5 Biggest Restaurant Business Predictions for 2022
It’s a new year, and I have some ideas about it. We know what 2020 did to the restaurant industry. It was like a raging wildfire. Then 2021 came, with some good and some really hard stuff. For example, customers came back with enthusiasm but the labor shortage made it impossible to serve them the way you wanted. In 2021 you also rising wages, rising food prices and customers who were mean as hell. Now that 2022 is upon us, I want to share to my five biggest predictions for the restaurant industry. Click below to watch the video or scroll down to read more.
Number one, food costs, which have already increase 4-5 percent, according to the USDA, will increase another 3-4 percent. This means what you’re charging your customers will have to continue to go up as well. The consumer price index in November of 2021 was up 6.8 percent, telling us what we’re already know, that inflation is happening. Your menus are going to have to change even more. That increase in prices that came so quickly on the restaurant side was passed on to the consumers so your could survive. 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 as a whole 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 really examine your menus. Depending on your concept, you may be looking at ways to prepare food, like sautéing and creating some sauces you can use for pasta or vegetables and proteins and whip up very quickly. It’s a handmade, fresh, high-perceived value that you can raise the price on but has a lower food cost. It could be pizza or flatbreads, something you can add to your menu.
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.
Number two, 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. 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 of this equals out, which again, is midyear 2022.
Number three, 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, 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.
Number four, operational trends and changes are definitely on the horizon. Drive thrus have been really popular over the last couple of decades, but the last two years woke us up as an industry. If you had a drive thru in April 2020, you were practically assured you would make it. To offer a bit of protection to your customer flow and meet the expectation of the customer, we're not only going to see more restaurants with drive throughs, 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 have to 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. Look at 2022 as the year where equipment really becomes a pressing issue.
Number five, restaurants need to develop multiple revenue streams. Restaurants are finding they need higher sales and 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. All costs are rising, and you need a way to outpace your fixed costs. 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 human beings 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. Delivery is here to stay. We've spent two years of everyone in America sitting on their butts and getting on an app and having it delivered to them. That's not going to change. My members are all charging more for food ordered through those apps and people are still ordering.
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.
With these trends in mind, as a restaurant owner, you must be able to spend time working on your business strategically on a weekly basis. That means you can't be flipping burgers. You can't be serving tables, cleaning tables, delivering product. You have to have time in your week to sit there and focus on your business, lead your team and say, “What direction do we need to go?” Because there are lots of outside factors. How are you going to react to it?
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.
If you would like to learn how to own a restaurant that doesn't depend on you being in it to be successful, sign up for my free video course that teaches you three key principles to running a successful restaurant. If you're ready right now to make some serious changes in your restaurant, you can also book a 60-minute call with me where we talk about your challenges and figure out exactly what is holding you back from having a restaurant that doesn’t depend on you being in it to be successful.
Be sure to visit my YouTube channel for more helpful restaurant management video tips.
