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The cost of experience

In Restauarant365’s just-released State of the Industry Survey, which covered some 5,500 locations, a clear paradox showed—but not an unfamiliar one. Operators are being hit with high-cost dynamics on multiple fronts, yet aware they need to deliver experience to justify how that’s being passed down to guests.

Of the more than 80 percent of respondents who said food costs rose over the past year, more than half said it was in the 1–5 percent range. Last year, respondents noted a 10 percent rise while labor was roughly 9 percent. This year, of the 89 percent who noted labor costs expanded in 2023, north of half put it in the 1–5 percent window as well. So costs are still climbing, albeit at a slow pace. “Restaurant operators continue to show resilience and creativity as they find new ways to move their restaurants forward,” Restaurant365 CEO and cofounder Tony Smith said. “We’re seeing continued focus on the guest experience and a heavier focus on overall business operations. Expanding the use of integrated technology to drive efficiency, cost savings, and growth have propelled many restaurants throughout the year.”

Sixty-one percent of surveyed operators said they plan to take price in 2024. Again, an upward arrow but one that’s started to level out—it was 82 percent in 2023.

In the study, restaurants picked employee experience and retention as their most-pressing challenge for 2024 (38 percent agreed), followed by sales volume (24 percent), and labor costs (18 percent).

More 2024 predictions

The Restaurant Lessons We Learned in 2023

Restaurants Brace for the Most ‘Normal’ Year Since 2019

What’s the Big Restaurant Tech Trend Nobody is Talking About Yet?

Fast-Food Trends for 2024: The Age of Automation and Customer Experience

What the Past Tells Us About What’s to Come for Restaurants in 2024

Nearly half of respondents said their investment priorities will include business intelligence and analytics, alongside employee lifecycle software (36 percent), integrated accounting and reporting (34 percent), and a host of AI tools.

AI remains a bit of a convoluted path. Forty-one percent said they planned to invest in AI sales forecasting and scheduling, 33 percent in AI-driven guest marketing, and 31 percent expect to implement AI inventory and purchasing tools.

And lastly, 57 percent of respondents said they’re planning to grow, essentially on par with 2023’s 60 percent. Twenty-five percent want to open one location; 28 percent two to five; and 4 percent six or more.

“It’s a testament to the restaurant industry that a year after many braced for uncertainty and a potential downturn, leaders are now planning to invest in critical functions across their businesses to bolster every aspect of this essential sector of the U.S. economy,” Smith said. “As the pace of change in innovation, consumer preferences, and the economy speeds up, operators that embrace efficiency-and-value-adding technology, whether in the back office, the order counter, or the dining room floor, are the ones best positioned to flourish.”

However you spin it, disruption is on deck once again, surrounded by an operating climate that’s pressuring operators to innovate while managing inflation. FSR touched base with eight experts to see what they expect to materialize in 2024’s crystal ball. As always, there will be no shortage of avenues to chase.

Let’s jump in.

Russ Spencer

Senior Director of Restaurant Success, Craftable

This past year marked a year of growth. Not only was there a 10 percent rise in new bars and restaurants compared to 2022, but the cost of goods also increased, subsequently increasing menu prices. Consumer goods rose by 13 percent, vendor goods by 15 percent and the average menu pricing by 8.5 percent—and it’s not stopping anytime soon. The price of many staple items, such as chicken, seafood, and olive oil, are expected to continue to grow into 2024. With an expectation of higher pricing, operators need to protect their profit margins by reducing waste, optimizing efficiencies, and leveraging margins. For example, operators can reduce waste by not over-ordering products and ensuring teams understand proper portioning.

