2023 Reflections: The Year That Was in Restaurants, Part Three

Each year, Modern Restaurant Management (MRM) magazine asks experts for their views on the state of the industry. Here are some of their insights. Click here for the first part and here for the second one. 

BrewLogix sees consumers of craft beverages moving from a “consumption creates the experience” mindset to an “experience creates consumption” mindset. Craft beverage consumers have evolved. They look for experiences that include craft beverages rather than viewing consumption as the end game. This has significant implications for on-premise sellers. Craft on draft is considered the highest craft experience, but it doesn’t stop there. These craft consumers want the full on-premise experience and are willing to pay for it, which includes variety across all variables (styles, ABV, flavor profiles, serving sizes), knowledgeable servers, food pairings and the right glassware/temperature for the beverage, among other things. Savvy food and beverage professionals are recognizing the craft beverage category as a gateway to loyal, higher-value customers. In 2023, we saw sellers increasing throughput utilizing the “experience creates consumption” strategy and we predict an increase in draft program profitability in 2024 as more on-premise professionals embrace the needs of the highly coveted craft beverage loyalists.

Creators entering more fully into the on-premise business model are becoming better partners for their B2B customers. For many craft beverage brands, the local brewery taproom (providing daily “market research”) is incentivizing creators to “create again" emphasizing local ingredients and unique blends (across all ABV's while also developing beyond-beer options. This craft consumer-rich environment aligns brewers with the unique product offerings both consumers and sellers want. In 2024, we’re watching for continued and renewed innovation in the creator market that will extend into the on-premise – giving sellers richer options with greater variety that will bring uniqueness and premiumization to on-premise draft programs. 

Maintaining relationships with your local breweries, taking intentional steps to partner with local creators and working together to create experiences for on-premise customers will pay dividends for the on-premise draft program.

A clear trend impacting creators and on-premise sellers in 2023 was the shifting sands of the craft beverage distribution model. As distributors consolidate and grow, the smaller, more local brands are losing their positions in their distributor’s portfolio. This may make sense in terms of distributor strategy, but BrewLogix is raising a cautionary flag for 2024 as it relates to the on-premise product mix. From the seasoned craft beverage consumer to the newest consumers in the hospitality environment, the favorability toward “fresh,” “local,” and “locally sourced ingredients” is still a profit-driver you don’t want to give up. Maintaining relationships with your local breweries, taking intentional steps to partner with local creators and working together to create experiences for on-premise customers will pay dividends for the on-premise draft program. While our full examination of 2023 isn’t in the books, we see greater outcomes across the board for draft programs featuring “variety” that includes a balanced mix of local, regional, and national brands.

As it relates to technology, there’s no question more and more tap rooms, bars and restaurants are embracing technology. What we’re seeing, however, is that technology adoption is less about solving “the staffing problem” as much as it is about enhancing the guest experience. Managers are seeking out technology that reduces staff participation in “non-value activities” so staff can focus more seamlessly on the guest experience and truly provide their unique brand of hospitality. From demanding more from existing technologies to introducing newer innovative solutions that streamline, reduce, or eliminate workflows while enhancing access to higher-quality information… today’s forward-thinking hospitality decision-makers are welcoming technology that can truly be additive to the business. 

– Lori Bolin is the President and Chief Strategy Officer for BrewLogix

Earned wage access (EWA) continues to be a concept employers need more education around. There is still so much "green grass" available across many verticals since it’s still so early in the market.

With responsible on-demand pay, employers can give all employees more control over their financial wellness and simultaneously reduce the pressure on payroll professionals caused by increased turnover and new hires. In fact, our Wages and Wellbeing study found that 79 percent of working Americans would be more interested in applying for a job that pays them the same day they work.

Employees today also have greater access to choices for banking and EWA. There is still growth available within the prepaid card space, but fewer employees need prepaid cards for electronic access within any given client we serve. Credit unions, neo-banks, and traditional brick-and-mortar banks have and will continue to expand offerings for historically unbanked or minimally banked users.

There has historically been a disconnect between what an employer believes their employees need and what they actually need. We must continue bridging that gap through research, communications, and marketing. For instance, in our recent EWA survey, 71 percent of HR leaders said the lack of employee requests is far and away the prevalent reason for not offering it. The idea that companies should wait for employees to request EWA assumes employees already know about the benefit but don’t want it. That may not be true. Research from 2022 found that 60 percent of employees wanted access to wages daily. A reactive approach won’t help companies stay competitive–especially as the number of companies offering EWA increases.

