2020 was like a raging wildfire. Then 2021 came, with some good and some hard stuff. For example, customers came back, but you also saw rising wages, rising food prices and some of those customers were mean as hell.
Now that 2022 is here, I want to share to my five biggest predictions for the restaurant industry.
1. Food costs, which have already increased 4-5 percent, according to the USDA, will increase another 3-4 percent
The consumer price index in November of 2021 was up 6.8 percent, telling us what we already know, that inflation is happening. That increase in prices that came so quickly on the restaurant side was passed on to the consumers so you could survive. As costs for you continue to rise, the question is when will your prices rise to a level where the price may not equal the value of the product you’re selling? The industry may be getting to a point where you’re charging your guests, and they’re going to push back because what they’re paying doesn’t match what they’re getting in return. They’ll stop going out to restaurants, cooking more at home.
To combat this, you have to examine your menus. Some concepts are going to have to make major changes to their menus. I’ve seen it. I’ve been coaching members for a long, long time. In the last two years, I have seen my members have to make some major changes just to make it. The changes you make will depend on your concept, but you may be looking at ways to prepare food so that it’s handmade, fresh, and has a high-perceived value that you can raise the price on but has a lower food cost.
2. By mid-year, the pesky product shortages of 2021 and early 2022 will be alleviated
There will still be those normal commodity challenges we see every year, like when a freeze in Florida crushes the availability of lemons, limes and oranges, or bacterial contamination in meat. Those things are still going to happen, but these other shortages should be back to normal by mid-year. The reports show that consumer demand has peaked for just about everything, which affects all food industries including grocery stores and markets, as well as restaurants. Reports also show that most manufacturers have inventories back up to pre-COVID levels. The government is also working on it as well as all the different companies increasing their shipping capacity. There are more trucks, more freight, more ships, and more people to get the containers unloaded.
The other part I want you to look at is reports show that global trade growth is predicted to rise 5.4 percent. That’s a good thing for us because a lot of the food that our farms and food created for export is producing more to meet the demand, which makes me think we won’t see the shortages again as soon as all this equals out, which again, is mid-year 2022.
3. The labor shortage that we are living with right now is going to continue to be a struggle
But my personal observation from working with the members of my restaurant owner coaching group, in the fourth quarter of 2021, is a lot of my members were getting back to full staff or near full staffing, and I think that’s going to continue. The industry is still going to struggle, but as an independent operator, if you take certain steps, you can find your way to a reliably full staff. What kinds of changes? Reduce prep, change the menu lineup so you don’t need as many cooks, reduce the number of tables, these will continue to be ways to limit the labor demands in your restaurant.
In November 2021, unemployment was down to 4.2 percent and experts are predicting that we may see rates as low as 3.8 percent in 2022. That means it’s going to continue to be tough for us to find good employees. However, if you focus on becoming an employer of choice and treat people like they need to be treated, offer solid wages, good supervision, flexibility in the workplace, and a positive work environment, you can attract people and retain people back in your restaurant.
4. Operational changes are definitely on the horizon
Drive throughs have been popular over the last couple of decades, but the last two years woke us up as an industry. We’re going to see more restaurants with drive throughs, and we’re going to see more multi-lane drive throughs because that’s how we’re going to speed people through.
Also, third-party delivery is here to stay. Until there is some sort of regulation to make sure restaurant owners, especially independent operators, are not getting screwed so badly on the commissions, you need to find a way to work with them.
Another trend in operations is smaller footprints for restaurants. This allows for lower rent, fewer employees, and a more efficient operation.
Continuing with efficiency, I predict a higher use of equipment and more robotics being adopted in 2022. The labor shortage shined a light on the fact that we cannot make it with high labor anymore. Restaurants must find ways to become more efficient, whether it’s equipment that shreds chicken and cuts Brussel sprouts to finding the right holding equipment so you can prep things early and hold them at temperature without overcooking a product.
5. Restaurants need to develop multiple revenue streams.
Restaurants are finding they need a way to create seats that don’t exist now. In fact, restaurants that had multiple revenue streams prior to 2020 fared well these last two years. This ties back to those smaller footprints. Drop-off catering is another example. While catering has been a way for a lot of restaurants to find revenue, doing the big weddings and things like that may be a thing of the past because of the labor shortage. Maybe leave that to the big catering companies. But drop-off catering where you can drop off food and not have to have humans there to serve it is going to be a major trend for independent restaurants.
Companies like DoorDash are tying in with POS systems, allowing you to use their delivery people for a fee instead of a commission, no matter how you use them, because delivery is here to stay.
Ghost kitchens/delivery concepts will also continue to trend in 2022. Opening a location that only does delivery and can be turned on or off will drive that extra revenue.
Now, whether my predictions are dead on or way off doesn’t change the fact that there will be changes in the industry. Only those who are truly leading their restaurants forward will be able to roll with those changes.