Another focus point for operators in 2023 was starting to reintroduce catering and parties. Now with companies going back to the office and social gatherings becoming the norm again, operators should make perfecting catering menus a priority to beat the inevitable New Year rush and avoid becoming overwhelmed when demand hits. Catering services are not only about the menu options—operators should also consider what services they can provide that offer convenience. Consumers order catering to enjoy their party and not have to worry about the details. For 2024, operators should review what services and conveniences they can provide their customers, such as set up, breakdown, serving staff and more. Additionally, if the current space doesn’t allow for one already, invest in property that has room for a party or private room. We predict that companies requesting either in-office catering or private party rooms at local bars and restaurants for gatherings throughout the year will significantly increase during 2024, so operators would be wise to prepare in advance.

Boomers have the highest disposable income, while Gen Z impacts the industry through their ordering habits with delivery, catering and takeout more than any other generation. So how can operators target these two generations? In 2023, there was a lot of attention placed on sustainability, with a heightened focus on eco-friendly practices. That is expected to continue in 2024. In 2024, it is also expected that there will be a heightened awareness of health and wellness versus what we saw following the year of the pandemic. Those in the lodging segment that offer wellness packages, such as fitness amenities, nutritious menu options and more, will have an advantage. As for food and beverage establishments, they must review their menu offerings and provide healthy choices, such as non–GMO, gluten-friendly, and low-sugar options like the very popular skinny margarita.

Lastly, we urge operators to consider adopting dynamic pricing to adjust to real-time supply and demand. As prices continue to increase and margins begin to thin, dynamic pricing will help operators increase revenues, better manage inventory, and protect profit margins. Dynamic pricing relies on real-time trends and supply chain factors. To effectively utilize dynamic pricing throughout 2024, invest in technology that analyzes profit margins and menu prices for you to save time on adjusting and evaluating prices based on this data and provide operators more time to spend with their customers.

Misty Chally

Executive Director, Critical Labor Coalition

The nature of the job market in 2023 continued to change nearly four years since COVID-19. With potential workers wanting more flexible schedules and “work from home” options, those most impacted include restaurants, hotels and other service-related jobs needing an in-person employee presence. Recent data from the U.S. Chamber shows that we have 9.5 million job openings in the U.S., but only 6.5 million unemployed workers. The labor force participation rate is 62.7 percent, down from 63.3 percent in February 2020 and 67.2 percent in January 2001.

As we look to 2024, the biggest challenge with labor and workforce across the service industry is continuing to educate the U.S. Congress and the American public of the bipartisan solutions to address the workforce shortage. Solutions such as expanding the pool of workers (second chance workers, caregivers, asylum seekers, and guest workers) and providing tax incentives for both employers and potential employees. People need to understand that the workforce shortage isn’t a political issue—but a solution for America’s small business owners.

Another challenge is finding solutions to the ever-changing workplace. Post-pandemic early retirements, less men in the workforce and teenagers no longer seeking entry-level jobs have resulted in less applications for employment. This—coupled with a desire for more workplace flexibility, work from home options and an increased work/life balance—will affect the demand for retail, restaurant, hotel, and all service-related jobs for the foreseeable future.

In 2023, we made strides towards rebuilding the workforce including the introduction of the “Earned Income Tax Credit Age Parity Act” (H.R. 5689), bipartisan re-introduction of the “Essential Workers for Economic Investment Act” (H.R. 3734) and increased bipartisan co-sponsorship of the “Asylum Seeker Work Authorization Act (S.255, H.R. 1325). But we’ve still got a long way to go. The most recent JOBS report shows that the unemployment rate fell from 3.9 to 3.7 percent with employers adding a seasonally adjusted 199,000 jobs, which means there are even less job seekers than the previous month (not a good sign during the holiday season).

As a coalition dedicated to solving the labor and workforce shortage, our members across the restaurant, hospitality, franchising, staffing and other service industries have joined forces to amplify the need for critical labor solutions. We’ve made a lot of progress this year thanks in part to partnerships with organizations like Golden State Opportunity, AARP, Refugees International, Asylum, Seekers Advocacy Project, and the American Immigration Lawyers Association but we still have a long way to go.

