Restaurant operators have faced stiff headwinds since 2020, with a near-constant swirl of inflation, supply chain and labor challenges. But if last year was any indicator, restaurant operators are on the road to relief.

The U.S. economy demonstrated resilience in 2023—with GDP, employment rates and consumer spending remaining relatively stable or even growing. According to the National Restaurant Association, 49% of restaurants reported year-over-year increases in same-store sales.

The Central Texas restaurant industry continues to thrive in the ever-booming local economy. In 2023, the Austin-area restaurant industry had a 20% uptick in restaurant openings, compared to the national average of 10%.

We expect these trends to shape the restaurant sector. Here’s how restaurant operators can evolve with them.

Since 2020, controlling food costs has been a major challenge for restaurant operators with many forced to increase prices when the cost of staple ingredients rise.

Despite price increases, data shows Texans still enjoy eating out. According to the Austin Business Journal, Austin’s culinary sector contributed about 10%, or $9.6 billion, to the $107 billion Texas economy in 2023. Austinites value the experience of dining out, and restaurants should make it worth the price tag. For example, operators can implement a barbell strategy—appealing to both budget-conscious consumers looking for affordable meals and adding luxury food options that attract high-end customers.

Restaurants generate vast volumes of data from their point-of-sale (POS) systems to evaluate who’s coming through their doors, what they’re ordering and how often.

From effectively managing inventory to launching new menu items, operators use the information to develop tailored deals, specials and loyalty rewards. Customers want personalized messages, and BofA Global Research indicates that loyalty programs encouraging customers to engage with the brand can increase short-term spending.

Pandemic-era restaurant labor shortages have eased—but not disappeared. In November 2023, the National Restaurant Association reported that full-service restaurant employment levels were still 4% below February 2020 readings.

As operators grapple with labor shortages, they’re turning to advanced technologies to address daily workflow challenges, such as using AI in drive-thru operations to take orders and respond to frequently asked questions. The goal is to create a faster, more frictionless experience and position employees for important duties, like fresh food preparation.

Restaurant operators are also adjusting to new business realities by increasing wages and enhancing benefits. Data from the U.S. Bureau of Labor Statistics shows that the average hourly rate for U.S. restaurant workers has increased rapidly since the onset of the pandemic. There will likely be sustained pressure to increase minimum wages this year, but operators should think beyond base pay when attracting and retaining workers.

Technological solutions have become more critical than ever to restaurant operations. According to BofA Global Research, restaurants’ IT budgets have doubled since March 2020 to account for up to 10% of gross revenue in June 2023. Technology plays a pivotal role in the industry’s revival but also increases the risk of cybercrime.

Growth in digital sales at quick-service restaurants (QSR) via third-party apps, platforms and websites has left QSRs susceptible to credit card fraud, fraudulent chargebacks and compromised POS systems. However, back-office operations and accounts payable are just as appealing targets for cybercrime. Restaurants have complex supply chains and constantly add new vendors and suppliers to their rosters, which introduces potential access points for nefarious actors.

After a few irregular years, the restaurant industry seems to be rediscovering a sense of balance. Operators who can effectively implement these strategies while remaining adaptable to the constantly changing landscape will be in a strong position for growth.

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