Restaurants Put Pandemic in Rear-View Mirror

Eateries of all kinds face a variety of opportunities – and obstacles – in the coming year, a pair of industry outlooks predict:

• While the pandemic made the last five years significantly challenging to the restaurant franchise industry, that sector has renewed optimism, driven by the adoption of digital and mobile ordering, menu creativity and heightened expectations around AI. That’s according to a survey conducted by TD Bank at its recent 2024 Restaurant Finance and Development Conference in Las Vegas, which collected insights from 175 restaurant operators and financial professionals to uncover their expectations for 2025.
• As they head into the new year, dining establishments’ priorities include increasing their sales and marketing efforts, as well as offering new benefits and programs to attract and retain staff. Those findings are from the latest annual survey of leaders running more than 6200 eateries by Restaurant365, a management platform for such businesses.

Lowering interest rates and technological innovation are boosting optimism, which is allowing restaurant franchise leaders to turn their attention to mergers and acquisitions, the TD Bank survey notes. More specifically, over the next 12 months, 84% of respondents believe mergers and acquisitions (M&A) activity will increase.

“Restaurant franchising as an industry is gearing up for an exciting time, with improved profitability and a better interest rate outlook offsetting moderating traffic and portending a reemergence in dealmaking and franchise expansion,” said Mark Wasilefsky, TD’s Head of Franchise Finance.  “Despite 2024’s challenges with foot traffic and average unit volumes (AUVs), a few factors are coming together to bolster the outlook – including the careful application of value menus, confidence in technology from AI driven efficiencies and continual improvement in the digital experience. Together, they are creating an optimistic outlook for revenue, margins and overall industry performance.”

In the Restaurant365 survey, industry leaders said the top obstacles they expect to face in the year ahead include recruiting/retaining talent (32%), rising food costs (27%) and flagging sales volume (21%). “Despite such challenges, the industry is both optimistic, as total restaurant sales crested $1 trillion for the first time on record, and ready to pivot to continue growing,” the report notes.

Click here for more from the TD Bank survey, and here for more from that of Restaurant365.