The State of Restaurants in 2024: Higher Costs, Higher Stakes

In the evolving landscape of full-service restaurants in 2024, several challenges and trends shape the industry. TouchBistro's annual State of the Restaurants Report, based on a survey of 600 full-service owners, CEOs, GMs, and area managers, sheds light on key aspects.

Financial Pulse:

• Profit margins declined in 2023, with an overall figure of 9.3%. Small venues with less than 20 seats fared relatively well, while midsized restaurants (21–40 and 41–80 seats) faced the most difficulty.

• Debt became a significant concern, with 68% of full-service restaurants reporting carrying some amount of debt, averaging $51,863.20.

Inventory Challenges:

• Rising inventory costs became a primary source of financial strain for 58% of operators, surpassing rent and labor costs.

• Restaurants navigated high-cost arenas by finding new, less expensive suppliers, limiting promotions, and reducing the number of technology providers.

Revenue Strategies:

• To counter financial strain, restaurants explored various revenue streams, including adding off-premises ordering options (46%), modifications/add-ons (45%), and new technologies (42%).

• Expansion opportunities included adding catering services (54%), physical expansion with new locations (43%), and exploring virtual brands or ghost outlets (35%).

Labor Landscape:

• While the age of skeleton-crew restaurants seems to be behind, turnover remains a challenge, with 82% of operators still short staff.

• Restaurants addressed staffing shortages by offering higher wages (64%) and benefits (59%).

Customer Behavior and Pricing:

• Rising food costs led to menu price increases, with 67% of restaurants raising prices, albeit slightly less than the previous year.

• Changes in customer behavior following menu price increases included customers tipping less (34%) and spending less overall (33%).

Innovation and Automation:

• Restaurants increasingly adopted automation in various tasks, including sending orders to the kitchen (66%), staff scheduling (59%), and inventory management (65%).

• Upfront costs remained a significant barrier to automation adoption, with 37% citing it as a challenge.

AI and Technology:

• 89% of restaurants reported using some form of AI, with digital assistants (35%) and AI chatbots (34%) being the most prevalent.

• Ease of use, system reliability, and customer support were the top factors considered when choosing a point-of-sale (POS) system.

Marketing and Loyalty Programs:

• Social media (37%) remained the preferred method of communication with customers, despite challenges such as high marketing costs (37%).

• Loyalty programs were offered by 67% of restaurants, primarily in digital formats.

Reservations and Payment Processing:

• 75% of restaurants reported taking reservations, with 67% opting for integrated solutions for payment processing.

• The main frustration with payment processors was high prices (19%), followed by a lack of transparency (17%).

Industry Outlook:

• The industry is exploring various growth opportunities, including adding more locally sourced ingredients, catering services, and physical expansion.

• Despite challenges, there is optimism, with 43% of operators planning to add a new location in the coming year.

In summary, the full-service restaurant industry in 2024 is navigating financial challenges, labor shortages, and changing customer behaviors, while also leveraging innovation and exploring growth opportunities. Restaurants are adapting their strategies to remain competitive and resilient in a dynamic market.

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