Top Pain Points And Insights From Full-Service Restaurant Operators

So what’s the current state of the restaurant industry? We surveyed restaurants from all over America and found the top five business challenges they face today are: inflation, guest turn-times, hiring employees, guest foot traffic, and marketing. These findings may come as no surprise, but let’s dive a little deeper. 

To better understand how restaurants navigate the current climate and their priorities for the future, from May 26, 2023 to June 20, 2023, Toast polled 8471 restaurant decision-makers for its annual Voice of the Restaurant Industry Survey. Of those 847 restaurant decision-makers, approximately 283 identified that they operate a full-service restaurant (FSR), making over $500k in Gross Merchandise Volume (GMV), and 142 of those operators identified they operate an FSR making less than $500k in GMV. The remainder of the operators included in the survey identified their establishments as quick-service restaurants. Insights from this survey are directional and should not be interpreted as precise.

We found that full-service restaurants that are making $500k+ in Gross Merchandise Volume (GMV) are focused on growth but aren’t looking to rock the boat too much. They’re aiming to achieve growth through gradual improvements and efficiency gains. Approximately 43% of these FSRs we polled  find growth and managing operations equally important – consistency is key.

FSRs with $500k+ in GMV are driving the need for improving profitability (41%). Meanwhile, FSRs that are doing less than $500k in GMV are most focused on the goal of increasing turn times (29%). 

We’re just getting started, folks! In this article, we’ll break down all our current FSR data and how it applies to your food service business in 2024.

Quick Insights

• 19% of FSR operators we polled ranked inflation as their top pain point, with 41% citing inflation as an extreme or moderate challenge over the last year.

• 49% of FSRs <$500k cited extreme or moderate challenges with labor, and 40% of FSRs $500k+ agreed.

• Nearly 1 in 3 restaurant operators we surveyed reported they are likely to open another restaurant location or open a new concept.

• For FSRs <$500k, 18% of operators we surveyed ranked guest foot traffic as a top pain point.

• 67% of successful high-volume FSRs have sign-up forms on their website to capture emails.

• 50% of the highest volume FSRs regularly host events such as themed nights, trivia competitions, karaoke, and sports viewing parties.

Let’s dive in!

What is a full-service restaurant?

To start, let’s define what a full-service restaurant is and what it looks like in 2024. A full-service restaurant offers table service. This service model differs from quick-service restaurants because the dining experience is led by a server. While its structure is basic in theory, tables are prepared, guests are seated, orders are placed, drinks and food are delivered, bills are paid, and thank you’s are (hopefully) exchanged on the way out.

In 2024, a full-service dining experience is typically more than just eating and paying the bill. They often provide amenities such as table settings, ambiance, and sometimes entertainment, aiming to offer a memorable customer experience that will establish repeat visitors. Let’s break down how these dining establishments are currently doing, and what they’re expecting in 2024.

Innovation in restaurants continues to play a fundamental role

Innovating during a time of great adversity says a lot about your business. According to the National Restaurant Association, 45% of operators expect competition from other restaurants to be more intense in 2024 than it was in 2023. Competition can also be a healthy problem for restaurants. When there are multiple restaurants close to each other, it offers customers a wide variety of dining options. People enjoy having choices, and a street filled with restaurants caters to different tastes, preferences, and budgets. This variety can attract more customers to the area – not to mention how much consumers enjoy a bar hop.

And, now that you’ve made it through the thick of the pandemic, let’s talk about growth.

The business environment in 2024 will continue to be challenging for restaurants, but some operators plan to use this as an opportunity to expand. In 2023, nearly 1-in-3 restaurant operators say they are very likely to open a new location in the next 12 months.1 To help them ride the wave of industry growth, they’re seeking ease and value from the providers they work with.

When you find success in one restaurant, you can do it again. This structure allows restaurateurs to capitalize on the success of one establishment and replicate it across multiple locations. The restaurants within a group may share organizational structure, staffing, and more. Replicating a proven concept can minimize some of the risks associated with new restaurant openings and provide a solid foundation for expansion.

