(November 20, 2024) – Today, all-in-one restaurant management system, TouchBistro, releases its 2025 State of Restaurants Report. The annual report surveys 600 independent full-service restaurant (FSR) owners and operators from across the U.S., outlining the top challenges facing the industry, alongside the emerging trends shaping it. 

The industry report reveals that 2024 was an “out of the ordinary” year for independents. While many operators struggled to keep expenses – particularly food and labor costs – under control, they also observed an increase in guest traffic and in profit margins, in part due to strong takeout and delivery sales. Key findings include:

• Operators report spending 34% more on food costs compared to last year, on average
• 36% observed customers tipping less in response to higher prices
• 82% have seen an increase in takeout/delivery sales compared to last year
• 48% now use TikTok to promote their restaurant (up from just 26% in 2023)
• 49% plan to add catering services in the coming year
• Almost 9-in-10 (89%) feel positive about the use of AI in restaurants

Cash Flow Problems

Currently, 78% of independent FSRs report carrying some debt, which is an increase from 68% who said the same last year. While operators reported an uptick in visits this year, food and labor costs continue to eat into profits, which led many to turn to financing and loans.

Pain points include:

• Food Cost Inflation: More than a quarter (26%) said that food costs have been their biggest source of financial strain this year. 18% reported that higher food costs were the number one obstacle to growing their business right now.
• Labor Costs and Higher Wages: 99% of operators also reported spending more on labor this year compared to last year, partially fueled by rising minimum wage rates and the overall expectation of higher salaries. Despite the financial strain, reducing headcount was the least common strategy used to reduce labor costs. 

One strategy for reducing costs has been the increased use of technology. Among full service operators, about half reported automating everyday business operations, with online ordering (57 percent) being the most common automation, followed by invoicing (54%) and email marketing (53%). Since implementing the technology, operators report seeing numerous benefits, including more efficient teams, more productive staff, and even an increase in sales.

AI usage has also skyrocketed, primarily in the back-of-house. 95% of those surveyed reported using some form of AI in their restaurant, with the most common being AI-assisted inventory management (35%), AI menu optimization (35%), and AI reservations/bookings (32%).

“Technology offers numerous applications for operators, ranging from behind-the-scenes automation to customer-facing social media marketing. By strategically allocating resources to enhance their tech stack, operators can realize substantial returns on their investments,” said Samir Zabaneh, Chairman and CEO of TouchBistro. “This is particularly true in the back-of-house. More than one-third of operators reported that implementing automation resulted in increased efficiency for their back-of-house operations, which means they were able to reduce operational costs while still maintaining high levels of customer satisfaction.”

Digital-First Dining

Independent FSRs are also recognizing the importance of a strong online presence – from digital ordering platforms to social media. For Gen Z in particular, easy online ordering and the use of social media as a restaurant discovery tool have become the norm.

How operators are catering to their customers online:

• Off-Premise Sales on the Rise: 99% of operators use at least one online ordering platform, with 39% offering a direct online ordering option. 25% of operators also observed a significant increase in takeout/delivery in the past year, while 57% said their off-premise sales had increased slightly.
• Social Media Experiences a Shake-Up: Almost all (99%) of operators reported having at least one social media profile for their business. While Facebook is the most commonly used platform for restaurant marketing, TikTok has seen a massive spike in usage, with nearly half of operators (48%) now using the platform, compared to just 26% who said the same in 2023. 
• Bringing Back Brand Loyalty: To keep customers coming back, operators are reframing the idea of value in their loyalty programs. 70% now report sending personalized offers to customers, with the most common being offers based on selected preferences.

Looking Ahead

Among independent FSR operators surveyed, 90% said they are optimistic about the future of their business. Based on the report’s findings, TouchBistro predicts the following trends and opportunities for 2025 and beyond:

1. Accelerating Back-of-House Automation: In 2025, operators should hone in on their back-of-house, where cost-saving automations can make a major difference, without taking away from the customer experience. Operators who invest in back-of-house efficiencies like digital inventory tracking and labor forecasting are more likely to win the battle against higher food and labor costs.
2. Optimizing for Off-Premise: With takeout and delivery sales continuously climbing, it’s clear that, even during a time of high inflation, consumers largely see takeout and delivery as a necessity, rather than a luxury. Improving speed of service, order accuracy, and operational efficiency of the online ordering process can translate into a better experience for customers and higher profits for operators.
3. Reframing Restaurant Loyalty: With profit margins still slim, discount-based loyalty programs are no longer a sustainable option for operators. In 2025, operators need to use the data they collect about their customers’ behaviors and preferences to develop programs that will shift the guest perception of loyalty from a channel for discounts to one of value.
4. Enhancing the Online Guest Experience: Attracting new customers was cited as one of the most common obstacles to business growth. There is ample opportunity for operators to take a digital-first approach to the guest experience, such as cultivating a presence on TikTok, in order to expand their reach. This will help operators not only reach new audiences, but also stay top of mind to drive repeat business. 
5. Choosing Future-Proof Technology: Restaurant operations are becoming increasingly complex, especially with many operators saying they plan to expand into catering, events, and even new locations. Operators will need to keep these objectives in mind when evaluating new technology – whether it is a cloud-based POS system or cutting-edge AI software – to ensure the capabilities offered align with their future business goals.

The 2025 State of Restaurants Report can be downloaded for free HERE. 

To learn more about TouchBistro, go to www.touchbistro.com. 

About The State of Restaurants Report

TouchBistro partnered with research firm Maru/Matchbox to survey more than 600 full service restaurant owners, presidents, and area/general managers across all 50 states, with an added focus on eight key cities: New York City, Los Angeles, Chicago, Dallas, Houston, Austin, Denver, and Las Vegas. The research was conducted from June 27 to July 15, 2024. The statistically significant survey results are accurate 19 times out of 20. 

Media Contact: Joyce Li | [email protected] | 416-414-4797