Full Course, the industry’s first and only incubator and accelerator of early-stage food brands, recently held a webinar titled “2024 Restaurant Industry Predictions” as part of its Rising Tide webinar series.
During the webinar, a panel of experts weighed in on what staffing, marketing, operations, and more will look like in 2024. Here’s what they had to say.
Staffing in 2024
Finding staff will continue to be a challenge into 2024, but Lissa Bowen, Chief People + Culture officer at Full Course, says employee retention is really the key to a stellar team and metrics like KPIs, sales, etc.
“Truly, it's better to have fewer people that are outstanding than a bunch of people that are ‘meh,’" says Lauren Barash, vice president of Brand Marketing for Full Course. "Hiring is not going to get a lot easier, so retention is really where it's at. If you've got high quality talent, keep it.”
In order to retain and develop employees, Bowen says it’s first important to create a culture where your employees love to work and can continue to grow. From there, offer them guidance on career pathing as well as incentives and benefits.
Training is also a big part of employee development and retention, and technology is making it easier than ever with automated training systems, customized training, and more. Plus, trained employees who stay on can lead to savings for a bar or restaurant in the long run.
“Generally speaking, you're going to see better costs with higher retention. The higher your retention is, the better people get at things, the more efficient they are,” says Bowen. “So when you look at things like sales, because they understand the guest, and they understand the menu, and they understand the product, and even food cost and things like that, [they will be better at selling and serving the customer, leading to a bigger bottom line.]”
Bar & Restaurant Development in the New Year
Aside from employee development, Full Course also tackled the topic of bar and restaurant development. Lauren Fernandez, CEO of Full Course, noted that new openings and mergers & acquisitions in the industry have slowed to a crawl.
There are a few reasons for this. For one, inflation has driven up the cost of construction, negatively impacting building. Inflation has also affected the availability of loans as well as interest rates. This is all leading businesses to wait to sell and build until market conditions improve.
To combat these factors, Fernandez recommends that bars or restaurants looking to grow focus on omnichannel development and nontraditional footprints. This could include launching catering programs, amplifying delivery programs, creating pop-ups, or exploring growth opportunities in venues like stadiums and universities.
“There are some creative ways you can solve for what we see to be some slow and sluggish development next year, just start to think outside the box of your four walls,” says Fernandez.
2024 Marketing for Bars & Restaurants
Barash dove into the likely marketing trends for next year as well as how to best promote a bar or restaurant brand.
Market on Value. Barash says consumers are tightening their purse strings due to inflation, but they are still spending and eating out—it just has to be worth it for them. For this reason, she recommends bars and restaurants compete on emotion and value.
“Beyond the functional things you would normally look at, convenience, price, etc., think about how to offer some sort of an experience that adds value to the guests,” she says.
For one, authenticity is a big part of that experience. “A lot of the ads out there that are speaking to how a brand is living out their actual purpose is really resonating, especially with gen Z and millennials. In fact, nearly half of those groups said what a brand stands for factors into their purchase decisions,” says Barash, who says it’s important for a brand to know their purpose so that this can translate into marketing. “That's one of the first things that we talk to clients about is discovering that purpose, and making sure that it transcends down into everything that you do.”
Loyalty Programs. Another way to ensure repeat visits and a bigger share of consumers’ shrinking budgets is through a robust loyalty program. “Your total average ticket is dropping a little bit, which means you have to be driving as much frequency of visit as you can,” says Fernandez.
Barash says successful loyalty programs also come back to value—but not just in the sense of discounts. “I think a lot of brands have been investing in their loyalty programs, as they should, but part of competing on emotion from a loyalty perspective would be looking outside the idea of giving discounts and things like that and trying to think of how to create community and a sense of belonging,” she says. “People want to connect with brands that resonate with their lifestyle choices and connect with the things that they value, that they care about.”
Loyalty programs that build community could look like an app that encourages more interaction from the consumer or a way for the guest to express their unique identity within the program.
Other ways to ensure the success of a loyalty program is to focus on building your database by marketing your loyalty program across all touchpoints and offering onboarding incentives.
Operators should also pay attention to frequencies. Guests may join your loyalty program because of a strong onboarding offer, but then there is usually drop off after that first visit. To avoid this, Barash recommends reexamining your second and third-tier rewards. “If you're joining a loyalty program and getting to reward number two takes too long, then you're not building a habit of using the loyalty program,” she says. “And having a well-trained team that understands the loyalty program and understands the value of asking people if they're members [is also important.]”
