Restaurants sales are forecast to exceed $1.1 trillion in sales this year, marking a new milestone for the industry that will employ over 15.7 million people in the United States by the end of 2024. This is all according to the National Restaurant Association 2024 State of the Restaurant Industry Report.

Key findings from this year’s report:

• Positive sales expected: Restaurant operators are cautiously optimistic about the year ahead, with nearly 8 in 10 predicting their sales will increase (33%) or hold steady (45%) from 2023 levels.
• Delivery, carry-out and drive-thru growth continues: 52% of consumers — including 67% of millennials and 63% of Gen Z adults — say ordering takeout from a restaurant is an essential part of their lifestyle, further showing the profound impact restaurants have on consumers’ lives.
• Industry employment increased, but help still wanted: Forty-five percent of restaurant operators report needing more employees to meet customer demand, and a majority (70%) have job openings that are hard to fill.
• Profitability remains challenged: Operators are slightly less optimistic about profitability, with only 27% of operators expecting to be more profitable this year. Average food costs have increased more than 20%, and average wages more than 30% from 2019 — both impacting profitability.  
• Jobs drive consumer spending: All restaurant sales are local, and consumers are generally upbeat about their community. Fifty-five percent of adults describe their local economy, including the availability of jobs, as excellent or good.

"With more than $1 trillion in sales expected this year, the state of the restaurant industry is strong thanks to the agility of its operators and employees,” said Michelle Korsmo, president and CEO of the National Restaurant Association. “As our report shows, restaurants are finding ways to adapt to the challenges of increased food costs and supply chain disruption. Restaurants have responded well to customers’ desire to have more opportunities to enjoy restaurant meals, which continues to grow sales, create employment opportunities, and foster a strong sense of community.”

Value in technology, special deals and promotions

Consumers’ affinity for technology in restaurants varies, and as a result, operators are strategically deciding how to incorporate technology into the experience. For full-service restaurants, nearly half (46%) of adults think technology has a positive impact, and this number weighs heavily toward younger consumers (64% of Gen Z and 66% of Millennials). Similarly, this group is more likely to want more technology options, according to the research.

These preferences can help operators make informed decisions on where and how to invest. In 2023, just under half (48%) of operators made technology investments to enhance the customer experience, but 60% plan to make an investment in 2024. The areas where consumers say technology would have the most positive impact on their personal experience include options that make ordering and paying easier and faster.

If consumers are somewhat split on technology, they can agree on the value of a special deal or discount, with 7 in 10 adults saying they often look for a daily special or discount. Customers (85%) are more flexible about when they dine if it comes with a deal, and 84% said they’d take advantage of deals offered for dining at off-peak times. Further, 75% of adults would opt for smaller-sized portions for a lower price — a trend that can help restaurants curb food waste and improve profits.

To further fuel customer retention, the data suggests focusing on loyalty and rewards programs. Customers prefer to see this type of program on a smartphone app, further enforcing the need for technological innovation and creating additional touchpoints between customers and restaurants.

Food cost and availability influence menus

If consumers notice menu changes on a more frequent basis, it’s often the result of increased food costs. In the past year, operators report needing to find new suppliers, removing items from their menus, adjusting portion sizes or substituting lower-cost items, all in response to elevated food prices. The availability of food items impacted menu composition as well, with more than three quarters (77%) of operators saying their restaurant experienced supply delays or shortages of key food or beverage items in 2023. These changes will present a challenge for operators, especially with most adults (86%) saying they like ample choices on menus.

Further directing menu choices are social media trends. As the National Restaurant Association’s 2024 What’s Hot Culinary Forecast shows, savvy operators are turning to TikTok and other social media platforms to be inspired and to fire up viral trends. Operators will need to be strategic in how they balance thoughtfully streamlined, food-cost-effective menus and enough variety to satisfy demand and lead the latest trends.

For those offering it, off-premises remains a key area of opportunity, and customers agree, with a vast majority (88%) reporting being satisfied with the variety of local food options for takeout and delivery. Customers are viewing take-out in new ways, with two thirds (67%) of adults saying they’d be interested in subscriptions that offer a specified number of meals each month and half (53%) saying they’re open to supplementing home-cooked meals with restaurant-prepared items.

“This is an historic and exciting year for the restaurant industry,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association. “While challenges remain—including inflation, recruitment, higher operating costs and profitability—restaurant operators will continue to innovate and evolve to meet customer demands.”

Download the 2024 State of the Restaurant Industry Report, supported by Sage, here.

Source: National Restaurant Association