As 2024 comes to a close, restaurant industry insiders are getting out of their crystal balls and looking ahead to an uncertain future. Here, we took a kaleidoscope view of the many forecasts, jumbled them together, and came out with the top predictions.
Some viewpoints in our soup of seers include Black Box Intelligence, Toast, ICR, and Restaurant365. These outlooks range from surveys polling 755 to over 6,000 restaurant operators. If there is a certainty in numbers, this may just be what to look forward to in 2025. Of course, as Heraclitus said, “The only constant in life is change.”
So, until the next storm approaches or the clouds part, here are the top restaurant industry trends and predictions for 2025.
“The Distinction between the past, present, and future is only a stubbornly persistent illusion.” – Albert Einstein
With no clear linear definition of time, the effects of 2024 will undoubtedly be felt in the coming year. Inflation, economic uncertainty, and reduced consumer spending were just some of the challenges the industry faced.
An analysis by Black Box Intelligence revealed these projections:
- Consumers’ real disposable income’s five-year average is at 3.6% Y-o-Y. The prediction is a 1.6% decrease, resulting in 2.0% in 2025.
- Consumers’ real spending Y-o-Y comes in at 2.5% as a five-year average. They predict this number will reduce by 0.5%, resulting in 2.0% consumer spending in 2025.
- Unemployment rate predictions see it rising to 4.0% in 2025, up from the five-year average of 3.8%.
Despite these numbers, forecasters predict a better year, though not the best year, for restaurants in 2025. Their data also suggests three important elements that restaurant customers look for, prompting them to return to your establishment: “friendly service, flavorful food, and consistent experiences.”
Restaurants that excel in these areas and keep up with the industry and consumer trends have the best opportunity to outperform the predictions.
“The only limit to our realization of tomorrow will be our doubts of today.” – Franklin D. Roosevelt
A common trait among restauranteurs and operators is persistent optimism. Despite the economic uncertainty, they have faith in their abilities, their customers’ preferences and love of experiences, and the certainty they can persevere until better times prevail. According to Helen Keller, optimism is, after all, “the faith that leads to achievement.”
ICR shared five reasons this optimism is rooted in scientific evidence:
- Restaurant sales have been trending upward since August while declining customer traffic is less severe. They believe this trend will continue into 2025.
- Reduced increases in menu pricing have resulted in attracting return visitors.
- Wage inflation has been tempered by streamlining BOH operations, menu simplification, and cross-training.
- More favorable interest rates will result in lower payments for outstanding consumer debt and higher disposable income.
- ICR believes the new administration is pro-business and, as such, will take measures like lowering taxes and deregulation that support a prosperous economic climate.
Toast’s survey found that 63% of operators reported increasing profits in 2024 compared to 2023, while 33% said they stayed the same. Another high point was that fewer operators found hiring a significant pain point in 2024, a trend expected to keep improving. The pain points still affecting their business include inflation and managing the cost of goods and services.
“Well done is better than well said.” – Benjamin Franklin
Restauranteurs are nothing if not pivotal prone. A problem arises, and they face it, pivot, measure the data and reactivity, and pivot again. Ultimately, they hit the sweet spot and find a safe harbor, at least for a month or two. According to Toast, some of the actions they’ve taken to counter inflation include:
- 37% changed food suppliers
- 36% tracked ingredient prices
- 34% increased menu prices
- 32% reduced inventory
- 36% reduced menu sizes
Many are also considering dynamic pricing, a trend expected to grow in 2025. Dynamic pricing is, in essence, lowering prices during slower demand and increasing prices during higher demand. This may range from standard happy hours that reduce prices during typically slower periods to total changes in menu pricing based on the market.
“In the business world, the rearview mirror is always clearer than the windshield.” – Warren Buffett
Expectations are always a challenge. Without them, our aim may be a little off. With them, our vision may be a little cloudy. After surveying over 6,200 restaurant owners and operators, Restaurant365 came up with these expectations for 2025.
- 79% expect labor costs to increase
- 82% expect to see food costs continue to rise
- 28% see staffing challenges as their main struggle
To overcome these challenges, restaurants are proactively taking several steps. Here’s what they’re focused on, the operational priorities in the year ahead.
- 55% Increasing Sales
- About 17% Reducing Costs
- Over 16% Enhancing the Guest Experience
- Almost 4% Expanding Locations
- 5.6% Improving Satisfaction
- 46% Holding Off Opening New Locations
Operators are also looking to increase revenue streams by adopting or enhancing catering (27%), takeout and delivery (11%), special events or promotions (22%), and branded merchandise (6%).
“If you take care of your employees, they will take care of your clients.” – Richard Branson
Restauranteurs learned a few valuable lessons over the past several years, one of the most important being the essential nature of their staff and how to reduce turnovers. In 2025, they expect to take the following measures to continue this trend:
- 40% Better Training
- 24% Improve Work-Life Balance
- 20% Increase Pay
- 15% Enhance Benefits
While 2025 appears to be a challenging year, restaurant owners and operators continue to prove their resilience. By adapting, pivoting, and prioritizing, they set the stage for continued success.
At EMERGING, we’re excited to be a part of that success by providing funding and revenue opportunities, enhancing supply chain profitability, and supporting successful data-driven expansion plans. To learn more about our strategic services, contact Emerging Concepts.
