Dinova and Technomic recently came out with their State of Business Dining Report for the third quarter of 2022. Within its pages are both current restaurant industry trends and predictions of what is to come. The good news is that there is good news! In light of the recent and ongoing challenges, we’re going to start there.
The Good News
The Business Dining Index (BDIndex) measures current restaurant industry trends in business dining spending as a percentage compared to the same time frame in 2019. The BDIndex has improved throughout the year and is projected to be just 11 points shy of a full recovery. This is due, in part, to more business people returning to the in-person workforce, meeting in offices, at conferences, and on the road. In essence, travel has returned to full force and, with it, business dining.
About 89% of companies have resumed domestic business travel, and 33% of employees’ jobs require travel. That’s great news for an industry that relies heavily on business travelers.
More good news: the holidays typically bring in more business dining. The caveat: Economic conditions could trigger a pullback, impacting corporate travel and expense budgets in 2023.
The Not-So-Good News
I’m sure you expected this one: Inflation. Despite the Federal Reserve’s attempt to rein in inflation, it’s still the worst it’s been in 40 years. About 41% of consumers report dining out less often, 32% seek more deals, and 83% are concerned about rising prices. However, Huhtamaki’s 2022 Q3 Trends report noted that 29% of recent survey respondents reported that it’s cheaper to order from restaurants than to buy all the items and cook at home. Additionally, those surveyed chose eating out over buying new clothes and traveling.
Getting Through a Possible Recession
Huhtamaki reminds us to stay the course, remember our primary strengths, and look to the actions of the restaurants and operators that made it through the 2008-2009 recession. Other recommendations include developing an integrated digital presence across all platforms and a loyalty program.
Smokey Bones developed an all-digital drive-thru lane, the first of its kind for a fast-casual brand. In addition, Red Robin upgraded their online ordering, noting that off-premise sales have more than doubled pre-pandemic levels.
Another area that seems to be working for restaurants is the growing breakfast segment, with trends leaning toward breakfast as an all-day event. For example, Snooze, a brand focused on leisurely breakfasts, saw sales grow from $80.9 million to $139.2 million after opening six new locations in 2021. Another Broken Egg Café reported record-setting sales in 2022, confident in their daypart brunch concept that provides a better quality of life for their staff.
Taking Advantage of the New Hybrid Workforce
Another trend that’s here to stay is the hybrid workforce. Dinova reports that about 44% of employees continue to work from home and the average office occupancy rate compared to 2019 remains at 43%. In addition, because in-person work is more common in smaller cities, more business dining is found outside major metro areas. Another offshoot of this trend is the increasingly competitive nature of corporate catering due to lower office occupancy.
It’s important to note that Fridays are the most popular work-from-home day, shifting the once-popular Friday business lunch. Instead, Dinova recommends that restaurants target the typical commute days, Mondays and Wednesdays, for the business crowd.
Companies are also encouraging workers to return to the “office” fold by feeding them. This includes in-office catering that one-third of commuters enjoy at least once a week and venturing out to restaurants. Now’s the time to market private event offerings and holiday party venues.
Attracting Conference Attendees
The top cities for corporate events in 2023 include New York, Houston, Boston, Chicago, Minneapolis, and Las Vegas. So how can restaurants attract these conference attendees? Dinova recommends expanding your restaurant hours to include early risers and late-nighters and incorporating special theme items on your restaurant menu. And, of course, don’t forget to encourage sharing their remarkable experience on social media.
Do restaurants do well during a recession?
Recessions usually require restaurants to tighten their belts by slowing down expansions or cutting back on expectations. Of course, several restaurants that continued their expansion plans despite an unprecedented pandemic succeeded, showing that for every rule, there’s a rule breaker.
How did restaurants do in 2008?
As the housing market deteriorated, sales began to slide at restaurant chains in late 2007. In 2008, the Dow Jones U.S. Restaurants & Bars index dropped about 13%, according to CBS news. In comparison, the Dow Jones Total Market index fell 40%.