If the restaurant industry had as many customers as it does forecasts of the year ahead, its traffic challenges might have abated by the time calendars flipped to February. Amid that torrent, the most authoritative and research-rich look ahead is likely the National Restaurant Association’s annual State of the Restaurant Industry report (SOI), a detailed projection that builds off a snapshot of where the business stood on Dec. 31.
For ink-stained wretches who cover the business, it’s a must-read, highlighter in hand. Here’s a sampling of the tidbits that were particularly strong ah-ha moments for us.
Nearly 40% of U.S. dining place lost money in 2023
Conventional wisdom holds that the wallop of the pandemic largely faded into a painful memory for the restaurant industry in 2023. But according to the SOI, relief eluded about 2 of every 5 operators.
The exact proportion of restaurants that finished last year in the red is 38%, according to the association. Perhaps not coincidentally, 43% of the restaurateurs surveyed for the report indicated they’re still paying off debt incurred during the pandemic.
The research shows that the trade isn’t exactly exchanging high-fives over the prospects for 2024. Two-thirds of operators (67%) expect their sales to be the same or lower than what they collected in 2023.
The supply chain is still a mess
What was supposed to be a short-term scramble of the industry’s supply lines, a result of vendors’ production and labor disruptions during the pandemic, is proving to have legs. More than three-fourths of operators (77%) reported they suffered shipment delays or shortages of food and beverage supplies last year, and 54% faced the same issues with equipment.
It might be a d'oh! that 60% shopped for new suppliers.
Sales windows are narrowing
Because of staffing difficulties, 65% of the nation’s restaurants cut their hours of operation in 2023, according to the SOI. Across all sorts of dining establishments, more than 2 of 5 (43%) increased the number of days they were closed. More than half (51%) of full-service places have shortened their sales week.
The findings support the new reality of employees being as sought-after as customers in today’s restaurant business.
The labor crisis is morphing
When the industry’s labor pool started shrinking to a challenging level some 50 years ago, the cause usually cited was a fundamental shift in the demographics. The Baby Boomers who had turned to restaurants for their first jobs were aging out of the field, and there weren’t enough of their younger brothers and sisters to fill the gap left behind.
As the SOI notes, the supply of potential teen hires is less of a concern at the moment than their interest in working any sort of job. The workforce participation rate for youngsters aged 16 to 19 inched upward last year to 36.9%, the highest rate level since the Great Recession of 2009. But that compares with the 57.9% of job-eligible teens in 1979.
The NRA notes in its study that the U.S. Bureau of Labor Statistics expects the participation rate to continue declining.
Look for more merch in 2024
Expect more of the industry to run a side hustle of offering logoed clothing this year. According to the SOI, 60% of full-service restaurants and 47% of limited-service places expect more places to sell items like hats or T-shirts emblazoned with their names or logos in 2024.