R365 State of the Industry Customer Survey results show that 60% of surveyed customers plan to expand their businesses in 2023 amidst predicted continuation in increased labor and food costs.
Restaurant365, the leading all-in-one restaurant enterprise management software today released key findings from the R365 State of the Industry Customer Survey. Results share the top challenges of 2022 and predictions for 2023 and represent over 10,000 QSR, Fast Casual, Casual Dining, and Fine Dining participating locations across the United States.
2022 saw an increase in sales across the industry with the return of on-premise dining. While this upturn in sales was openly welcomed by all, many operators struggled with profitability due to the continued labor shortages and increasing food costs.
Food and labor are two leading cost drivers that impact a restaurant’s bottom line. Most respondents noted increases in both, with labor costs increasing 9% and food costs increasing 10%, on average. To offset these increased expenditures, the restaurant industry has become more creative in their operations.
“Operators are finding strategic ways to drive profitability,” states Tony Smith, CEO and co-founder of Restaurant365. “Restaurants who are already making data driven decisions to lower labor costs, control inventory, and reduce waste can also turn to menu engineering to improve their margins. This analysis will make it clear which dishes need recipe or portion adjustments, an increase in price, or to be removed from the menu.”
Amid increasing inflation many operators found it necessary to increase menu prices to balance margins and the customer experience. 92% of surveyed restaurants increased their menu prices in 2022 with the average increase being 8%. 73% plan on increasing menu prices in 2023.
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Looking forward to the new year, 75% of survey respondents expect labor costs to increase in 2023 and are planning to focus on recruiting and retention efforts. 38% plan to use additional spend and resources on salary increases and recruitment to combat this ongoing issue.
“Many are predicting an economic downturn in 2023,” states Smith. “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 and can focus their efforts on other pressing issues such as recruiting and retention.”
While the survey results show that restaurant operators are predicting many of the same obstacles experienced in 2022 to continue into the new year, the uncertainty has not discouraged the hope of future growth to most. The survey results indicate that nearly 60% of the surveyed restaurants have growth planned in 2023.
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“Restaurant365 is proud to support the growth of our customers,” states Smith. “We have helped over 40,000 restaurants streamline their operations and increase their margins. Once operations have been transformed and a brand is profitable in one location, the model can quickly scale to be leveraged in new locations.”