The biggest opportunity with labor and workforce across the industry in 2024 is for Congress to set aside their differences and work together to support U.S. small business owners. The Critical Labor Coalition’s primary goal is to remove barriers when it comes to addressing workforce participation. If labor shortages and costs continue to rise, we will have a lot more kiosks and artificial intelligence in the restaurant and hotel industry. And while innovation can streamline some processes for businesses, the heart of a business depends on people—so it’s pivotal to solve the workforce shortage and get people back in business.

Krystle Mobayeni

CEO, BentoBox

It’s an exciting time for the restaurant industry as restaurants move forward from the pandemic and look ahead to new innovations. In 2024, we anticipate the following trends will emerge. First, we’ll continue to see a shift in restaurant job listings reflecting the demands of an empowered workforce—employees seeking benefits like PTO and healthcare, prompting industry leaders to respond accordingly, particularly as restaurants continue to open in droves. The second trend is technology-driven, with ongoing developments enhancing dining experiences. Expect the rollout of more personalized options, including customer loyalty programs, menu recommendations, and targeted marketing, thanks to advancing A.I. Although not an immediate transformation, 2024 will be a year of experimentation that leads to a new balance between automation and hospitality for the industry.

Giliah Librach

Director of Merchandising Operations, ezCater

On Consumer Preferences  

Next year is the year of unconventional pizza. Restaurants are taking the dish to the next level, serving everything from breakfast to Indian-inspired pizza. While Pizza Fridays have been a long tradition at work and home, we anticipate seeing a growing demand for pizza orders for all parts of the day as the fan-favorite dish becomes more diverse than ever.

Based on what we’re already seeing from our partners, consumers want to be educated about their food to make informed buying choices: where is it from? How was the food sourced or produced? Next year, I believe consumers will make food sustainability a top purchasing priority. This trend will manifest itself at many levels, whether in retail labeling or how restaurants describe their menu items to customers.

On Menu Ingredients

We predict the rise of “bougie” ingredients like caviar, lobster and truffle popping up at restaurants at more affordable prices and in more casual settings like fast casuals and quick-service restaurants. Restaurants will lean into serving ingredients that create a craveable, memorable, and unique experience for their customers at a more accessible price, making it a more accessible treat that’s not only for special occasions.

As the return to office continues, we anticipate employers will jump on the latest food trends when deciding what to serve to create “office FOMO.” From serving food from hard-to-book restaurants and menu items like the latest chicken sandwich or charcuterie board taking TikTok by storm, photo-opp-worthy foods will be used as a draw to increase in-person attendance.

On General Restaurant Trends

Workplace catering will remain a critical channel for restaurants to boost their revenue, and we expect to see restaurants focus on providing a greater variety of catering options, like offering more single-serve or handheld items that give people the flexibility to eat their lunch with their teams or grab and go as needed.

Amy Chen

COO, UPSIDE Foods

The cultivated meat industry is entering its next chapter. With products now cleared for consumer sale in both the United States and Singapore, the cultivated meat industry is moving from proof of concept and early-stage R&D to a focus on demonstrating scalability, sustainable unit economics, and consumer and customer demand. Scaling will require deep capabilities and infrastructure, and we expect more industry collaborations and consolidations, particularly given the current funding environment.

In the context of 2024, we anticipate the cultivated meat industry expanding its horizons by forging more meaningful partnerships with a diverse array of stakeholders, such as governments, large industrial and agricultural players, NGOs, academia, and investors. This could take the form of creative blended financing structures, open innovation platforms, infrastructure partnerships, and commercial collaborations as the industry enters its next phase of maturity. This shift will position cultivated meat as a long-term venture with the potential for far-reaching positive impacts on future generations. Just as the transition to renewables and electric vehicles has thrived on collaborative efforts, we foresee more collaboration for the cultivated meat industry in 2024.

