Thinking of getting into the restaurant business? Then you’ve likely heard it’s a risky venture. But the more you understand about the future of the restaurant industry, the better the decisions you’ll make when narrowing down a solid investment. It may seem that investors and customers alike are more wary of restaurants in the wake of the pandemic. However, a Deloitte study in March 2023 revealed that 55% of respondents dine out as much if not more than they did pre-pandemic. Meanwhile, those already invested in restaurants seem more energized than cautious. A stunning 100% of those surveyed by Square in 2024 are planning expansions of their restaurant business through innovative strategies. Let’s take a closer look at the trends defining the future of the restaurant business.
Finding Customer Loyalty Through Affordability
Is it any surprise that affordability is one of the driving factors in the evolution of the restaurant business? With people feeling the crunch all around, necessity often overrides desire. Therefore, many restauranteurs are currently grappling with providing loyalty-inducing food at a reasonable price. This is particularly heated in California, at the moment, as hidden fees face the axe on July 1. Some restaurants are exploring loyalty programs, cost-saving promotions, and subscription services to stand out as an affordable option when menu prices are rising en masse. These solutions establish a personal connection with clientele and, in so doing, promote repeated dining, building a solid foundation of customer loyalty.
A Sustained Focus on Health
One of the biggest challenges when seeking affordability is maintaining a high standard of quality. And healthy options are still very much in vogue in the restaurant business. The fixation on health consciousness is so prevalent that several restaurants successfully make healthy cuisines a tenant of their brand. Just look at the abundance of restaurants around California that cater to vegetarian, vegan, and even gluten-free diets. It can be quite the balancing act to create meals that are affordable, healthy, and appetizing. Yet, people are doing it every day in the restaurant business. As an investor, the impetus to perfect this formula won’t fall solely on you. However, it behooves investors to maintain a focus on these attributes as their partners experiment with culinary creativity.
Ghost Kitchens Continue to Possess the Restaurant Business
According to Deloitte’s study from March 2023, 69% of respondents stated that they get takeout or delivery as much if not more than they did just a few years ago. The same survey revealed that 50% of respondents would order food from ghost kitchens, and another 24% felt indifferent. Yes, even after the pandemic, convenience continues to be king. It’s why ghost kitchens play such a vital role in the future of the restaurant business. Unfamiliar with ghost kitchens? These are basically restaurants that operate without any dine-in options. This translates to low overhead and less need for labor, ultimately offering a low-cost entry point into the restaurant business for investors. Even established restaurants are expending resources by reconfiguring designs to meet the growing emphasis on delivery and take-out. Expect future restaurants to further prioritize design efficiency to meet this evolving model.
Automation is All Around Us
Automation is figuring big into the future of the restaurant business, as is the case with so many other industries. Delivery services are relying more heavily on drones and driverless cars. Supply chain management is becoming increasingly more driven by AI. And, as you no doubt know from personal experience, there’s an app for everything. Artfully incorporating automated services into your restaurant business can ultimately save you money. However, cutting-edge services are rarely cheap. Be prepared to allocate a significant amount of funds to incorporating automated services. This may be a long-term strategy where more automation is introduced over a prolonged period so as not to cripple your restaurant out the gate with oversized start-up costs.
Is an Experiential Restaurant Business For You?
Not everyone’s tightening the purse strings when dining out. These customers are propelling the concept of “experiential dining” in which they’re willing to pay a premium price for a novel experience. Experiential dining offers an easy way to diversify the income stream with picture-worthy plates, signature drinks, live entertainment, exclusive merchandise, and even interactive add-ons such as cooking classes. But the concept behind a dining experience needs to be top-notch to attract this level of clientele. With experiential dining, it’s not enough to simply provide great food. Image matters, so you’ll need to put significant effort into creating a buzzworthy atmosphere that can’t be missed.
Guilt-Free Dining
People care much more about where their food is coming from these days than they did a few decades ago. And that’s a trend that’s still rising. The more aware people become about ethical sourcing and sustainability, the more they typically prioritize choosing restaurants that value these virtues as well. Don’t look at sustainability and ethical sourcing as yet another hurdle to overcome. Developing relationships with local vendors who practice sustainability can lend to a particular brand of customer loyalty.
Thinking about getting into the restaurant business? Make sure to consider the options above to put together a solid business plan. When you’re ready to start looking for a property that perfectly fits your vision, let me know!
