising, given the general view at the conference, in which much of the commentary was loaded with anxiousness about the state of the economy, regulations and the consumer. That said, there is at least some sense that the challenges the industry faced during and after the pandemic may be in the past.
Inflation is showing signs of easing. More operators have indicated that labor has been easier to find this year and their restaurants are more likely to be fully staffed. Food costs, too, have gone down. Speakers at RFDC suggested that interest rate increases are likely over—even if some of them believe that higher-than-normal inflation and a generally weaker environment could be more common over the next decade.
To be sure, it’s not like there aren’t concerns out there. Wage inflation, despite the improving labor picture, remains operators’ biggest macroeconomic challenge, with 68% of operators listing that as a top problem. Rising interest rates was next at 55%, followed by commodity inflation (40%).
Restaurant companies have been investing heavily in technology and that is expected to continue to be a big focus. More than half of operators are embracing mobile apps and online ordering systems.
And more than half are investing in technology that can automate or streamline operations. Mobile ordering is a major source of sales (57%) and investment (66%).
Most operators, 53%, told TD Bank that they are investing in technology to navigate fears of a recession.
Restaurants are resilient, and far more resilient than many people think. While the climate could prove more difficult to navigate over the coming years, due to a variety of factors, at the end of the day people still like eating out. And technology and industry trends are giving them more options to protect themselves from those challenges.