In an industry marked by incredible ups and downs over the last few years, we love good news. And the first few months of 2023 give us reason to see the cup as half full. According to the National Restaurant Association, January 2023 saw total sales for eating and drinking establishments come in at $95.5 billion. This figure shows a significant increase from sales of $89 billion in both November and December. These sales were also about 24% greater than those experienced in January 2022, another significant benchmark.
These numbers reveal that, at least for the coming months, consumers appear resilient, thanks to a strong labor market and moderating inflation. Additionally, restaurants added almost 99,000 jobs in January, making them the top job creator in the economy. We are currently just 166,000 jobs below our pre-pandemic level.
Those employment numbers, however, vary significantly based on the sector. For instance, full-service restaurants still show staffing levels 311,000 below those found in February 2020. Comparatively, fast-casual and quick-service establishments demonstrate about 4,000 jobs over pre-pandemic staffing levels.
So, what do economists say after positive numbers came hurtling in? Let’s take a look.
The Reasons Customers Continue to Spend
A survey by Deliverect at the end of 2022 found that 42% of people in the U.S. get as many as three food deliveries each week. The top five factors that influence their restaurant of choice include its location and delivery time, item availability, appealing photos of the food, and seeing it on social media.
Potential guests are still looking for two driving forces when choosing a dine-in restaurant—the experience and convenience.
Lessening Impacts of 2022 Disruptors
As you know, the three greatest challenges restaurants faced that had a profound impact in 2022 included supply chain issues, inflation, and labor. As of January 2023, chief economists report that, while a global recession is likely in 2023, the pressures on inflation, food, and energy may be peaking. Sources of optimism include continued labor market resilience, strong household finances, and some easing in inflationary pressures.
Bank of America’s Global Research economists also expect an impending recession, but believe it will be mild, particularly compared to historical standards. They also report that those with capital in the restaurant industry are searching for deals, knowing there are opportunities in the market.
Restaurants’ Response to the Current Climate
Consumers see restaurants as essential to their lifestyle. A recent report by the National Restaurant Association found that 84% of consumers believe going out to a restaurant with friends and family is a better use of their leisure time than cooking and cleaning up.
One survey found that many consumers would try a restaurant known for its “cool atmosphere.” Restaurants are responding by providing an exceptional experience, creating Instagram-worthy environments that depict their brand. Additionally, according to Nation’s Restaurant News, 45% of TikTok users chose a restaurant because it had a unique food item posted. This translates to the continued demand for unique experiences.
The Role of Technology
During the pandemic, technology was a restaurant’s life raft. Many found the benefits greater than anticipated and continue to use technology to attract the next generation of guests. As energy is being focused on existing customers and increasing check averages, restaurants are looking to appeal to their frequent users.
One of the continuing trends that appeal to the younger generations is using a restaurant app. Make sure yours offers a user-friendly and engaging experience. Another growing practice is the use of upselling as customers peruse online menus.
It’s clear that the new normal is here to stay and requires keeping an eye on the horizon to stay abreast of the growing and all-important trends. At EMERGING, our team of data scientists works as your in-house Business Intelligence Data Partner, gleaning actionable insights from your POS and other data sources to increase your revenue. To learn more about our solutions-focused process or to schedule a consultation, contact EMERGING today.
How are restaurants doing in 2023?
Compared to the last few years, 2023 is, thus far, looking like it may be heading toward the new normal for restaurants. While “normal” certainly has vastly different connotations, this new normal has less volatility, and a consumer still looking for an experience and convenience.
Is 2023 a good year to open a restaurant?
According to a survey by Restaurant365, many restaurants are bullish about growth in 2023, even with the expected increase in food costs. Almost 60% of respondents said they’d developed a plan to scale up.