As the restaurant industry grapples with sustained economic pressure and labor challenges, SpotOn unveils its predictions for the restaurant industry and recommendations for independent operators to unlock profit in 2024. Navigating higher labor costs, elevated food/input costs, and stiff competition from tech-forward chain restaurants, independents will need to consider significant operational shifts to protect revenue and boost profit margins.
The tech battle is heating up. Restaurant operators are focused on cost control and need easy-to-use technology for a better employee experience and more significant data-driven insights. The era of the status quo is over, and SpotOn expects a widening gap between tech leaders and laggards. Failure to adapt will make securing a seat at the table an uphill battle for tech companies. SpotOn doesn’t only combat tech bloat; the company has redefined how operators should approach their tech stack, championing partnership over provider. Success hinges on technology proficiency and a hospitality mindset. SpotOn stands at the forefront, challenging the industry to prioritize reliability, operational efficiency, and first-class support.
“The tech companies that embrace this challenge will be rewarded,” explains Bryan Solar, Chief Product Officer at SpotOn. “The future belongs to those who lean into this shift, and at SpotOn, we're not just predicting change – we're preparing our customers for it.”
Concepts and Offerings Expand
As restaurants continue to face margin pressure from wage increases, tip credit eliminations, rising real estate costs, and reduced guest spending due to inflation, a growing part of their business will be the ability to sell offerings in new and different ways. Consumers no longer view restaurants only as a full-service dining-out experience, but rather as a way to feed themselves in various formats - dine-in, carry-out, order ahead, delivery, QR at the table, kiosk ordering, and more. Savvy operators will adapt their menu and model to accommodate more flexible ordering options - but with a renewed focus on the bottom line. Direct online ordering without third-party commissions and tech-enabled ordering that takes the pressure off service workers (and related labor costs) will boom in 2024.
Full-service restaurants will also evolve and diversify their physical spaces to drive greater throughput and revenue. With lower overhead, streamlined staffing, and limited menus, QSR models offer flexibility to guests and operational efficiency for staff. In 2024, the QSR space will show continued growth both from new entrants and FSRs expanding into the QSR space.
To ensure restaurants can meet their customers where they are, SpotOn will continue investing heavily in flexible ordering technology so restaurants can take guest orders in multiple formats and relieve pressure on service staff. SpotOn Order and QR Scan + Pay have shown strong traction among clients in 2023, and the company anticipates continued growth in 2024.
The pandemic decimated the hospitality workforce; as the industry returns to “normal,” major socio-economic shifts drive an influx of new service workers that trend older while the experienced staff leaves the industry. The result is a more diverse workforce joining the hospitality industry for the first time or rejoining the sector after decades away. This shift will necessitate easy-to-use technology that makes it quicker for employees to learn and more accessible for them to operate, improving employee retention and maintaining operational efficiency. For example, a handheld POS system saves servers time and steps, while restaurant management software like SpotOn Teamwork's Employee App makes shift swaps and viewing pay a breeze. 2024 will be a year where great talent will be highly sought after, uncharacteristically challenging to source, and critically important to retain; technology will play a key role in addressing these issues.
Reclaiming Guest Relationships
For the past three years, we’ve seen a growing trend of tech providers prioritizing their brands above their clients’ brands. For example, guests are encouraged to download a tech provider’s app to order takeout or delivery instead of ordering directly through a restaurant’s app or website. Operators have reached a breaking point with platforms that get between them and their guests, diluting guest loyalty and charging fees for the privilege.
2024 will be the year that restaurants reclaim their guest relationships by focusing on direct relationships with their customers. How? For quite some time, airlines, hotels, and ecommerce retail customers have benefited from bespoke experiences tailored to their preferences, spending, and loyalty. This level of customization and engagement hasn’t quite arrived in the restaurant space. We believe that the restaurant concepts that figure out how to deliver a deeply personalized customer experience — including status, special access, and unique rewards — will be able to create loyal guests and consistent revenue.
“We are being extremely intentional about where we invest our R&D to ensure we are creating and preserving excellent value for our operators in the face of these challenges,” said Bryan Solar, Chief Product Officer at SpotOn. “Our innovation will focus on helping restaurants capture the most value across their cost and revenue centers with technology that creates and identifies opportunities to cut costs or drive revenue.”