F&B Insights

Restaurants’ Challenges and Response as Summer Ends

As many of you know, rising labor costs and continued inflation continue to challenge the restaurant industry. A July 2023 poll by Restaurant365 representing all restaurant segments and 14,000 locations revealed the impact of both these challenges. Over 70% of respondents saw an increase in food costs from Q2 2022 to Q2 2023, with the average coming in at 13%. 

In the world of labor, over 80% saw increasing costs, with an average increase of 8%. About 50% said recruiting and retaining staff was their biggest challenge in 2023. 

Let’s explore how restaurants are facing these challenges and what the future holds.

Inventory Control

In the 2023 poll, over 50% used better inventory tracking to reduce their cost of goods sold to counter rising food costs. As painful as it is, taking consistent inventory can result in considerable savings, providing powerful control of costs and theft prevention. If the current labor shortage makes this all but impossible, start with the most expensive and high-usage items. Watch these items closely until usage, ordering amounts, and timing are all dialed in. 

Changing Menus to Increase Profits

Changing menus is another tact chefs and operators are taking to manage food costs. A Datassential report found that over 80% of consumers love or like hashbrowns. Yes, hashbrowns. And, with potato prices surging this year due to strong demand and declining production, you may wonder how this food group comes into play. Looking forward, an expected 7% drop in price is forecasted for the 2023 to 2024 marketing year.

Despite this segue into the land of delicately fried potatoes, one of the keys to increasing profits is tightening up your menu. Limiting your menu to your star dishes improves profits and enhances the guest experience. Another important consideration is pricing. Unfortunately, it’s a fine line between increasing menu prices due to rising food costs and losing traffic due to increasing prices. 

The answer lies in F&B Insights. This platform offers the largest menu database in the world, enabling you to see what your competitors are doing and make changes to your menu and prices accordingly without affecting demand. 

The Changing Environment

Consumers are beginning to change their dining preferences. Takeout sales dropped by just over 6%, while on-premise dining increased by over 9%. Delivery remained relatively unchanged. Do you know the trends occurring in your brand? 

In July, the restaurant industry posted negative year-over-year growth for the fourth consecutive month, as reported by Nation’s Restaurant News. However, while the market continues to challenge economists, many with contradicting opinions and forecasts, the U.S. economy has proved resilient, and the potential for a recession in the near term is declining. 

How did the big chains fair the last few years? Technomic reported that most chains added about eight locations. Some, however, did not fall on the side of expansion, with Subway showing the biggest decline, closing 571 units in 2022.

Controlling Labor Costs and Enticing Recruits

Over 53% of those surveyed increased wages to stay competitive and retain staff. The labor shortage, however, appears to be stabilizing with turnovers decreasing. Despite this, brands like Chipotle are going all in, gearing their recruiting efforts to social media content designed to appeal to the Gen Z population.

Another approach is Target Workforce. This proprietary technology uses advanced geo-location and mobile tracking to find qualified employees at the lowest recruiting costs. 

While those in the restaurant industry have certainly faced their share of challenges, we’ve made it through another summer, and now it’s time to start preparing for the upcoming holidays. Does the fun never cease?

At EMERGING, our many divisions have one goal in mind: to optimize our partners’ growth and profits while minimizing risks. To learn more about F&B Insights, Target Workforce, or optimizing your growth strategy, contact EMERGING today.


How can I make my menu more profitable?

Menu engineering has been in effect for as long as there have been restaurants. In its simplest terms, it involves drawing attention to your highly profitable, popular dishes and eliminating items that fall on the other end of the spectrum. 

How can restaurants reduce food costs?

In addition to trimming down your menu and keeping an eye on pricing, controlling portions can significantly counter increasing food costs. Use measuring tools and train your staff to use them consistently. 

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