Operations

5 stunning predictions for the rest of 2023

The National Restaurant Association issued its combination industry snapshot and near-term outlook this week. Here are five findings that jumped out.
Third-party delivery services have lost a big number of restaurant partners. / Photo: Shutterstock

One of the major forecasts for the restaurant industry is the National Restaurant Association’s annual State of the Industry Report. This year’s edition, a 41-page snapshot of the business and the near-term implications, was released this week.

Here are some of the surprising findings.

Operators are split on the prospects for ghost kitchens and virtual brands.
According to the NRA, about 30% of restaurateurs expect ghost kitchens and virtual concepts to become more of a factor within their segment in 2023—the same proportion that expect the delivery-only options to wane.

Consumers are more transparent in their attitudes toward the alternate delivery sources. About 70% say it is important to them that a delivered meal come from an actual restaurant and one they could visit.

15% of restaurants are relying on guest-check surcharges.
The report notes that the practice has become a common way of countering cost spikes across all segments. About 13% of fast-food places, for instance, have instituted what’s sometimes called a service fee. That’s not much of a lower incidence than the rate for fine-dining, where 17% of establishments have resorted to using the fees.

What’s more, 81%of the fee chargers expect to keep the extra fees in place for more than a year.

13% of restaurants stopped using third-party delivery services.
Although the report indicated overall that delivery continues to grow in popularity among consumers, a significant portion of eating places are balking at paying the high commission rates charged by outside delivery specialists.

The proportion of restaurants ending their relationships with players like Grubhub and Uber Eats was well into double digits for all major segments except the traditional quick-service market, where 7% of operations cut ties with the services. At the other end of the spectrum were fine-dining and the coffee and snack markets, where 17% of operators pink-slipped their former partners.

Other data suggests most of the places closing their doors to outside deliverers are taking the function in-house. Among casual restaurants, fast-food places and family-dining outlets, 9 out of 10 said they intend to continue offering delivery in 2023. Within fine-dining, 80% indicated they’ll maintain the service.

The NRA found that 11% of full-service placesand 15% of fast-food restaurants currently provide their own delivery services. Within those segments, 19% and 27%, respectively, use a blend of self- and third-party delivery.

Competitor counts are down, but competition won't be.
The conventional wisdom holds that the pandemic forced weaker restaurant operations to finally throw in the napkin. The NRA’s stats support that assessment. Forty-five percent of the surviving restaurants said they believe the nose count of establishments in the business has dropped from 2019. Yet 47% say they expect competition to intensifyin 2023.

Utilities are becoming a major profit-eater.
80% of the restaurateurs who participated in the NRA’s research said their electricity, gas, heating fuel and water bills jumped in 2022. The typical increase came to 11.8%.

The situation is particularly worrisome for full-service operations; more than 60% of family-dining places, casual restaurants and fine-dining establishments see the climb in utility costs as a major concern.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Financing

Winners and losers from a tough first quarter

The Bottom Line: Wingstop (again) and Texas Roadhouse (also again) were among the big winners last quarter, while the fast-food value proposition is among the losers.

Financing

Red Lobster needs a buyer. How does Darden sound?

Reality Check: The casual dining giant sold Red Lobster in a cloud of controversy a decade ago. Here's why a return to the fold may not be as crazy as it sounds.

Food

KFC goes portable and poppable to grab the snacking generation

Behind the Menu: Bite-size Apple Pie Poppers, created to target customers' sweet spot, lend themselves to line extensions to expand the chain’s snack selections.

Trending

More from our partners