Restaurant operators are still facing inflation and macroeconomic uncertainty

In 2023, inflation remained top of mind as a pain point for restaurant operators, particularly for FSRs with more than $500k in GMV. Restaurant Business reported food away from home prices are up 4.5% over the past year, compared with 3.2% for inflation overall and 1% for food at home prices, which were flat last month, according to February 2024 data from the U.S. Bureau of Labor Statistics. About 19% of FSR $500k+ operators Toast polled ranked inflation as their top pain point, with 41% citing inflation as an extreme or moderate challenge over the last year. As a result, higher GMV restaurants are more likely to increase their prices — 45% of FSRs $500k+ say they increased prices on menu items to fight inflation.

According to the National Restaurant Association 2024 State of the Restaurant Industry, 97% of restaurant operators anticipate higher food costs in 2024.  Food costs have always been a major concern in the food service industry. However, your restaurant can prevail. 

Some other tactics to take control of food costs include:

• Consider implementing menu engineering practices

• Reduce food waste

• Take control of your inventory

Respondents also cut costs by shopping different suppliers, tracking ingredients, substituting lower-cost ingredients, and reducing inventory and menu offers. Only 5% of FSRs $500k+ we surveyed say they have not done anything differently in response to inflation, and only 4% of FSRs <$500k could say the same. The good news is, as the U.S. federal government attempts to cool inflation, restaurant sales are up, and the National Restaurant Association forecasts foodservice industry sales to reach $1 trillion in 2024.

Hiring remains a significant challenge for restaurant operators, but technology can offer a competitive edge

Similar to inflation, hiring has become more challenging for restaurants, but it is particularly painful for FSRs <$500k, with 49% citing extreme or moderate challenges with labor. Though it is also affecting FSRs $500k+, with 40% also citing extreme or moderate hiring challenges. Finding the right waitstaff for your restaurant can be difficult, but luckily technology can help.

There is plenty of technology to help with restaurant staffing, and restaurants are prioritizing using mobile technologies to address labor shortages over employee management tools. This may be because, historically, the restaurant industry hasn’t provided much career growth for workers. This lack of progression, combined with demanding hours, contributes to burnout. If you can’t provide a reason for your staff to stay, they won’t. 

According to a blind online survey of 1,011 U.S. restaurant employees not operating at a manager or owner level ages 18 and older between February 27  and March 19, 2023,  46% of restaurant employees we polled are motivated by making money and supporting their lifestyle — while 18% of restaurant employees surveyed are motivated by career development and growth within the restaurant industry.2 

Approximately 51% of the FSR operators we polled expect to place increased importance on employee training.1 Providing employees with health insurance also rose in importance.  If your business is experiencing a high turnover rate, consider internal growth and focusing on improving the day-to-day of your current staff to start. 

Restaurant operators can leverage technology in several ways to efficiently staff their establishments:

• Online hiring platforms: Utilize online platforms dedicated to job postings in the restaurant industry. Websites and apps like Culinary Agents, Indeed, and ZipRecruiter can help connect restaurants with potential candidates.

• Employee scheduling software: Consider implementing employee scheduling software that automates the scheduling process. These systems can take into account factors like availability, labor laws, and demand.

• Training and onboarding platforms: Utilize training software to streamline the onboarding process for new hires. These platforms can provide standardized training materials to ensure that new employees quickly get up to speed.

Technology can certainly offer a competitive advantage, and we can vouch for that. 

Toast Handheld POS Systems help servers take about 46 minutes off their table turn time. This combination of the excellent service, and additional tables served, resulted in a whopping $7,000 increase in annual tips per server at Odd Duck Restaurant in Austin.

Restaurants are accommodating the evolving expectations of the guest experience

For operators, cautious optimism prevails for the year ahead, but overall, they have a positive outlook on the future. As we mentioned before, nearly 1 in 3 restaurant operators we surveyed reported they are likely to open another restaurant location or open a new concept. While this should not be interpreted as a projection for the number of restaurants opening next year, it’s positive to see that respondents have an optimistic outlook for the future of the industry.  Queue the fireworks. 

