Key Insights from NRN's 2024 Report on Autonomous Eateries
Independent Restaurants Faced Strenuous Year in 2024 Amid Rising Costs and Pandemic Continuum
The restaurant industry grappled with challenging conditions in 2024, with independent operators bearing a brunt of the struggles. The year was marked by an unrelenting succession of hurdles, such as soaring costs, labor shortages, and declining consumer sentiment.
The first quarter was marred by a nationwide bloodbath as independent restaurants across the country struggled to maintain their footing. The economic headwinds persisted throughout the year, exacerbated by inflation, rising costs of goods, shifting labor dynamics, stiff competition from large chain operators, and the backdrop of an election.
To better understand the landscape, the Nation’s Restaurant News released its 2nd annual 'State of Independent Restaurants' report, supported by Unilever Food Solutions. The report provides valuable insights for operators, brands, and suppliers alike.
Independent restaurants, together with small brands, account for approximately three out of every five restaurant locations in the United States. According to the Technomic estimates, both independents and small brands recorded a 1.5% uptick in sales for the year, reaching $206 billion. Meanwhile, chains saw an 8.2% increase, totaling $451 billion. The quick service and fast casual segments were the only industries to record growth in terms of locations in 2024.
Here are the key takeaways from the report:
- Limited-Service Mexican segment grew by 45%, primarily attributed to a 62% increase in independent restaurants. Similarly, independents grew their share of locations in the limited-service chicken category from 8% to 24% as the segment swelled by more than 25%. Operators serving Mexican cuisine are advised to focus on to-go orders, both first-party and third-party, to capitalize on this trend.
- Nearly half of all respondents (47%) reported a decrease in customer traffic compared to the same period the previous year. While chains faced a steeper decline in sales performance, independents remained resilient, with 43% indicating their sales were growing. A two-pronged approach is recommended for all restaurants: automated acquisition and scalable retention.
- Automated acquisition entails activities that work in the background, such as optimizing local search through listings management, increasing positive reviews, boosting Meta Awareness ads, utilizing Google Search Ads, and turning on automated channels for incremental revenue.
- Scalable retention emphasizes utilizing owned channels to boost guest returns through email newsletters, gated WiFi, SMS offers, and encouraging social media sharing.
While focusing on strengthening marketing strategies, general areas of focus for cost reduction and labor efficiency remain essential, such as lower operating costs and improving labor metrics.
For help activation around the takeaways from the report, reach out to [email protected].
References
[1] https://www.nationalsmallplate.com/2024-industry-report/
[2] https://www.technomic.com/nations-restaurant-news/analysis/2024-state-of-independents-report-highlights
- In an effort to navigate the tough business landscape of 2024, delivery services can play a vital role for independent restaurants by streamlining to-go orders and boosting revenue, which is particularly important given the increased popularity of third-party delivery services in the limited-service Mexican segment.
- As the finance sector continues to evolve, independent restaurants can benefit from focusing on cost reduction and labor efficiency, while also employing automated acquisition and scalable retention strategies to improve customer traffic and sales performance, as suggested in the 2024 State of Independent Restaurants report by the Nation’s Restaurant News and Unilever Food Solutions.