Operations
James Kahler, COO of Full Course, said inflation and fluctuating food prices continue to bring volatility to the market as bars and restaurants are forced to make price increases. “Over time, what has happened is many restauranteurs have been taking price increases multiple times over the last several years, and they are backing up to their ceiling as far as price is concerned,” he says. “You can only take so many price increases and added fees to combat the inflation of the cost of goods coming in to where the customer is really going to start looking at trading down.”
The good news is because dining out, take out, and delivery are so convenient for the consumer, Kahler says there hasn’t been much degradation in the consumer spend in these areas. He has some suggestions for ways to combat rising costs that don't involve raising prices.
Optimize. Kahler says to really know your product mix and product costs. If there is a labor-intensive food product on your menu or an item with expensive ingredients, consider shifting it to an LTO until it becomes more profitable.
Automate. Also look at optimizing your labor, automating repetitive tasks with technology, and paying attention to the data from technology like your POS system. “Really trying to make sure you understand what your products are costing in real time, as best you can, can help you make very informed pricing decisions and is an ongoing solution,” says Kahler.
Simplify. Kahler cautions bars and restaurants to avoid trying to be everything to everyone. He says to reduce the complexity of menus and instead focus on what your establishment is the best at. “That is what is attractive to people because of the consistency and quality of the delivery,” says Kahler. “So consistent delivery, accuracy, quality, and speed of service are going to be some of those game changers for a lot of people in their decision making.”
Shrinkflation. Originally observed in the off-premise, shrinkflation is the phenomenon of a product’s quantity going down while the price goes up. It’s now starting to be seen in the on-premise as well, as operators look to keep profit margins intact by shaving down portion sizes.
While this can be a successful tactic that usually goes undetected, Kahler cautions operators to realize their regulars may be the first ones to notice. “That's something that I think a lot of loyal guests that come to your restaurant more frequently will notice and point out,” he says. “Our customers are very savvy about this. So be sure you're not offending or pushing away, and then your frequency of guests visits start sliding off because you're implementing this strategy to help protect your margin.”
Group Buying. Another possible solution to rising costs, especially for smaller and independent bars and restaurants, is to join a group purchasing organization. This provides a smaller business with access to better discounts and prices from vendors they wouldn’t otherwise have. “The group purchasing organization has such a huge buying power because they're aggregating tons and tons of either smaller chains, mom and pops, and so forth, and it gets these big contractual pricing [deals] that they can help share with you to help decrease the cost of goods on your shelf," says Kahler.
Taxes & Financing
Full Course ended their webinar with a look at some changes Uncle Sam may have in store for 2024.
Sam Patterson, interim CFO at Full Course, says above all else it’s important to understand your individual state’s tax laws as they vary widely.
He says to pay particular attention to sales and use tax. “We expect to see more sales and use tax compliance audits in 2024 as the states dig deeper and deeper for more revenue,” he says. “So update your understanding of the rules for your state, especially when it comes to third party delivery and catering.”
Patterson said a second area he expects states to get more aggressive on are the laws around gift card compliance and unclaimed property. “Some states are liberal, they'll let you keep most or all of the dormant balances on those gift cards and let you keep them as the traditional breakage revenue that you're used to getting,” he says. “But a lot of states now require that the stale balances on those gift cards have to get sent to the state as unclaimed property and that is real cash out of pocket.”
The bottom line? Knowledge is power in 2024—whether it’s the knowledge you’re equipping your staff with, the knowledge you have of your brand and its purpose, or the knowledge you wield regarding profits, taxes, and costs.
Are you registered for our Crave and Crave on the Menu newsletters? Sign up today!
Plan to Attend or Participate in the 2024 Bar & Restaurant Expo, March 18-20, 2024
To learn about the latest trends, issues and hot topics, and to experience and taste the best products within the bar, restaurant and hospitality industry, plan to attend Bar & Restaurant Expo 2024 in Las Vegas. Visit BarandRestaurantExpo.com.
To book your sponsorship or exhibit space at the 2024 Bar & Restaurant Expo, contact:
Veronica Gonnello (for companies A to G) e: [email protected] p: 212-895-8244
Tim Schultz (for companies H to Q) e: [email protected] p: 917-258-8589
Fadi Alsayegh (for companies R to Z) e: [email protected] p: 917-258-5174
Also, be sure to follow Bar & Restaurant on Facebook and Instagram for all the latest industry news and trends.