The restaurant experience remains deeply personal and profoundly human. And while automation and robotics can help streamline some elements of operations, in the wake of the COVID-19 pandemic, there’s a newfound appreciation for human connection and dining experiences. We’ve reached a point where we’re recognizing the value and limits of these technologies. There’s an acknowledgment that not everything can be resolved through the use of robots, AI, and automation alone. The artistry of chefs and the creativity of restaurateurs will continue to be at the forefront, while these tools become operational enhancers.

As we look forward to 2024 and beyond, we’ll witness a growing consumer demand and acceptance of “alternatives.” People will increasingly choose innovative products not only because they align with their values, but because they taste and perform better or otherwise meet personal preferences or needs. This transformation is evident in the realm of milk alternatives, where oat milk, once a niche product, has become the default choice at upscale coffee chain Blue Bottle. While the decision was originally driven by environmental concerns, it stuck because it makes a better coffee. What a great double bottom line. Looking ahead, we predict a day when cultivated meat will find its place as a default choice -on menus, because it delivers on taste, nutrition, and food safety, in addition to environmental sustainability and animal welfare. Beyond the realm of food, a similar shift has occurred with electric cars. Initially seen as symbols of sustainability, they are now appreciated primarily for their performance and features.

In 2024, we anticipate food’s role in the global solutions conversation will continue to rise in importance, fueled by a growing awareness of its significant impact on both our health and the planet. As consumers become more aware of the intricate connections between their food choices and the well-being of the planet, they are demanding a more sustainable, equitable, and resilient food system. Governments, too, are recognizing the urgency of addressing food-related challenges, from hunger and malnutrition to climate change and resource scarcity. In this evolving landscape with more conversations around creating resilient and sustainable food systems, these discussions can help translate into tangible solutions.

As we head into 2024, we are seeing food safety become more top of mind for consumers and more mainstream media talk about its risk. Once a niche concern primarily discussed within scientific circles and regulatory agencies, food safety has now taken a more prominent place in consumers’ consciousness. This heightened awareness will drive consumers to actively seek information and make informed decisions to ensure their well-being. In the long run, this will drive consumer interest in choices like cultivated meat and other alternative proteins—which are created in clean, controlled conditions versus conventional slaughterhouses.

Frank Jaksch

CEO, Ayana Bio

Plant-based foods will actually be plant-based

Plant-based meat’s tailspin decline has some lessons for CPGs in 2024—consumers want “plant-based” products to actually contain healthy plants. Next year, we’ll see more companies shift away from trendy precision fermentation and synthetic ingredients that are “nature identical” in favor of real plant-derived ingredients that still have a high-tech twist. For example, plant cell cultivation is on the rise as a way to optimize plant materials directly from plant cells in a lab rather than growing plants in soil, and the ingredients can be considered natural.

Better-for-you processed foods expanding in 2024

Two trends will converge in 2024 to start to shift how CPGs make our most popular foods—the White House’s focus on “food as medicine” and the increasing scrutiny on ultra-processed foods. Ultra-processed foods are a necessary evil to feed the expanding population and will need to become part of the solution. Together, these forces will push companies to build more health benefits directly into processed foods, and in new ways. My company’s recent survey results show that two-thirds of adults would eat more and pay more for ultra-processed foods that included more nutritious ingredients or added health benefits.

Soumya Nair

Global Consumer Research and Insights Director, Kerry

What do you foresee as the biggest flavor trends coming to the forefront in 2024?

Flavor trends are deeply rooted in the changing consumer priorities and in the coming year consumers’ priority in wanting conscious, empowered and comforting foods will gain significance.

Empowering eats—people want to be heard and feel seen in the food and beverages made available to them—whether low to no alcohol or vegan or plant-based etc., consumers want to feel empowered to decide their personal priorities and have solutions that support their decision.

Flavors and ingredients we will see—grain-free pasta and meals, alternative dairy ingredients—cashew is enjoying its limelight in soft cheese, spreads, dips, zero proof drinks and cocktails that give them the social belonging without the need to change their low-no alcohol goals.