If you’re looking to kickstart sales at a new location, there are plenty of options. Though word-of-mouth recommendations are listed as the top discovery channel (24%), restaurant operators can still help boost their brand and encourage more sales. This can be accomplished by improving your social media game, implementing email marketing, and offering restaurant promotions.

From a guest standpoint, 9 in 10 consumers enjoy going to restaurants and say that’s where they experience dishes and drinks they haven’t tried before. Queue the confetti. 

This is promising news for your business, but you can also use this as an opportunity to freshen up your menu. There’s an immense amount of alcoholic beverage trends that could bring in new customers, from non-alcoholic mocktails to seasonal cocktails. You could also feature food specials to test out new offerings you should add to your menu. 

Toast found that approximately 50% of the highest volume FSRs on the platform regularly host events such as themed nights, trivia competitions, karaoke, and sports viewing parties.3 These engaging events attract a diverse customer base, encourage repeat visits, and increase overall revenue potential. Try new things, and find out what your guests like.

Restaurant operators should take advantage of discounts for dining on slower days of the week or off-peak times of the day

For FSRs <$500k, 18% of operators Toast surveyed ranked guest foot traffic as a top pain point. The National Restaurant Association suggests operators who offer a solid value proposition for dining out can nudge customers out of their holding pattern. According to research by Toast, 67% of successful high-volume FSRs have sign-up forms on their website to capture emails. Visitors are encouraged to leave their email for newsletter correspondences, promotions, and special announcements.3 

This is where restaurant promotions come into play. When your restaurant’s traffic isn’t as high as it normally is — could be a particular season, month, or day of the week — restaurant discounts can be enormously useful. Consider the following discounts and promotions:

• Restaurant BOGO — A tried-and-true discounting method, BOGO (or buy one, get one) is easy to implement and calculate, plus customers see it as a valuable offer.

• Time-sensitive discounts — Happy hour discounts are old news for bar owners: Lowering prices on food and drink is a staple for bringing in the after-work crowd. Not a bar? No worries. The happy hour approach works for traditional restaurants, too, even if they don’t serve alcohol. Take your low-cost items like fries, or other small plates and discount them for a happy hour deal.

• Weekly specials — Maybe Tuesdays are slow for your business. Can you offer a ‘Taco Tuesday’? What about a ‘buck-a-shuck’ for dollar oysters? Maybe you’re an Italian establishment, have you tried a bottomless pasta deal? Craft a deal that works best for your specific restaurant.

In addition to restaurant promotions and discounts, loyalty programs can get customers through the door. Building relationships with your customers by engaging them with an effective customer loyalty program is critical to the long-term success of your restaurant. You can customize your restaurant loyalty program as you see fit – check out Toast Loyalty to start increasing guest frequency.

FSR: fantastic service restaurant

FSR owners and operators should feel optimistic going into this year. Restaurant technology can help give you a competitive edge here. We’re keeping costs low, hiring great staff, and increasing profitability in 2024. Remember, if you’re trying to get guests into your restaurant, consider discounts, loyalty programs, and a menu refresh. At the end of the day, guests value quality. Give them a high-quality experience and they’ll want to come back for more.

2023 Restaurant Operator Survey Methodology

1To help better understand the restaurant industry, Toast conducted a blind survey of 847 restaurant decision-makers operating less than 15 locations in the United States from May 26, 2023 to June 20, 2023. Respondents include a mix of both full-service and quick-service restaurants. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to restaurant respondents for participation. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 3%.

2023 Restaurant Employee Survey Methodology
2Toast conducted a blind online survey of 1,011 U.S. restaurant employees not operating at a manager or owner level ages 18 and older between February 27 - March 19, 2023. Respondents were not made aware that Toast was fielding the study. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 3%.

High-Volume Full-Service Restaurants Methodology

3High-volume full-service restaurants in this context were calculated based on the quantity of annual gross purchase volume (GPV) transactions at the time of analysis for businesses classified as “full-service restaurants” in Toast’s system as of Q3 2023. Additional data was gathered from the websites and social media accounts of the high-volume FSRs we analyzed.