HAPPY NEW YEAR – 2023
The Best of Restaurant Business
2022. It’s difficult to assess just what kind of year this was for restaurants. Costs were up, margins were down despite historically high menu price increases. M&A was virtually nonexistent. Uncertainty ran rampant. And yet companies invested heavily in technology and expansion. And then there’s this: Customers continued to spend at restaurants. The editors of Restaurant Business kept track of all this during the course of 2022 and went deeper than ever on the challenges and opportunities affecting restaurant owners, operators, employees and customers. We told the stories of independent restaurants and giant chains. We delved deep into all kinds of vital topics. As we head into the last week of the year, it’s a great time to look back at our best work. Most of these stories are for subscribers of RB+. But we are making them available for everyone. But I’d urge you to subscribe and get this kind of journalism all year long. Use the code MAZE22 for a free month. I promise it’s worth it.
How the Pandemic Altered the Restaurant Industry Forever
Chefs and restaurant owners are trying to figure out why it all feels so different. Pandemic restaurant-going was like a series of twists on the old Yogi Berra quip about how nobody goes there anymore because it’s too crowded. First, restaurants stood cavernously empty by mandate as we pined for them. Then we got scared to be cheek-to-jowl with fellow customers. As patrons surged back, a dearth of workers kept things off-balance. And as the worker shortage eased, inflation thwarted many diners from pre-pandemic levels of patronage. It’s still not normal. Looking around your favorite restaurant, assuming it’s still open, it feels different, right? The ebb and flow of service, how and when and what people order — the pandemic has meant seismic shifts for an industry defined by its resilience and adaptability, developments that will probably alter the dining landscape permanently. It’s changed because we, The Diners, have changed. Here’s how.
Consumers and Operators Find a Little Optimism to Close Out the Year
Consumer confidence in December reached its highest level since April. Still looking for a little bit of holiday spirit in the 11th hour? How about those gas prices, which have fallen like a brick since their peak in the spring. There are now 20 states with average gas prices below $3 per gallon, according to AAA. Why does this matter? High gas prices directly impact restaurant foot traffic, particularly at drive-thru/drive-in concepts. Consumers not only try to drive less when they pay more at the pump, they’re also forced to shift their discretionary dollars. High gas prices of course also impact businesses. When the average price-per-gallon hit record highs in March, for instance, 68% of small business owners said high fuel costs were hindering their sales. Fortunately, Santa has brought us all some timely relief. Still feeling Grinchy? Well, consider that consumer confidence in December reached its highest level since April. The Conference Board’s consumer confidence index was 108.3 in December, up nearly seven full points from the month prior and driven by plunging gas prices, softening inflation and consistently low unemployment rates. Consumers are feeling more buoyant than they have in months and that has to be good news for restaurants, right?
36 Restaurant Industry Predictions for 2023
Experts give their best guess as to what’s ahead. It’s been a wild couple of years for the restaurant industry. 2022 was no different, with brands fully embracing the new post-pandemic norm and adapting to technologies, tools and strategies that made their restaurants more efficient and responsive to the rapidly changing demands of the mainstream consumer. What does all of this suggest for 2023? How might the trends and changes that we witnessed as an industry this year further affect restaurants next year? NRN’s editors set out to discover which trends will make the biggest impact in 2023 and came back with a list that at once feels plausible and totally futuristic — an intersection that restaurant operators should get used to.
Finding Hidden Fees of Credit Card Processing Can Increase Profitability
A crucial element of the business. Total Food Service has asked us to analyze the data from our look at those credit card processing programs with a goal of understanding and bringing some additional savings to your operation in 2023. We’ve found that the pace of life for today’s restaurateur, CEOs and entrepreneurs find them engulfed in putting out the fires of daily operations. Consequently, the attention to credit card transactions and the corresponding costs are not being properly addressed. It’s obvious that credit card acceptance with the explosive growth of takeout & delivery continues to rise as a form of payment. However, it is important to avoid the pitfalls associated with taking a credit card for payment and understand different issues that will affect your profitability. The credit card industry has numerous “hidden costs” which can, and will, inflate credit card costs. When analyzing your credit card statement, there are over 500+ Interchange fees, gateway fees, PCI fees, annual fees, regulatory fees, transaction fees, cross border fees, (and many others) that comprise your “effective rate”.
