The future of restaurants and food service has been saved
Analysis
The future of restaurants and food service
Strategies to overcome restaurant industry challenges
As the restaurant and food service industry continues to navigate rising costs, diminishing traffic, and ever-changing consumer preferences, how can companies compete in the future of restaurants? Explore five key imperatives that can help set restaurants up for continued success and create a competitive advantage.
Addressing restaurant industry challenges
The restaurant industry is challenged. According to Deloitte research, intent to spend on restaurants is lower than two years ago, when a short post-pandemic resurgence briefly elevated restaurant spending. In 2024, 20 large restaurant chains filed for bankruptcy, the most since 2020, at the height of the pandemic.
We recently conducted a survey of 150 restaurant executives to better understand what drives them, what they prioritize, what trends they are seeing, and the investments that they are making. According to this survey, restaurant companies are facing multiple challenges across the business from struggles to grow traffic and high input costs.
To address these challenges, restaurants appear to be taking actions in specific areas, including improving their digital experiences, innovating their menus, improving everyday value to drive traffic, and implementing efficiency measures to cut costs. Each of these point plays could provide temporary relief, but a more holistic approach may be warranted to help shape a thriving future and enable longer-term growth.
Our research indicates that there are five strategic imperatives that restaurant companies should understand and consider incorporating into a more holistic plan to help with sustained growth. However, before we get to those imperatives, it’s important to understand how we got here.
Future of restaurants and food service
Key issues reshaping the restaurant industry
Several macro forces are having an outsized influence on restaurant companies. We’ve identified six key issues, backed by our broad proprietary research with restaurant executives and our research with the James Beard Foundation. Many of these are evergreen issues, made more intense by changes over the past decade and accelerated by the pandemic.
Imperatives to improve performance
The unprecedented impact of macro forces is contributing to extraordinary change across the restaurant industry, and there is a wide range of potential solutions. Industry leaders can consider these five imperatives to help navigate—and succeed in—the future of the restaurants:
1. Unlock new growth horizons
Restaurant companies should consider pushing beyond traditional boundaries to capture new customers, markets, and revenue streams. These could include innovative concepts and formats, food innovation to capture the increasingly diverse consumer, regional and international expansion, daypart and occasion expansion, and targeting new segments.
2. Elevate convenience and connection
Restaurant patrons may want more than just a meal—they likely crave meaningful connection and seamless experiences that blend digital convenience with real-world enjoyment.
3. Unleash breakthrough efficiency
Improving operations, speed of service, efficiency improvements, order accuracy, and logistics are the top five areas of increasing investment at restaurant companies surveyed. With the power of AI increasing, and the cost declining, the conditions for AI adoption in restaurants are significant. GenAI and AI agents can also work with multiple sources of structured and unstructured data, helping enterprises to be more efficient in their operations.
4. Empower the future-ready workforce
Given the changing landscape, the workforce of the future may need new skills and capabilities. At the same time, restaurants are likely dealing with evergreen issues in scheduling, retention, hiring, and training that can be addressed with new technologies. Some restaurant companies appear to be working through these issues in multiple ways.
5. Serve up a sustainable future
Restaurants are appearing to accept that consumers are often drawn to brands that have strong reputations for operating sustainably. Some restaurant companies are taking several steps to meet challenges and create value in this area.
There are likely significant opportunities to help improve performance embedded in each of the five considerations outlined above. Restaurant companies should consider their aspirations, take stock of the current state, and devise options that can cross all five to help them prioritize a plan of action. Download our full report to learn more about these key imperatives that can help set restaurant companies up for continued success.
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