Industry Forecast for 2023
by Kevin Stockslager, EVP & Partner, Wray Executive Search
While it sometimes seems like a lifetime ago, the COVID-19 pandemic severely impacted the restaurant industry, amongst many others, and we are still feeling the effects years later. However, as the world gradually returns to normalcy, the industry is expected to continue to rebound in 2023. Recently, President Biden’s administration announced that after May 11th, COVID-19 will no longer be considered a public health emergency. Despite proclamations from our government leaders, the lingering effects of the pandemic remain and new subvariants continue to emerge, keeping transmission rates relatively high. As we move further and further away from the early days of the pandemic, the restaurant industry looks to have a strong year in 2023.
With dining restrictions well behind us, it is expected that there will be a continued increase in demand for restaurant services. Nation’s Restaurant News recently forecasted foodservice sales to approach $997 billion in 2023!! Customers have been and will continue to be eager to eat out and socialize, and restaurants will need to be prepared to meet this demand. Restaurant owners should ensure that they have enough staff, inventory, and seating capacity to cater to the surge in demand. The tightening labor force within the industry has remained one of the biggest challenges throughout the COVID pandemic. In good news, the industry has continued to add to the workforce. The National Restaurant Association posted that the industry added almost 100,000 jobs in January, bringing the industry to within 166,000 jobs of the pre-pandemic numbers.
Increased Use of Technology
The pandemic has accelerated the adoption of technology in the restaurant industry, and this trend is expected to continue in 2023. Restaurants will need to invest in technology that can enhance customer experience, such as mobile ordering and payments, digital menus, and online reservations. They may also need to incorporate technology that can help them manage inventory, labor costs, and other operational aspects of the business.
Hybrid restaurant models, which combine different types of dining experiences, will likely become more popular in 2023. During early months of the pandemic, restaurants that offered robust drive-thru, online ordering, pick up, and delivery services fared particularly well. The full-service segment has continued to grow in that regard, with many of the leading brands focusing heavily on both dine-in and take-out options. This approach can help restaurants cater to different customer needs and preferences, while also increasing revenue streams.
Emphasis on Health and Safety
The pandemic has heightened people’s awareness of health and safety, and customers will expect restaurants to take measures to protect their health. Restaurants will need to continue implementing strict hygiene protocols and sanitization practices, as well as adhering to social distancing guidelines. The use of touchless technology such as mobile ordering and payments will continue to be present.
Focus on Sustainability
Sustainability is becoming increasingly important to customers and restaurants will need to address this issue in 2023. They may need to focus on sourcing ingredients from local and sustainable sources, reducing food waste, and using eco-friendly packaging. Restaurants that are able to demonstrate their commitment to sustainability will be more attractive to customers and may have a competitive edge over others.
The restaurant industry is expected to experience a rebound in 2023 as the world continues to recover from the COVID-19 pandemic. Restaurant owners will need to be prepared for an increase in demand, and focus on health and safety, technology, sustainability, and hybrid models. Those who are able to adapt to these changes will be well-positioned for success in the years to come.
All the best in 2023!
Kevin Stockslager, Ph.D., EVP & Partner