The Challenges and Trends Facing Restaurant Operators This Fall

Winsight, a leading B2B information services company focused on the food and beverage industry, recently examined the challenges and trends facing restaurant operators this fall in a webinar titled, “Beyond Pumpkin Spice: Fall Flavors & Trends Invigorate Your Menu.”

The presentation began with a look at the on-premise industry. Wade Hanson, principal at Technomic, a company providing data and insights for the foodservice industry, says that the industry is actually trending nearly 10% upward as it continues to shake off the effects of the pandemic.

Still, order share at chain restaurants continues to be greatly affected by the changes brought on by COVID. While on-premise orders rose to 47% in July 2022, Hanson pointed out that this is still below the 58% of on-premise orders bars/restaurants were seeing pre-pandemic. He says it’s unlikely the industry will regain that percentage as off-premise channels like drive-thru, pick-up, and delivery continue to grow and take order share.

As consumers focus more and more on experiences, however, Hanson sees room for innovative companies to take control of the remaining share of the on-premise with opportunities that cater to the guest experience through atmosphere and high-end service.

Hanson also covered the myriad challenges facing bar/restaurant owners. As he said, the problem is not just the types of challenges—it’s the number of them as well.

Technomic recently conducted a survey of 550 operators and asked them to rate how concerned they were about nine challenges on a scale from 1 to 5, where 5 represented “extremely concerned.” The top three challenges all revolved around expenses—high food costs, high labor costs, and high disposables costs.

Interestingly, however, the challenges of labor retention and labor recruitment both came in at the bottom half of the list. Despite the continued challenge of the costs associated with labor, Hanson says this suggests the labor problem could be getting better. As inflation continues and consumers are spending more for the same goods/services, Hanson says many employees are staying put and looking for job stability to help pay the bills.

Another surprise is that supply chain shortages came in the middle of the list at number five. Operator outlook seems to have improved on this challenge, with a survey of 500 operators for Technomic’s Consumer and Operator Outlook Report released in July finding that 53% of restaurant operators believe the supply chain has “improved slightly.”

menu pricing rising costs
Restaurant operators are struggling to keep up with rising costs.

On the other hand, high food costs crowning the list of operator challenges comes as no surprise. Over the last two years, there have been big jumps in food and beverage costs. A graph compiled using data from Technomic and the Bureau of Labor Statistics showed that from April 2020-April 2022, cooking oil was up 77.8%, turkey was up 65.8%, and chicken was up 62.2%. The graph also showed that all foods have risen by over 25%.

As Hanson pointed out, these increases are all on core food service categories, so it can be difficult to find ways to combat these rising prices.

One strategy consistently used is menu price increases. However, according to Technomic, the price elasticity of consumers is somewhere between $7-$10, and the average quick-service restaurant (QSR) meal is now trending above $10.08. So the question becomes how much more are customers willing to pay before a restaurant prices themselves out? And if menu price increases are not an option, what are some alternative strategies?

In the survey of 500 operators for Technomic’s Consumer and Operator Outlook Report, it was found that most operators are simplifying menus (44%), cutting menu items (29%), and using more versatile ingredients (29%) to combat rising costs.

Versatile ingredients enable an operator to not only create more dishes, and unique ones too, but also to reduce waste and more easily source items. “Versatility is really something important to focus on right now in the foodservice business,” said Hanson.

Ingredients that can be used in multiple ways also enable operators to easily change menus and introduce new products. In fact, the previously mentioned survey of 500 operators found that when considering a new menu item, being sure it uses ingredients the restaurant already purchases is key (34%), which comes in just behind an item’s appeal to current customers (38%).

 

Plan to Attend or Participate in the Vibe Conference, Feb. 27 – March 1, 2023

To learn more about the latest trends, issues and hot topics, and to experience and taste the best products within the on-premise beverage community, plan to attend the Vibe Conference, Feb. 27 to March 1, 2023 at the Sheraton San Diego Hotel & Marina. Visit VibeConference.com.

To book your sponsorship or exhibit space at the Vibe Conference, contact:

Fadi Alsayegh Sales & Sponsorships Email: [email protected] Phone: 917-258-5174

Donna Bruns Sales & Sponsorships Email: [email protected] Phone: 936-522-6932

Charlie Forman Sales & Sponsorships Email: [email protected] Phone: 845-262-1041

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