It appears the foodservice industry in North America has just about cleared the Covid-19 hurdle that initially rocked the sector beginning in 2020.
Sales in 2022 for the top 500 U.S. restaurant chains grew 8.2 percent to USD 393 billion (EUR 366 billion) compared to 2021, according to research firm Technomic in its latest 2023 Top 500 Chain Restaurant report.
“Unprecedented levels of foodservice inflation had a major effect on the industry’s largest chain restaurants in 2022,” Technomic Director of Industry Research and Insights Kevin Schimpf said of the report’s findings. “Soaring menu prices proved to be the biggest factor behind the 8 percent sales growth posted by Top 500 chain restaurants in 2022. Location development also boosted chain performance, as the Top 500’s overall footprint expanded beyond its pre-pandemic total.”
Fellow foodservice insights company Datassential, in the fifth edition of its Top 500 report, similarly declared that the largest restaurant chains in the U.S. “have more than recovered in size from what they lost during the pandemic.”
“The Top 500 restaurant chains had a total of 232,937 units in 2022, up 1.1 percent from 2021. This highlights how the industry has stabilized after a few tumultuous years,” Datassential said.
Canada’s leading restaurant chains also saw gains last year, Technomic discovered in its 2023 Top 200 Canadian Chain Restaurant report, released at the end of May.
“Total sales for Canada’s Top 200 chain restaurants hit USD 40 billion [EUR 37 billion] in 2022, improving by 15 percent compared to the prior year,” Schimpf said. “While overall chain restaurant sales managed to bounce back to pre-pandemic levels, the recovery was largely driven by rising menu prices and the top-heavy growth of the industry’s top-ranked players.”
With pandemic concerns moving deeper into the rearview, obstacles related to inflation and labor are taking their place, Datassential Vice President of Customer Experience Kelley Fechner said.
“Things that everyone’s concerned about, especially operators, are rising food costs, inflation, ingredient shortage, etc.,” Fechner said.
Fechner added that “rising labor costs and staffing issues remain some of the most salient challenges for operators, falling just short of inflation.”
Of the operators surveyed by Datassential as of March 2023, 67 percent listed rising food costs as their leading challenge, with inflation (42 percent), rising labor costs (36 percent), ingredient shortages or unavailability (32 percent), recruiting and hiring hourly staff (31 percent), and retaining hourly staff (29 percent) also making the list of top complications.
“This is not going away, and we’re seeing technology come into play,” Fechner said.
The number of operators turning to automation robotics and artificial intelligence (AI) is also slowly on the rise amid persistent labor shortages.
“While once there was a fear that tech and robotics would replace workers, the hospitality labor shortfall means many of those workers have moved on to other industries. As margins continue to be squeezed, tech investments will pay off in the long run,” Mike Kostyo, Datassential’s trendologist and associate director, wrote in the firm’s Foodbytes 2023 Food Trends report.
Last year, limited-service (LSR) chains “leaned into their off-premise strategies and experimented with digital-only concepts that feature no inside dining room or, sometimes, ordering counter,” Datassential noted.
Quick-service restaurants (QSR), including those with seafood on the menu, have also begun dabbling in the tech space, Fechner added, with operations adopting voice-ordering AI in their drive-thrus.
Last year, Tampa, Florida, U.S.A.-based Checkers & Rally’s, for example, rolled out Presto’s automated voice AI, designed “to help restaurants maximize labor efficiency.” The AI has improved order accuracy, increased upsells, and provided a superior guest experience, according to the double drive-thru chain.
“Checkers & Rally’s is the pioneer of the double drive-thru restaurant model, so our decision to again lead the industry with the largest rollout of an A.I.-based voice assistant solution should be no surprise,” Checkers & Rally’s President and Chief Executive Officer Frances Allen said of the move in 2022. “We are excited about this new era in partnership with Presto, a leader in the restaurant hospitality technology field. As a company, we embrace technology that will help our team members maximize time and efficiency while making their jobs easier and more enjoyable, creating a better experience for them as well as our guests.”
Fechner said that drive-thrus with voice AI have seen “higher average checks” and that technologies of this ilk are able “to understand different dialects.” Worker morale has also increased with the AI’s aid, she added.
“The person taking your money or credit card and giving you the food was much happier because they could actually stay focused on doing one thing versus doing 14 things,” Fechner said. “There’s some good data that we’re seeing coming from this from a profitability perspective and productivity perspective.”
Other restaurant types can get in on the AI action, too, by turning to open systems online to help with recipe-writing, Datassential’s Kostyo noted.
“Don’t know where to start? Let AI write the recipe for you – 77 percent of consumers say they’d be open to trying a dish or product created by a computer,” Kostyo said, adding that AI is primed to “revolutionize many aspects of the food industry, from agriculture to food safety, concept development to production, marketing to personalization, and beyond.”
Beyond AI, Fechner said certain restaurants have been getting a hand – or an arm, rather – from robotics. Pasadena, California, U.S.A.-based Miso Robotics’ Flippy 2 robot, which automates the process of deep-frying potatoes, onions, and more, has found its way into a number of hospitality businesses, including A&W, White Castle, and Buffalo Wild Wings.
“If anybody has worked the fry station and gotten burned by grease, you kind of appreciate this in some way, shape, or form,” Fechner said, pointing out the benefit of foodservice technology when it comes to worker safety.
Kura Sushi U.S.A., meanwhile, has made a name for itself as a technology-centered restaurant franchise, offering customers a menu of over 140 freshly prepared items that arrive via revolving conveyor belt.
Established in 2008 as a subsidiary of Japan’s Kura Sushi, Inc., Kura Sushi U.S.A. announced the closing of a USD 68.3 million (EUR 63.7 million) public offering of common stock on 13 April 2023. The company, which operates 45 locations across 14 states and Washington, D.C., said it intends to use the net proceeds from the offering “for general corporate purposes, including capital expenditures, working capital, and other business purposes.”
Even as more restaurants embrace the cutting edge in terms of technology, Fechner maintained that humans will always remain at the heart of the restaurant world.
“The one thing that we all enjoy about going to the restaurant is that human interaction,” she said.
Photo courtesy of Prathankarnpap/Shutterstock
