Reviewing 2023 Restaurant Sales Trends in North America
After weathering the pandemic storm, restaurant sales in North America are bouncing back. Itching to dine out during the days of lockdowns and social distancing, consumers are now taking advantage of their freedom by spending their hard-earned dollars wining and dining. Between 2020 and 2023, restaurant sales increased by a whopping 47%, indicating that the industry is on the mend.
Though the pastures are starting to look greener for restaurateurs, one hurdle that the industry has been trying to overcome is inflation. Despite inflation slowing down towards the end of 2023, federal officials don’t expect inflation to reach the target of 2% until 2026, which means that for now, it’s here to stay.
Whether you’re a restaurant operator or someone who’s interested in keeping up with the restaurant industry, look no further. In this article, we’ll be reviewing North American restaurant sales trends for 2023, along with taking a glimpse into the future with the outlook for 2024.
2023 Wrapped: The Restaurant Industry Makes a Comeback
The numbers are in! While the pandemic tried to slow down the restaurant industry, the data shows that it made a relentless comeback in 2023.
Overall Snapshot
Taking a look at the industry as a whole, 2023 was predicted to close with an all-time high of $997 billion in restaurant sales, which is even higher than pre-pandemic numbers. In comparison to 2022, that’s an increase of 6.4% in revenue. Not only did the restaurant industry make a strong recovery, it went above and beyond and flourished.
On top of the general success of the restaurant industry this past year, restaurant operators have noticed that revenue on holidays and special occasions was higher in 2023 than in 2022. A key holiday for restaurants was Valentine’s Day, which saw a 30% year-over-year increase in revenue. Another popular holiday that was celebrated was Mother’s Day with this special day generating 7% more revenue than Father’s Day.
Overall, the restaurant industry has taken massive strides to get to where it is today. For restaurant businesses that made it through the pandemic, the hard work is finally paying off.
Full-Service Restaurants
After being locked down for almost two years, full-service restaurants are making their return to the restaurant industry. While quick-service restaurants were a convenient and affordable way to stay socially distanced during the pandemic, full-service restaurants felt the brunt of the pandemic, with a negative growth rate of -23.92% in 2020. With the toughest year behind them, full-service restaurant operators claimed that their sales have returned to about 75% of pre-pandemic volume.
Overall, full-service restaurants generate about $365.5 billion annually in the US, with the average restaurant location generating about $1.5 million annually. Despite sales slowly increasing, the average profit margin for a full-service restaurant has stayed fairly steady at 10.6% due to inflation.
Quick-Service Restaurants
Busy lifestyles call for fast and convenient food. Quick-service restaurants (QSRs) tap into the market of consumers who are looking for a quick fix. In the United States alone, there are currently 201,865 fast-food establishments, with Subway taking the number one spot with 20,603 locations. Taking a look at current consumption trends, the global QSR industry isn’t slowing down anytime soon, with a projected revenue of $846.75 billion by the end of 2023. The North American QSR industry is expected to continue growing at a CAGR of 4.6% between 2020 to 2027 in the US and 4.7% from 2022 to 2030 in Canada. Even though the QSR industry is booming, in comparison to full-service restaurants, QSRs have a slightly lower average profit margin of 6-9%.
Driving Forces: Recovery and Innovation
The restaurant industry has seen a lot of changes throughout the past few years. Here’s what we’ve seen in 2023 that further pushed the industry into recovery and innovation.
Demand for Delivery
Even though the pandemic kicked off the high demand for delivery, busy lifestyles keep the delivery demand going. The food delivery industry has already grown by over 52% since the beginning of the pandemic and is expected to increase by 10.3% year-over-year between 2023 and 2030. Considering that 60% of US consumers order delivery or takeout once a week, the convenience of delivery is something that’s made its mark on people’s everyday lives.
Going “Ga-Ga” for Ghost Kitchens
Going hand-in-hand with the upward sales trend of delivery and takeout orders, ghost kitchens are also making their mark on the restaurant industry. For these establishments, having no dine-in space frees up overhead costs like front-of-house staff, higher rent for a larger space, and decor. Ghost kitchens have risen in popularity due to the promising profit margins, often as high as 5% or more than traditional restaurants.
Adapting to New Consumer Preferences
Research shows that consumers are shifting towards healthier foods that are locally sourced, and they are willing to pay a premium. People are prioritizing health and food quality, which is now starting to impact purchasing decisions more than affordability. The data backs this up, as 52% of Americans followed a specialized diet in 2023. Consumers are also starting to be more conscious of product descriptors with 35% of them stating that “fresh” food is a top definition of healthy food. For restaurants, incorporating healthy food options that are locally sourced can help tap into these new consumer preferences.
Another food trend amongst consumers that’s been on the rise in 2023 is flavor tourism. Flavor tourism allows diners to experience new cuisines and ingredients without leaving home. While Americans have their typical favorites of Chinese, Mexican, Italian, and Japanese cuisines, their taste buds ventured out for new flavors in 2023. The top-growing cuisines for the past year were Caribbean, South Asian, and South American.
All in all, we’re seeing slight changes in the choices consumers are making in the restaurant industry. Taking advantage of these trends and incorporating them into your menu can help you cook up profits in 2024.
One Big Hurdle to Overcome
Since 2021, North America has battled with crippling inflation. The restaurant industry has certainly felt the effects of this with 9 in 10 restaurant operators stating their concern about food costs and inflation. Compared to 2022, food costs have risen by 4.3% in 2023 and are burning a hole into restaurateurs’ pockets. Restaurants have slowly increased prices to maintain their profit margins, and consumers are noticing, as 91% of consumers say they’ve noticed the cost of food and beverages increase.
Though we did see inflation slow down towards the end of 2023, restaurateurs should get ready to continue facing this uphill battle. Inflation isn’t expected to return to the target of 2% until 2026 according to federal officials, which means we should expect another two years before it begins to level out.
What’s Next For The Restaurant Industry in 2024?
The outlook for the restaurant industry is positive for 2024. Strong growth is expected amongst the entire industry, with a forecasted 5.6% increase in sales this year despite inflation. The labor market is beginning to cool off as well, which means lower turnover and reduced hiring costs. Restaurant operators can take advantage of gaps in their offerings, such as delivery and healthier menu items, to increase their restaurant sales for the new year. As we step into 2024, we can expect new trends to emerge surrounding new technology. No matter what’s in store for the restaurant industry this year, by staying ahead of the curve, you’ll be well-positioned for promising growth.
Take a glimpse into the new year by downloading our 2024 State of the Industry Report, which was the primary source for the data in this article.
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