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

Each year, Modern Restaurant Management (MRM) magazine asks experts for their views on the state of the industry. Here are some of their insights. 

This year has shown us that the demand for drive-thru is growing, and continues to meet consumer demands with quick, efficient, and convenient service. As the pioneer of the double drive-thru, as we see competitors begin to adopt our double-lane model, we view it as a testament to our proven concept and continued success. We are also confident in our small-footprint concept that we’ve mastered over the last 35 years, and believe it positions us well when it comes to real estate site selection, which can be a true pain point for companies.

– Frances Allen, President and CEO, Checkers

Brand loyalty took priority in 2023. As restaurants sought out ways to stand out from the competition, many turned to creative promotions, offers and rewards that would draw in crowds, increase trial and result in return visits. Building these relationships with customers is key to attracting new guests and fostering long-term brand loyalty across locations. At Dutch Bros, we leaned into several fun trial-driving and loyalty-based initiatives this year as we continued to expand across the country.

– Christine Barone, President, Dutch Bros.

This past year has shown us the invaluable difference that a warm and welcoming dining experience can make for customers, who are increasingly choosing establishments that go the extra mile in offering hospitality. The human element of hospitality has and always will be at the core of our business and, as we continue to scale our brand, we will approach each new restaurant opening with the same “You First” mindset that we have always maintained – putting our people and our customers at the forefront of everything we do.

– Matt Eisenacher, Chief Brand Officer at First Watch

Digital transformation continued to dominate 2023. As guests gravitate towards digital for control and convenience and operators sought to improve operational efficiencies, brands realized the importance of implementing technology both back- and front-of-house in an effort to do more with less and make every guest feel like a regular. Solutions that specifically targeted the guest experience, from ordering to payment to on- and offline interaction, took priority. Overall, we are still in the early innings of the industry’s drive to 100% digital, but 2023 was another step in the right direction.

– Noah Glass, Founder & CEO, Olo

As guests gravitate towards digital for control and convenience and operators sought to improve operational efficiencies, brands realized the importance of implementing technology both back- and front-of-house in an effort to do more with less and make every guest feel like a regular.

In 2023, we experienced unprecedented shifts in consumer behavior amidst broader macroeconomic conditions like inflation. Where we sit at the intersection between live sports and entertainment and bars and restaurants, there has been a noticeable increase in the utilization of various live distribution subscriptions for fans to enjoy their favorite games, matches or fights. Notably, significant changes were made to how the NFL Sunday Ticket is distributed, with YouTubeTV handling residential sales, a new company, EverPass, managing commercial rights, and DirecTV remaining the distribution source.

Streaming is increasingly becoming the inevitable future, and while bars and restaurants may have been slower to adapt based on technological hurdles and associated costs, we anticipate more operators will look to diversify their programming and close this gap.

– Joe Hand Jr., President, Joe Hand Promotions

As AI dominated headlines this year, the national sentiment was largely fearful. Like most new technology, it takes time for society to adapt and recognize its benefits.  We’ve seen how robotics can improve not only the customer experience, but the employee experience. One of our biggest restaurant customers, Kura Sushi, has been ahead of the curve with its technological solutions. We provided and integrated Kur-B the Kurabot into all 50+ locations across the U.S., which delivers drinks and provides a fun, novel experience for guests, while allowing employees to focus on customer service.

Many companies sell robots, but do not service, integrate or repair the robots, making it more difficult for customers to maintain. As the demand for robotics increases, there will also be demand for robotics service that makes the technological investment worthwhile. A-Z customer service – from testing, delivering, servicing, and repairing robots – has put us at an advantage over the last year.

– Elad Inbar, founder and CEO RobotLAB

2023 was a strange year for restaurants. On the one hand, it was the first 'normal' year since 2020, but it also continued to be difficult with labor shortages, inflation, and huge fluctuations in cost of goods. That being said, it was a very strong year for Immigrant Food because we managed to keep costs in check and retain staff. Those two items were key in growing our business and maintaining good margins.

 – Téa Ivanovic, COO and Co-Founder of gastro-advocacy focused restaurant group, Immigrant Food

In many ways, 2023 was the year the restaurant industry did more with less. We’ve now fully applied learnings from the pandemic about working smarter, and in a more streamlined fashion. For example, and specific to TRAY, we’ve helped numerous locations shift from legacy systems to our cloud-based software that runs on virtually any hardware, saving them from a costly equipment overhaul. Across the board, technology continues to lend to a restaurant brand’s ability to operate more efficiently both time- and cost-wise.

– Peter Kellis, Founder and CEO of TRAY

We think one of the most prevalent characteristics of 2023 for the restaurant industry is consumers’ definition of “value.”

Throughout 2023, we’ve seen our guests approach value holistically, and we believe this will only continue into 2024. While the cost of a single menu item or a full ticket is still a priority for guests, the concept of value is no longer just about price. When our guests choose to dine with Portillo’s, they’re also considering the quality of ingredients, the amount of food they’re getting, and the overall experience. We’re focused on providing an amazing experience and consistent value in every aspect of a Portillo’s visit, and that remains a priority for us as we head into 2024.

– Garrett Kern, VP of Strategy & Culinary, Portillo’s

The biggest trend I’ve seen is that from front-of-house operations to back-end management, technology became the backbone of many establishments, reshaping the traditional dining experience. Ghost kitchens and the surge in third-party delivery service showed a shift and new chapter in the ever-changing culinary world. I’ve seen a huge increase in interest and demand for recipe costing and inventory management tools which highlights the importance and need for precision and efficiency in this age of tech. 

