There’s a saying in the restaurant industry, “Adapt or die.” While a little dramatic, it bears remembering. Of course, there was no greater testament to its truth than the pandemic.
So, with today’s headwinds remaining steady, such as economic uncertainty and fluctuations in consumer spending, rising costs and menu price sensitivity, increasing competition, and shifting consumer preferences, what are restaurants doing to adapt and stay afloat despite the turbulent waters?
Let’s explore.
The Current Environment
Axios reported on changes to the restaurant industry in Washington, D.C., which can often reflect national trends. In 2024, about 73 restaurants permanently closed in D.C. A survey of residents in the region found that almost 50% are eating out less, over 30% are dining at less expensive restaurants or ordering fewer dishes, and nearly 25% are passing on alcoholic beverages.
Contributing to the closures is the continuing rise in labor costs and fewer office workers dining out.
A Growing Partnership
Restaurant operators are, as always, adapting. One of the growing partnerships is with retail. Although this partnership isn’t new, it is expanding. Over 10 years ago, Paulie Gee’s Brooklyn-based pizzeria supported a local entrepreneur entering the industry by allowing him to develop his product, a chili-infused honey, in their kitchen.
When they put Mike’s Hot Honey on one of their pizzas, it became a cult favorite, and they started selling twice as many as any other on the menu. According to U.S. Foods, Mike’s Hot Honey is now sold in numerous high-end retailers across the country. They quoted the restaurant owner, Paul Giannone, saying, “We definitely helped each other out.”
Adapting Time and Time Again
While challenges persist, forward-thinking operators reflect on opportunities. As John Adams and others have suggested, “Every challenge is an opportunity in disguise.” Here’s how some restaurants have adapted over the years.
- While Sweetgreens is currently challenged with significant losses, they have grown into a brand with over 900 locations. According to QSR, when they opened their second store, no one came. Did they give up? Obviously, not. Instead, they created an experience by setting up speakers and playing loud music outside the restaurant, attracting soon-to-be regular customers by sharing samples. With the street music a success, they went on to throw a block party, which morphed into the Sweetlife Music Festival, a yearly event attracting thousands of people.
- Today, more restaurants than ever are working with retail brands, creating signature specials and another revenue stream. Restaurant Hospitality recently reported on several partnerships developing in this area.
The Standard Grill in New York City created an LTO by teaming up with Sauz, a “new generation of tomato sauce offering bold, curated flavors made with the freshest ingredients.” Some of the offerings include stuffed meatballs and Miso Garlic Sauz, Calamari Fritti with Summer Lemon Sauz, and Fried Mozzarella Wedges with Hot Honey Sauz.
Rouser restaurant in Salt Lake City is partnering with Aperol for a limited-time summer event. The summer Aperol Spritz-themed patio pop-up offers alfresco dining serving Italian-inspired small bites with Aperol Spritzes in a European-like outdoor atmosphere. They’ve also provided games for the kids. This brand is taking full advantage of the season, offering guests sought-after experiences.
Panda Express and Hot Ones joined forces a while back, creating Blazing Bourbon Chicken infused with the Last Dab Apollo hot sauce by Hot Ones. Hot Ones is a popular YouTube show attracting about 14 million subscribers. This strategic partnership put Panda Express on the radar, enabling it to access Hot Ones’ audience.
And, of course, there are the large-scale fast-food versions that, by partnering with a retail brand, developed massive hits. Think Taco Bell and Doritos, and Dairy Queen and Oreo.
Taking a Chance
Taking chances by adapting to the opportunities that surround you provides the best chance at long-term success. By diversifying and considering how to offer elevated experiences for your guests that go beyond the norm, you can differentiate yourself in a highly competitive market.
As Winston Churchill said, “Success is not final, failure is not fatal: it is the courage to continue that counts.”
