The restaurant industry continues to face obstacles, such as inflation, labor shortages, and shifting customer preferences. But restaurant operators have never shied away from challenges, and once again, their resiliency and ability to adapt and innovate are on full display.
We learned as much from Toast’s third annual 1Voice of the Restaurant Industry Survey, which gathered insights from 755 industry decision-makers and highlighted the latest trends shaping the landscape. Inflation is one of the most pressing concerns, but operators are finding creative ways to navigate rising costs while staying profitable.
That’s just the tip of the iceberg (lettuce). Let’s dive into five key takeaways from the survey.
Inflation’s impact persists
For the third year in a row, the survey found inflation is still a top concern for restaurant operators. While nearly 63 percent of respondents who oversee finances said their profits were up in 2024 compared to last year, inflation remains a major hurdle. Rising costs are forcing operators to rethink their supply chains and pricing strategies.
In response to inflationary pressures, operators are getting creative. For instance, 37 percent have adjusted their number of food suppliers, 36 percent are keeping a closer eye on ingredient prices, and 34 percent have raised menu prices.
Interestingly, fewer restaurants surveyed raised prices this year than last, signaling that many are finding smarter ways to manage costs without fully passing the burden onto guests.2 Instead, they’re trimming inventory (32 percent) and simplifying menus (26 percent) to maintain profitability in a tough economic climate.
Optimism about profitability and expansion
Despite these challenges, the survey found many restaurant operators are feeling bullish about the future—only 4 percent of respondents said that they have seen profits decline. Further, 28 percent of operators hope to open a new location within the next year.
This renewed focus on growth speaks to the industry’s resilience. Operators surveyed are thinking beyond survival, looking to boost profitability and serve more guests through new revenue streams, whether looking at catering, off-premises dining, or fresh service models. Data-driven digital platforms are available to help make such expansion efforts easier and quickly a part of a restaurant’s revenue.
Catering can be especially lucrative, particularly during the holidays. For instance, a Toast Q4 2023 report found that 35 percent of same-store annual catering orders on the Toast platform in 2023 occurred in Q4, and the average catering order ticket size was $160.
Staffing ills easing, but training remains crucial
Finding people to work has long been a sticking point for the restaurant industry, but there’s some good news this year. Per the 2024 Voice of the Restaurant Industry Survey, hiring challenges are still present.
Still, fewer operators surveyed identified them as a top concern compared to 2023, with a three-percentage-point drop (15% to 12%) in those reporting difficulties. However, with many restaurants juggling multiple service models—dine-in, takeout, delivery, and catering—training ranked as a top area of intended increased focus over the next year.
This calls into question the importance of employee productivity and the tools they use to do their job. About 28 percent of restaurant operators surveyed are looking to improve their employee productivity, which is similar to last year.
Technology drives efficiency and growth
Digital tools are restaurant game-changers, helping operators overcome challenges and streamline operations that may improve employee productivity. According to the survey, 26 percent of operators plan to roll out new tech solutions in 2024, a noticeable jump (7 percentage points) from last year. This move is largely driven by the need to improve efficiency, enhance guest experiences, and generate more revenue.
About 35 percent of operators surveyed said their top business goal for next year is to improve profitability. One avenue to potentially increase their revenue is to invest in solutions like branded mobile apps and SMS marketing where they can engage customers and strengthen brand loyalty through personalized, real-time communications. These tools can help streamline operations and drive customer retention with targeted promotions, all while integrating with the restaurant’s backend systems.
Meanwhile, per the survey, AI is getting much attention. 52 percent of operators surveyed expect to place greater importance on AI over the next year (+7 pp). Use cases include exploring its potential to optimize menus (40%), offer personalized recommendations (39%), facilitate benchmarking (38%), explore price optimization (38%), and analyze business performance (35%).
Dynamic pricing gains cautious interest
Our industry increasingly talks about dynamic pricing, where menu prices change based on demand, and such chatter is making restaurant operators’ ears perk up. The survey found around 70 percent of operators are “extremely interested” or “very interested” in how this type of strategy could help them manage demand and boost revenue.
That said, it’s still early days for dynamic pricing in restaurants. Currently, only 7 percent of operators surveyed have implemented some version of it, such as Happy Hour deals or lunch discounts.
There’s hesitation, too—many operators worry that fluctuating prices might confuse or upset guests if not handled carefully, and guests have resisted the idea of “surge pricing.” For now, SMS or email campaigns to highlight deals or buy-one-get-one offers may be a more successful tool for attracting and delighting guests.
Embracing tech to stay ahead
As restaurants head into the last two months of this year and beyond, they’re optimistic but cautious. Inflation is still a concern, yet operators surveyed are finding smart ways to manage it, from streamlined menus to tech-driven solutions.
With expansion plans on the rise and technology like AI becoming more integrated, the survey suggests that restaurants are carving out new ways to boost profitability, enhance guest experiences, and tackle staffing issues. And while dynamic pricing is still in its infancy, it could play a bigger role as operators look for ways to balance supply and demand.
The 2024 Voice of the Restaurant Industry Survey shows an industry not just surviving, but thriving through innovation. With a strong focus on change and technology, the future of the restaurant industry looks bright.
Julie Powell is Senior Director, Market Insights and Competitive Intelligence at Toast.
2024 Survey Methodology
1To help better understand the restaurant industry, Toast conducted a blind survey of 755 restaurant decision-makers operating 16 or fewer locations in the United States including both Toast and non-Toast customers from May 17, 2024 to June 2, 2024. Respondents include a mix of both full-service and quick-service restaurants. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to restaurant respondents for participation. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 4%.
2023 Survey Methodology
2To help better understand the restaurant industry, Toast conducted a blind survey of 847 restaurant decision-makers operating less than 15 locations in the United States including both Toast and non-Toast customers from May 26, 2023 to June 20, 2023. Respondents include a mix of both full-service and quick-service restaurants. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to restaurant respondents for participation. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 3%.