Authentic adjacent—Food tourism has returned over the past couple of years as consumers broke free of their pandemic restrictions. This meant consumers got back their thirst for adventure and authentic experiences. Social media has further catalyzed this consumer nerve. But in the recent months and into 2024, authentic foods will take on a new dimension—of chefs and baristas inspiring a brave twist on authentic foods. Heritage Remix is unabashed, bold, and tells a story and creates an intercultural collaboration (also closely linked with the trend of empowering eats) Think beyond fusion foods and third culture cuisine to different cultures bravely inspiring each other:

Flavors and ingredient we will see—tikka sauce wings and za’atar wings, birria ramen, sashimi tostadas, tandoori masala pasta, wasabi/kimchi mashed potatoes, cheeseburger ravioli, to Vietnamese po-boys.

These uncharacteristic combinations are rising, and consumers are here for it.

Thrilling comfort—Comfort has always been and will always be a foremost driver of flavors in foods. In recent months we noticed an uptick of comfort flavors with a flair for spice and heat. In the U.S. alone, spicy LTOs have grown significantly and now 71 percent of U.S. menus carry spicy as a menu call out.

Flavors we will see—spicy everything from spicy honey, spicy cocktails and sparkling waters, spicy chocolates and candies and sauces, we will see interesting new spice ingredients—arbol peppers, gochugaru, tajin seasoning, with new variants of the fried chili sauces appearing across the world—e.g., salsa macha (the cousin of the fried chili sauce), sambal oelek continues.

Comfort sauces and bold flavors with new origins will continue as well—garlic inspired Lebanese toum, Provençal pistou, chaat masala, tamarind, etc.

Meanwhile we will continue to see more comfort nostalgic flavors and blurring of these flavors such as—alcoholic flavors inspiring sweet and savory foods, dessert-inspired flavors in beverages and meals, etc.

Renaissance revival—Heirloom food and ingredients are experiencing a revival as consumers want to taste and experience history.

Flavors and ingredients we will see—Middle Eastern anise-flavored arak liquor, cave-aged and pottery-cooked foods such as cheese, meats, breads, retro soda and retro shakes, depression-era slugburgers, and flavors that pay homage to the golden ages.

Near nature—personal home gardens and foraging have become dominant behaviors adopted by consumers worldwide, significantly more after the pandemic. This has resulted in a closer relationship with ingredients—how to grow, how to preserve, how to cook with these ingredients and is no longer just limited to the summer months.

Flavors and ingredients we will see—cider, pickles, brine, vinegars, fermented foods—all rising in consumer searches, in products, recipes, and on the menu. Also giving rise to new botanicals, spices and herbs such as nettle, and mushrooms of all kinds for texture, flavor and function.

Conscious consumerism—The “& consumer” stays strong—prioritizing taste alongside nutrition, healthy aging, and sustainability and their impact on the society, community, and environment. This means the need for craveable flavors will sit alongside the need for ingredient transparency, functional health ingredients, and sustainable solutions. Consumers face a world of contradictions with critical uncertainties of food waste, food scarcity, and the reality of supply challenges and geopolitics affecting their foods.

Flavors and ingredients we will see—BCAA, creatine, functional mushrooms, berberine, electrolytes.

At the same time consumers are moving toward frugal foods and practices hoping to guard themselves against the rising cost-of-living crisis and fear of inflation and recession. Zero-stigma foods are coming back—tinned fish, bath cooking, ‘instant’ everything among a few of these.

Kimpton

Salt With a Story

While salt is one of the most common ingredients in cooking, expect to see a noticeable shift to unrefined salts (Black Hawaiian Salt, Kala Namak, Persian Blue Salt, Celtic Salt, Fleur de Sel) as consumers move away from table salt staples in search of something far more unique to add to their favorite dishes.

Sourcing will also be a priority for many chefs, working with global salt producers to identify salts from around the world and understand their history and use cases.