– Matt Luckey, opsi Co-Founder
 

2023 was the year that we saw promising growth and finally returned to pre-pandemic employment levels. Then we remembered that staffing before 2020 was never that great. So we had to contend with the same problem, but now compounded by higher wage rates and cost of goods; i.e., inflation. Enter the demand for self-service solutions and the realization that technology can actually enhance the human connection in hospitality. Human connections have been the foundation of the industry – whether it’s the interaction with a server or a concierge at a hotel that makes each experience memorable and can serve to drive repeat business. What many have realized is that technology, when done in the right way, drives a better guest experience and better returns.

– Tim McLaughlin, Co-Founder and CEO, GoTab

As consumers continue to create the new normal, speed and efficiency remain of ultimate importance – especially when it comes to people getting their favorite caffeinated beverage fix. For us at 7 Brew, we focus on fast, quality, friendly service in a drive-thru format, and we’ve seen significant growth given demand for our premium offering. We had approximately 40 locations at the end of 2022 and now operate more than 150 stands in 24 states across the country.

– Nicole Miller Regan, CFO, 7 Brew

A trend I think everyone noticed this year was the surge in the significance of automation and artificial intelligence. AI has moved into the forefront of all conversations around tech and it’s becoming increasingly clear by the way that many in the restaurant industry have changed the way they do things that embracing it is the way forward. Everyone in every industry is finding new and creative ways to weave the use of AI into their daily operations. 

– James Passafaro, opsi Co-Founder 

2023 was characterized by a number of ongoing challenges including inflation, the rising cost of commodities, labor shortages and growing competition. Operating under razor thin margins, brands did everything they could to streamline daily operations, optimizing both time and resources to save where they could without sacrificing quality and hospitality. Much of this involved leveraging advanced technology to automate traditionally manual procedures, providing employees more time to focus on high-touch tasks while giving management better peace of mind.

Operating under razor thin margins, brands did everything they could to streamline daily operations, optimizing both time and resources to save where they could without sacrificing quality and hospitality.

Health & safety is a major area where restaurants tapped into technology to streamline back-of-house procedures in 2023. With digital tools, brands were able to track expiration timelines on food, control temperatures, monitor hygiene and meet other health-related inspection requirements to best utilize labor and avoid costly fees and shutdowns. This was a game-changer in 2023 for operators aiming to save on time, money and manual inaccuracies to boost bottom-line profitability.

– Christine Schindler, CEO, Pathspot

2023 brought about a new era of data, creating an influx of consumer feedback that drove the way the restaurant industry marketed and curated customer experiences. The online voice of the customer reached new heights, and the ultimate question became, how should brands react?

The Power of AI-Driven Customer Insights

In a landscape where 92 percent of global consumers lack brand loyalty, brands had to learn how to leverage AI to best understand the ‘full story’ of customer experience. AI enabled brands to extract valuable insights from online conversations about their services, offering a profound comprehension of customer satisfaction and areas needing improvement. Given the substantial impact of online reviews and unsolicited feedback on platforms such as Yelp, Google, and social media, it became crucial for restaurant enterprises to actively monitor and respond to customer sentiments. 

Various case studies this year have proved that one viral social media post is enough to make or break a brand, especially in the restaurant industry where consumer safety comes into play. Brands can no longer afford to ignore customer voices online.

Localized Strategies with AI 

For multi-location restaurants, harnessing the capabilities of AI-driven brand intelligence tools was instrumental in 2023. These tools empowered multi-location brands to collect and analyze performance at the local level, enabling an understanding of customer preferences and the overall brand performance across various brick-and-mortar locations. With this valuable data in hand, brands were able to promptly adapt to evolving customer preferences, address concerns, and fine-tune marketing strategies customized for each specific region, something that was seen as relatively difficult before.

Various case studies this year have proved that one viral social media post is enough to make or break a brand, especially in the restaurant industry where consumer safety comes into play. Brands can no longer afford to ignore customer voices online

Personalization is now paramount for authentic customer engagement and retention, making a localized approach essential. By utilizing AI-powered insights, multi-location restaurants can navigate the intricacies of diverse markets, ensuring that their offerings resonate with local tastes and preferences. This not only strengthens brand loyalty but also positions these restaurants as responsive and attuned to the unique needs of each community they serve.

–  Cynthia Sener, President GTM of Chatmeter

American Seafoods’ perspective, based on what we’ve heard from key seafood folks connected to the QSR space, is catering to new trends with the millennial and multicultural consumer demographics dominated 2023.

Eventually, we expect to see this focus shift over to Gen Z, but for now, millennials and multicultural consumers have been generating demand for more healthy, sustainable and affordable food choices, and our customers have followed suit, driven by downstream demand like QSR customers. As a result, we have seen an uptick in demand for our wild Alaska pollock products, which are healthy, sustainable and affordable protein sources. Data has shown that millennials and multicultural consumers have become more interested in these products recently. For example, data garnered from the GAPP and Ketchum, demonstrated that this year 5.3 million new millennials and 13.1 million new multicultural consumers entered the “fish eater” consumer profile with 2.6 million and 9.1 million, respectively, becoming familiar with Wild Alaska Pollock.

– Rasmus Soerensen, Chief Commercial Officer, American Seafoods

The last year can be characterized by a cautiously optimistic return to pre-pandemic dining habits. Despite current economic headwinds, our data shows the number of customers dining out is continuing to increase.

– Matthew Tucker, Head of Tock

In 2023, we saw that consumers are ready for the return of great customer service experiences, and that includes through digital channels. Customers expect digital restaurant experiences to meet or exceed the expectations they have for a dine-in experience. That includes everything from food quality and friendly service to accuracy and convenience. The continued expansion of our Potbelly Digital Kitchen (PDK) has helped us successfully enhance our customers’ digital experience, with the added benefit of creating efficiencies in Potbelly shops for our associates.

– Bob Wright, CEO, Potbelly