According to the National Restaurant Association’s 2023 State of the Restaurant Industry report, restaurant sales are expected to increase by $60 billion in 2023. The factors driving this 6.4% growth, from $937 billion in 2022 to $997 billion in 2023, are pent-up demand and higher menu prices.
According to Hudson Riehle, the association’s senior vice president of research, the increase stems from “high rates of menu price inflation.” He reported, “Restaurant operators obviously have to look for creative solutions in this environment because the traditional restaurant model, from a cost standpoint, was not designed to endure the depth and breadth of this sustained period of much, much higher food and labor cost.”
The report also found that inflation continued to challenge the industry. Over 90% of operators stated that the cost of food remains a significant issue. Additionally, 47% of operators believe competition will be more intense in 2023.
Revenue Streams Continue to Expand
The report also found continued expansion in additional revenue streams for restaurants, with loyalty programs, meal bundles, subscription plans, prix fixe items, and outdoor dining adding to the bottom line. In addition, the ability to add alcohol for to-go orders has also seen high demand.
Investing in Technology
Restaurants turned to technology to get them through the challenges that started with the pandemic. Continued investments in the sector are expected. The report found that four in 10 operators plan to invest in technology or equipment to increase productivity. Most of those investments are geared toward the payment and order arena, and fewer noted any investment strategies in robotics to support BOH staffing shortages.
Takeout Continuing to Trend
Almost 80% of fine-dining restaurants offered delivery for the first time during the pandemic. Not surprisingly, in our current environment where two-thirds of adults are more likely to order takeout than before the pandemic, eight out of 10 plan on continuing the practice. With 70% of operators believing conditions have settled into or quickly approaching the new version of normal, it’s critical to look at your menu pricing and see where you stand against competitors.
As a data-driven company, EMERGING is always excited to see more restaurants focusing on data when making critical decisions to improve performance. A survey conducted by Restaurant365 suggests their doing just that.
Conducted in December 2022, the survey revealed that most restaurants noted an increase in labor costs by about 9% and an increase in food costs averaging 10%. To offset these rising expenditures, they turned to data, looking for avenues to reduce waste, lower labor costs, and improve margins through menu engineering.
By crunching the numbers, they determined which dishes needed to be removed from menus and which ones required portion or recipe adjustments. This analysis also helped to determine price increases. This is expected to continue, relying on data analytics to decide which menu items require changing or limiting.
As Tony Smith, CEO of Restaurant365, stated, “While many business sectors begin to brace for uncertainty, the restaurant industry has already learned how to be more efficient with their business operations over the past couple of years. They are well prepared to operate no matter what economic challenges may lie ahead.”
A Better Way: F&B Insights
F&B Insights offers the world’s largest menu database, giving restaurants the competitor and market pricing information they need to make informed decisions about menu pricing. With continued pricing increases expected, it’s important to stay in the sweet spot. For restaurant operators, the goal is to increase prices as needed without affecting demand.
F&B Insights puts the needed information at your fingertips, giving you instant alerts when competitors adjust their menus and raise or lower prices. Additionally, with a national database, you have access to market trends across the board.
According to Steve Madonna, SVP of Culinary Bar Louie, “The Menu Pricing tool has streamlined the process we use for our competitive analysis, and has allowed us to focus on what is truly important the guest experience.”
To learn more about this platform that helps restaurants raise prices and reduce turnover, schedule a demo today.
Are food prices expected to continue to rise in 2023?
According to the USDA, food prices in 2023 are expected to increase by 7.9%. In addition, restaurant or food-away-from-home prices are predicted to increase by 8.3%.
Why is the price of eggs so high?
As many of you know, an avian flu outbreak killed over 60 million chickens. As a result, the price of eggs has skyrocketed, increasing above 200% in January 2023 compared to one year ago. While prices have started to drop, they are expected to remain about 150% higher throughout the year.