Unpacking the Latest Trends and Takeaways from GuestXM’s Q4 State of the Restaurant Industry
As we edge closer to the end of 2023, having access to current restaurant industry data is vital for planning the year.
During our Q4 State of the Industry webinar, we delved into the intricacies of the industry, with a focus on sales, traffic, and check growth; workforce and customer experience trends; and other essential insights to help you stay in the know.
Here are my top five takeaways from our latest SOTI:
- Restaurant sales and traffic growth have been slowing down in the second half of the year. However, sales growth is falling at a faster rate than traffic, primarily due to average check growth moderating after many quarters of unusually high menu-price inflation.
- In the current environment, when deciding to dine out or order food from a limited-service restaurant (those in quick service and fast casual), guests are much more sensitive to changes in price and growth in average check than when going to a full-service restaurant.
Again, unlike full-service, limited-service brands with higher increases in average check growth year-over-year (YoY) tend to lose more customers compared to other brands in the same segment.
- The volume of online customer feedback a restaurant receives has a great influence on how positive or negative a brand is perceived.
During the first nine months of 2023, those restaurant locations with very high ratings (over 4.5 stars) received 3.5 times more online reviews than restaurants rated between 3.5 and 4.0 stars.
- Staffing challenges, although still present, have continued to ease slowly. As a result, pressures on wage growth have largely subsided. YoY growth in starting wages for key hourly, non-management positions in both limited-service and full-service restaurants has declined from the record-high levels experienced in previous years. Wage growth YoY is now lower than what was experienced back in 2018 and 2019.
- Elevating the restaurant experience beyond a pure transaction pays off. Restaurants that provided higher levels of hospitality had 2.4 percentage points better same-store sales growth and 1.8 percentage points better same-store traffic growth than brands classified as providing lower levels of hospitality to their guests. Hospitality was defined as going above and beyond expectations by making guests feel welcome, special, and genuinely cared for as part of the restaurant experience provided.
The restaurant industry has weathered its fair share of ups and downs this year. Given inflationary pressure, consumers may be opting to dine out less often; however, they are prepared to increase their per-visit spending for more enriching and superior restaurant experiences. Brands must adapt by positioning themselves as masters of hospitality, delivering top-notch encounters that provide customers with excellent value for their money.
The first step in this transformation is listening to your customers, understanding their preferences, and staying updated on industry trends to maintain a competitive edge.