4 restaurant trends staying beyond 2024

Modeling the year ahead is an important step for restaurant operators to take. You don't have to be a fortune teller with a crystal ball — it's about being prepared and learning from your experiences.

One effective way to feel primed and ready for 2024 is to familiarize yourself with statistics to see what's been recently trending. With that in mind, leaning into Toast's Voice of the Restaurant Industry survey of 847 restaurant decision-makers from May 2023, to June 20, 2023, here are four predictions for the restaurant industry to chew on.

1. Understanding ingredient data will help maximize ROI

Inflation has been in the news for a couple of years, and rising costs for food away from home continue to hamper restaurants' return on investment (ROI): the survey found that 42% of operators raised menu prices due to inflation in the past 12 months, up from 36% in 2022.

The same study revealed that enhancing profitability ranks as a primary business objective in the upcoming year, with 34% of respondents emphasizing the significance of their profit margins. To attain this goal, businesses can assess their menus, pinpoint items with higher profit margins, and concentrate on promoting and selling these particular courses.

Another way to keep profitability at the forefront is to utilize ingredient data tools. For example, data-driven, recipe-appraising tools can provide operators with precise insights into the cost of each serving for every recipe. Then, menu engineering systems can fold those costs into consideration with pricing, menu design, and more.

With this data, restaurants can make well-informed decisions about whether to retain or remove certain items from the menu based on ROI or substitute different ingredients that have a higher profit margin. These tools also provide real-time insights into pricier items, enabling cost reduction strategies and, for multi-location brands, facilitating inventory reallocation to meet higher demand at specific locations.

A notable success story from 2022 involves one of our customers, Underbelly Hospitality, a regional hospitality group in Texas, which reported to Toast in 2022 that it achieved substantial cost reductions with a combination of new systems, discipline and opening additional ventures.

2. Restaurants will lean into catering services

In the services realm, catering plays a critical role in enhancing revenue streams for operators. Last year, global business consultancy McKinsey identified catering as a pivotal avenue for restaurants with growth-oriented strategies. Prominent fast casual brands like Chipotle, Sweetgreen and Panera — not to mention full-scale establishments like Another Broken Egg Cafe — are embracing catering to broaden their revenue streams.

Catering expands the business's outreach, connecting with a broader audience that has the potential to become regular patrons. Events such as weddings, birthdays, anniversaries, and corporate parties allow restaurants to showcase their hosting prowess, culinary expertise, and diverse menu offerings. This exposure contributes to heightened brand awareness and has the capability to substantially boost revenue growth.

Implementation of catering as a revenue channel can be made relatively seamless with the right equipment, including insulated food pan carriers, cooking countertops/chef stations, chafing dishes, and more. It's a sales driver for all kinds of eateries. For instance, according to the same Toast survey in early fall 2023, approximately four out of five small-to-medium-sized cafes and bakeries derive a portion of their sales from catering, accounting for 12% to 32% of their overall revenue. As operators look to the future, 48% say they will place an increased focus on catering in the next 12 months.

Restaurants can leverage digital tools to streamline backroom tasks associated with catering, such as invoicing, deposits, time management, and cost tracking. Familiarizing restaurant managers with these digital tools can pave the way for smooth integration.

3. Loyalty and rewards will become increasingly important

Toast's Voice of the Restaurant Industry study also found that marketing was the fourth-most difficult area for restaurants to manage in 2023 (behind inflation, guest throughput, and hiring). Loyalty programs are one marketing strategy that, once established, builds momentum upon momentum, which is why restaurants will continue to embrace it this year.

New York City-based Blank Street Coffee offers an innovative loyalty program, managing a waitlist of 4,000 individuals for its monthly subscription initiative called "Regulars." Currently, around 5,000 customers are subscribed, paying up to $18 weekly to enjoy 14 beverages, encompassing cold brew, espresso drinks and tea. There is also a streamlined $9 weekly option, granting customers access to 14 beverages, such as teas, hot brewed coffee, and Americanos. Participation in the program is capped, leading to the existence of a waitlist and an element of FOMO ("fear of missing out") among local consumers.

Blank Street's initiative makes sense, too, according to research. Per a 2022 Merkle study, 79% of consumers are more likely to do business with a brand due to its loyalty program.

4. Operators will embrace a retail-oriented mindset

Beyond serving popular beverages like coffee and fantastic food, restaurant operators can explore an additional revenue stream: retail. This approach optimizes the use of available square footage and allows establishments to sell various dried goods such as coffee beans, heirloom flour, specialty condiments, mugs, cookbooks and baking tools as an example. By transforming their storefronts into small, niche shops, eateries can offer patrons supplementary groceries, unique gifts, and impulse purchases while ordering coffee or picking up their takeout.

The beauty of this strategy lies in its relatively small investment. For example, a simple shelf near the counter, coupled with inventory management tools, can introduce a new revenue stream to an existing shop. Moreover, the displayed items can serve as engaging conversation starters for both regular and new patrons alike (also helping with brand awareness).

While 2024 will inevitably have twists and turns for restaurants, what we've learned in the last several months from research trends may help what will drive a successful business in the year ahead. The operators who are prepared to capitalize on the increasing importance of ingredient data, catering, loyalty programs and retail can reap dividends and build their restaurant's audience to new levels.

2023 Survey Methodology

To help better understand the restaurant industry, Toast conducted a blind survey of 847 restaurant decision-makers operating fewer than 15 locations in the United States from May 26, 2023, to June 20, 2023. Respondents include a mix of both full-service and quick-service restaurants. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to restaurant respondents for participation. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 3%.