Dive Brief:

• New restaurant openings increased 6% during the period May 2023 to April 2024 compared to the same period the year prior, according to a Yelp report. 
• This is a slight deceleration in growth from the previous year, which reported 10% in new openings during May 2022 to April 2023, according to Yelp’s data on the state of the restaurant industry shared with Restaurant Dive. 
• Popup shop openings were up 155% as restaurateurs continue to debut new concepts with limited menus to test consumer interest. Dessert shops were up 52% along while shaved ice concepts were up 22%.

Dive Insight:

Given ongoing demand for sweet shops, chains like Jeremiah’s Italian Ice and Sprinkles are planning to open hundreds of units via franchising. Despite this growth, high-end restaurants like New American, Teppanyaki and Modern European were all down in the double-digits in terms of new openings. Yelp attributed this decline to consumers grappling with high prices despite inflation easing.

Restaurants have also been adopting more technology in response to labor shortages and increased costs. Yelp tracked review mentions on various business pages to monitor tech implementation. iPad checkouts were up 291% followed by ordering kiosk at 238% and self check out up 235%. More reviews have also mentioned an uptick in counter service replacing table service, with mentions up 203%. For restaurants priced $$$ to $$$$, mentions of “self-service” were up 159%. This data compares the year spanning May 2023 to April 2024 with the May 2020 to April 2021 year. 

Kiosks have been particularly popular among QSR chains with the likes of Burger King, Taco Bell, Shake Shack and El Pollo Loco implementing them to boost average checks and reduce labor needs. As of last quarter, kiosks were Shake Shack’s largest ordering channel. Steak ‘N’ Shake has gone a step further adding facial recognition check-in and check-out tech to its self-service kiosks across its 300 U.S. locations. 

While self-service technology can help with labor savings for the operators, it is also having unintended consequence of increasing diner fatigue about tipping. 

“As digital interfaces replace traditional human service roles, there’s a growing debate among consumers about the necessity of tipping,” Yelp said. “The increased focus on gratuity is reflected on Yelp with increases in restaurant review mentions of ‘tip screen’ (up 811%), ‘gratuity’ (up 111%), and ‘tipping’ (up 81%).”

Yelp has also seen an increase in reviews of low-priced restaurants ($ to $$) including tip screens versus high-end restaurants ($$$ to $$$$). Mentions of tipping increased 140% for low priced ($) and 103% for ($$) restaurants, the company said. 

A recent survey from Talker Research found that an increase in tipping screens across cafes, delis, food delivery and even self-checkout at airport convenience stores has led to consumers feeling forced to tip more than they like. Talker Research found that “guilt-induced gratuity” equated to consumers spending $454 annually. Experts suggest that setting default tipping at lower levels gives consumers more perception of control and thus results in a positive consumer experience.