Employers are looking to reduce the number of vendor relationships required to manage the employee's life cycle, from hiring to payroll to end of employment. 4 to 7 vendors in the restaurant space between recruiting and payroll are too many to be sustainable.

Employers are looking for easier implementation solutions that reduce their costs and workload – and EWA remains the best solution to their problems.

– Tal Clark, CEO of Instant Financial 

2023 marked a pivotal year in the landscape of restaurant technology and payments trends, with a notable surge in the adoption of advanced solutions. Noteworthy among these solutions were the widespread embrace of contactless payments, the growing popularity of mobile ordering platforms, and the integration of sophisticated point-of-sale (POS) systems.

These changes were instrumental in enhancing operational efficiency and customer convenience, reflecting a broader industry shift towards tech-driven experiences. As we look ahead to 2024, these technological advancements are poised to become even more ingrained in the restaurant ecosystem. Mobile payments and contactless transactions are expected to remain at the forefront, reflecting the sustained demand for swift and secure payment methods. While artificial intelligence (AI) has been a growing component of this technological landscape, its role is expected to evolve into a more supportive capacity, focusing on predictive analytics for improved inventory management and the personalization of customer experiences.

On the operational side, restaurant workers stand to benefit from the streamlining of order processing and reduction of manual tasks, although adapting to these new technologies may require additional training.

The impact of these technological shifts is multifaceted. For customers, the advantages are clear – quicker, more streamlined transactions and increased convenience, aligning with modern expectations for seamless dining experiences. On the operational side, restaurant workers stand to benefit from the streamlining of order processing and reduction of manual tasks, although adapting to these new technologies may require additional training.

While there is an upfront investment associated with the adoption of these advanced payment technologies, the long-term benefits often outweigh the initial costs. Increased operational efficiency and improved customer satisfaction can contribute significantly to the return on investment. Looking specifically at 2024, AI's influence on restaurant payments is expected to grow, with applications such as predictive ordering and personalized promotions taking center stage. The ongoing integration of technology into the restaurant industry is not merely a trend but a strategic response to evolving consumer expectations. By prioritizing both enhanced customer experiences and operational efficiency, restaurants are positioning themselves for sustained success in an ever-changing market. The journey into 2024 signifies a continued commitment to technological innovation and its seamless integration into the fabric of the dining experience.

– Justin Price, Vice President, Business Development, ScanSource POS & Payments

Today's insurance market is the toughest in my career. Insurance rates and availability are the most problematic in the property and general liability lines, while workmen’s compensation insurance is stable or trending downward. 

Why such a “hard” insurance market? 

Property Insurance 

Property insurance rate hikes are primarily due to the unheard-of number of catastrophic (CAT) weather events, which Moody’s estimates averaged $100B in losses in the past five years. 

Finding insurance carriers is more complex than ever before. As many know, carriers like State Farm pulled out of the Florida market. Still, coverage is more challenging to attain in most weather-affected states, and the number of regions experiencing CAT events is growing. 

General Liability 

A wide range of factors affect general liability increases, but Smith and his team point to the tight labor market as one cause. “We’ve seen a lack of training as restaurants and hotels lost many of their veteran staff during the COVID lockdowns and had to fill positions with new, less experienced employees. As a result, locations have seen costly “premises liability” claims from customers. These premises liability claims can range from a trip and fall due to a poorly mopped/dried floor, improper food handling or customer service issues. 

Bars are also facing more scrutiny than ever, primarily due to litigation. We are seeing elevated claim settlements that quickly outpace premiums charged for the exposure.

Customers are more likely to file claims in a more litigious environment. Social media has escalated the problem — an incident can be spread among communities at 5G speed, emboldening the potential claimant and encouraging group (or even class) action. 

Bars are also facing more scrutiny than ever, primarily due to litigation. We are seeing elevated claim settlements that quickly outpace premiums charged for the exposure. For example, in 2022, a jury found a Miami bar liable for a deadly drunk driving accident. The bar was ordered to pay $95M in damages to the victims and their parents, claiming that the bar employees continued to serve Chavez even though he was a known alcoholic and was showing visible signs of intoxication.

– Tim Smith is Senior Vice President and National Hospitality Practice Director at IMA Financial Group