Tinned Fish and Seacuterie Boards

In the last year, luxury tinned fish sales have soared as people embrace seafood’s diverse range of flavors and sustainable practices. Expect to see more unique conservas on charcuterie boards as well as dedicated ‘seacuterie’ boards including samplings of luxury canned fish like Spanish sardines in olive oil, habanero smoked oysters, and Maine eel smoked in alderwood packed in California olive oil.

Cabbage Takes Cauliflower’s Crown

Cabbage will take over plates as culinary professionals and consumers alike turn to the cruciferous vegetable for its versatility, taste and texture. Both well-known varieties such as Napa, Savoy and Red Cabbage and the more coveted Caraflex or Conehead cabbage will be showcased in a multitude of ways on menus including charred, fermented, roasted, braised, and even caramelized.

Creative Dry Aging

The technique of dry aging has grown in popularity and is increasingly sought after by consumers. Leveraging the proper equipment, dry aging provides enhanced control of texture, adds depth of flavor and complexity to elevate any dish.

With dry aging, chefs are able to push beyond beef into more interesting dishes with duck, lamb and fin fish. Vegetables like beets and carrots are being dry aged with koji to create a charcuterie-like texture and flavor. Even spirits like bourbon and gin are being treated with dry aging techniques to take cocktails to the next level.

Pastry is Back

Consumers are saving room for dessert as chefs roll out inventive confections. Kimpton is particularly seeing a rise in Asian and French influences for the sweetest course.

Guests can expect to see a rise in sweet and savory combinations, such as carrot mochi and chocolate smoked salt croissants with alternate sugars like date-based sugar, beet sugar and coconut sugar growing more prominent.

2024 Cocktail/Beverage Trends

Textured Cocktails for the Senses

Rose and pistachio dust, dragon fruit crisp and edible helium bubble clouds are some of the sensory ingredients diners will soon find on bar menus in 2024 to add texture and visual appeal to the liquid base.

A New Wave of Umami

Kimpton bar leaders predict more experimentation with different types of fat washing as a new way to create smooth, creamy and velvety undercurrents in spirits rather than more traditional sweet syrups. Expect to find creations like a salmon martini or beverages using unique washing ingredients such as duck confit and spam.

Pantry Ingredients Featured in Cocktails

Bars will incorporate ingredients from the kitchen to up level cocktail and non-alcoholic beverages, including biquinho peppers, salsa macha, soy sauce, fish sauce, whole cacao, black tahini, lion’s mane and sweetened condensed milk as an alternative to more traditional cocktail infusions.

Over-The-Top Garnishes

From snap peas to using 3D printers, simple garnishes will evolve to elaborate final flourishes that completely transform a cocktail from salty and savory to citrusy and bright in an instant.

Cinnamon Revisited

Breaking out of its autumnal shell, the versatility of cinnamon will offer dynamic flavor pairings as a popular additive and bridge to trans-seasonal beverages and dishes, like cinnamon and smoked salt coffee and chica moradas.

Unique Latin American Spirits

While tequila, gin and bourbon continue to shine on menus, 2024 will see the rise of Latin American spirits and liquors such as Aguariente, Singani and Cocuy, served within craft cocktails or enjoyed on the rocks.

2024 Dining Experience Trends

Multisensory Dining

Consumers will continue to look for culinary experiences that take them beyond taste and texture, and provide a holistic experience filled with more extravagance and novelty. Restaurants and bars will be paying even more attention to presentation and glassware, background music and smells to engage all the senses during a culinary journey.

The Future of AI

Kimpton culinary experts anticipate more chefs will be open to integrating AI tools to optimize processes, reduce food waste and help make food more accessible, providing a new solution to operating as sustainably as possible. Restaurants will continue to emphasize responsible stewardship from zero waste efforts and regenerative agriculture, to water conservation.

AI can also be used as a new source of inspiration to spark conversation in the kitchen about new flavor combinations and dish ideas, allowing chefs to think about their menus in a new light.

Consumer Trends, Feature, Leader Insights, Slideshow