How EaaS Benefits Businesses
Big and small. We’re all familiar with equipment rental and software subscription services in the restaurant industry. But have you considered how an equipment subscription is a better, smarter business move than equipment ownership? If you’re going to run a successful restaurant, there are certain pieces of equipment you just can’t do without: dishwasher, walk-in refrigerator, ice machine, etc. You get to choose how to acquire this equipment: buy or rent. While purchasing has always been the norm for most, if not all, essential equipment in the restaurant business, it’s not necessarily the smarter fiscal choice. Capital expenditures (CapEx), often but not always incurred before a business opens, represent major purchases that business owners typically finance with loans. Virtually all the CapEx equipment and other items in a restaurant or bar depreciate over time and must eventually be replaced. Back-of-house essential equipment includes some of the most expensive items a restaurant can buy, and while the business can’t function without them, these CapEx purchases aren’t going to generate more business year over year. Operating Expenses (OpEx) are the recurring monthly bills a restaurant or bar usually budgets for: electricity and water, rent, food and alcohol, etc. Any item or service the business rents or pays for through subscription also counts as OpEx. OpEx items are tax-deductible, unlike CapEx items, which means they can improve a business’s annual bottom line in a way all those CapEx purchases won’t.
6 Global Restaurant Trends
Impacting menus in 2023. Forecasting 2023 trends at the tail end of 2022 is risky business. Who would have predicted as we celebrated New Year’s Eve 2019 that the world would be gripped by a pandemic in 2020 that is still making news today? And some of this year’s trends, like butter boards and worldwide Sriracha shortages, sounded like make-believe in 2021. But every year, Restaurant Business sister company Technomic issues its set of global trend predictions based on data and menus from around the world. This year is no different. As we head into 2023, Aaron Jourdan, Technomic’s Director of International Research & Insights, offers up a glimpse of six trends that can potentially impact foodservice and restaurants in the months to come. Operators tended to put sustainability on the back burner as they struggled with supply and labor challenges, food costs and pandemic recovery. But the planet isn’t getting any healthier, as evidenced by recent wild weather swings and destructive forces of nature, and it’s time to take a “now or never” approach to climate change and sustainability initiatives.
Restaurants’ New Year’s Resolution
Finding Gen Z’s sweet spot. Virtual brands are tapping into the Gen Z-driven creator economy, while legacy brands are also trying to attract younger consumers with growing spending power. Just how important has the Gen Z consumer become to restaurant operators? During a recent panel, Raj Patel, president of multi-brand franchisee The Hari Group, said one of the reasons his company added Dave’s Hot Chicken to its portfolio was because it is attractive to that demographic. He added that Dunkin’ – another one of his brands – has made several changes in the past two years to attract Gen Z, such as launching a new app and Refreshers iced beverage line. “They have done a good job on platforms like Instagram. Dave’s is built on Instagram, on social media. Gen Z is the hardest segment for brands to attract right now and figuring out that piece is huge,” he said. “The brands that are hot and making noise right now have figured out how to cater to Gen Z.” No doubt social media is a big part of that puzzle. A recent Morning Consult survey found that 54% of Gen Z consumers spend at least four hours a day on social media. Research from N.C. State’s Poole College of Management’s Consumer Behavior Lab finds that 90% of younger consumers use Instagram daily and 68% use TikTok in addition to Instagram. TikTok has become the world’s most downloaded app for those ages 18 to 24.
Did You Know?
Netflix to build east coast production facility at Fort Monmouth. Gov. Phil Murphy and Netflix announced that the entertainment company will develop a state-of-the-art East Coast production facility on the former Fort Monmouth campus in Monmouth County. The property, which has sat largely vacant for more than a decade, is expected to be transformed into an economic engine that is estimated to create more than 1,500 permanent production jobs and more than 3,500 construction-related jobs in the state. Netflix plans to commit $848 million in capital investments to develop the more than 292-acre parcel, adjacent to Route 35 in Eatontown and Oceanport. The sustainable, integrated film studio campus will be completed in two phases over the course of several years.
Employee Tip
Hourly minimum wage increases to $14.13 on Jan. 1. New Jersey’s statewide minimum wage will increase by $1.13 to $14.13 per hour for most employees, effective Jan. 1, 2023. Annual increases in the minimum wage are required under a 2019 law that gradually raises hourly wages by $1 each year for most employees until a $15 per hour minimum wage is reached in 2024. Under the law, the minimum wage increase can exceed $1 an hour if there is a significant increase in the Consumer Price Index, as happened this year. The 2019 minimum wage law gave seasonal and small employers with fewer than six workers until 2026 to pay their workers $15 per hour to lessen the impact on their businesses. The minimum hourly wage for these employees will increase to $12.93 per hour on Jan. 1, up from $11.90.