Remember when we thought things would go “back to normal” for the restaurant industry after the country emerged from COVID? Instead, restaurants were left to navigate an increasingly challenging economy with acute implications for restaurants.
The industry needs solutions, especially those that forward-thinking brands have successfully implemented. We spoke with executives from our partners Jersey Mike’s, Original ChopShop, and Ocean Prime about the headwinds facing the industry, the strategies they’re executing, and the results. Here’s what they said.
The Consumer Price Index for Food Away from Home increased by 8.8% between March 2022 and March 2023. According to a Technomic study, 9 in 10 consumers notice price increases on menus. To compensate, they’re dining out less and seeking more deals.
Restaurants, also squeezed by food price hikes, have little room for discounting. While tactics like reducing portion sizes have turned off consumers, some restaurants are re-evaluating suppliers, prepping ingredients in-house, or adopting dynamic pricing models. Others, like Original ChopShop, are focused on delivering value in the same ways they always have.
“[Guests] love that Original ChopShop offers a fast, convenient way to enjoy feel-good food,” said CEO Jason Morgan, noting that performance has exceeded expectations. “In 2022, we achieved positive same-store sales growth of 41% and positive overall revenue growth of 99%, compared to 2019.”
Jersey Mike’s Chief Marketing Officer, Rich Hope, also emphasized the need to understand what NOT to change.
“Fresh preparation, high-quality ingredients, and friendly staff are the key to our success,” he said. “Over the last three years, Jersey Mike’s has been one of the very top performers in sales growth.”
Executives are also investing in digital infrastructure to deliver convenience and heightened perceived value.
“Our digital ordering platforms and loyalty program have also allowed us to seamlessly navigate the digitization of consumer ordering behavior,” said Morgan. “By focusing on convenience-based messaging rather than rewards and discounting, our Chops loyalty program has excelled.”
The return of on-premise dining means store employees again play an outsized role in customer experience.
“The face of the restaurant is the people, and that impacts repeat business,” said Mitch Miller, Vice President and Operating Partner at Ocean Prime.
This holds true for fine dining establishments and QSRs like Jersey Mike’s and Original ChopShop.
“Re-engaging with the customer face-to-face in our restaurants after three years of mostly serving our customers through online ordering will be a big challenge over the coming months and years,” said Hope. “Fortunately, it has always been a competitive advantage for Jersey Mike’s.”
Morgan explained how employee satisfaction has been vital to Original ChopShop’s success and ability to execute against customer experience goals.
“We strive to be an employer of choice by creating a culture that encourages personal and professional growth while also providing a strong work/ life balance for our teams,” he said. “Last year alone, we introduced a number of new programs to support our teams’ well-being, including a 401k program with a company match, a manager tenure bonus, a career pathing program, mental health counseling sessions for all team members, and more.”
Inflation has hit restaurants particularly hard, as dining out is one of the first things to go when households make budget cuts. While lower-income consumers were less likely to dine out in the first place, February data showed an inflection point where middle-income consumers reported even more sticker shock.
Meanwhile, another segment is returning to pre-COVID spending patterns and increasing food and beverage budgets: business diners. Our latest State of Business Dining Report highlights how in-person meetings, conferences, and travel are coming back, driving increased demand for dining and catering.
Because these diners are far less price-sensitive, attracting them has become key to many restaurants’ resilience. Enter the Dinova Connect program, a low-maintenance, high-impact method for attracting business diners and growing sales.
“Dinova has been a great shot in the arm to our sales efforts in that it brings in customers we would otherwise not get,” said Rich.
While Miller estimated 4% of Ocean Prime’s revenue was due to its Dinova partnership, Morgan is optimistic that business dining revenue will continue to grow in 2023.
“We are glad to see an increase in guests headed back to their offices,” he said. “This will result in more business people dining in, enjoying delivery, and ordering catering for large groups.”
Browse our blog articles and reports for restaurants in our News & Research section.