Majority of Restaurants Say They Plan to Expand in 2023

The restaurant industry is seemingly recovered from its staffing challenges and a majority say they intend to grow their businesses in 2023, according to the R365 State of the Industry Customer Survey.

In a stunning reversal, this past month alone, restaurants and bars added 62,000 jobs, according to the Labor Department. In fact, food service and drinking establishment positions have just about returned to pre-pandemic levels with all but 2.1% of these 12.2 million jobs having returned.

Higher pay and fewer opportunities in other industries are among the reasons recently cited for workers’ interest by The Wall Street Journal, which added that fast-food employment is performing better than staffing at full-service eateries.

These are among the trends that help to explain why nearly 60% of the surveyed restaurants plan to expand.

Industry forecasters say the headwinds restaurants will face next year are familiar – a continuation in increased labor and food costs – not to mention the expectations of a downturned economy.

Data-Driven Decisions Improving Performance

A focus on retention and using resources on salary increases and recruitment to combat these ongoing issues are strategies that will be used, according to the survey.

Tony Smith, CEO and co-founder of Restaurant365, said in prepared remarks, “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.”

The report also showed restaurants that are making data-driven decisions to lower labor costs, control inventory, and reduce waste can also turn to menu engineering to improve their margins.

Data can make it clear which dishes need a recipe or portion adjustments, an increase in price, or to be removed from the menu, Smith said.

Adjusting Hours of Operation

Richard Colloca, CPA, partner, national food and beverage practice leader, EisnerAmper, tells GlobeSt.com that there will certainly be ongoing challenges for restaurant operators.

“The pandemic created a shift in dining experiences that enabled the industry to expand options to the consumer,” Colloca said. “With expected rising product and labor costs, inflationary pressures, continued supply chain issues, and workforce challenges, the industry will continue to employ more strategies to help combat some of these obstacles.

“The restaurants will have to balance in-person dining strategies, such as limiting or changing the menu options to focus on higher demand meals based on data analytics with that of enhancing take-out and catering options, which continue to require the related infrastructure to meet consumer demands.”

Colloca said other considerations will be a change in hours of operations, continued investment in technology – such as ordering apps and robotics to ease the strain of labor constraints and having the ability to handle larger size dining groups, even if less frequent, to overcome possible downturns in the decline of visits from more-frequent diners.

Commodities Prices Have Industry in ‘Fragile’ State

Walter Kunisch, senior analyst at HTS Commodities, tells GlobeSt.com how cattle prices are impacting restaurants.

In 2023, the domestic macro climate, the US consumer, the health of the restaurant/food service sector, and the financial state of the feedlot are all precariously fragile.

The challenge is to identify the statistically relevant demand-related variables that can impact live cattle prices.

As the US economy weakens and inflation persists, food service demand for beef is expected to soften. During a recession, consumers tend to “trade down.” Diner traffic at quick service restaurants (QSR) rises while traffic at upscale casual and fine dining restaurants declines.”