When I was in high school a McDonald’s Big Mac was among my favorite fast-food meals.
It checked all the boxes for a high school kid. It was fast, tasted good and at less than $3 in 1985, the Big Mac Value Pack was cheap enough for my 12th-grade budget. The idea of a Big Mac costing $18 seemed unthinkable to 1985 Joe. And yet here we are today, where, according to a variety of experts and published reports, reaching that price point for one of the fast-food industry’s most famous menu items seems entirely within reach.
None of this is a criticism of McDonald’s, mind you. It’s a glaring sign of the times and the Chicago-based chain is susceptible to the headwinds of the day the same as any other foodservice operator.
No doubt, the challenges today’s foodservice operators face are many and multifaceted. Food prices remain elevated and labor cost pressures show no signs at all of abating. In fact, government efforts to significantly raise minimum wage for restaurant employees in places like California and Chicago promise to keep labor a top-of-mind issue for operators for years to come.
To keep pace, operators have had to make a variety of changes, like increasing prices. Through September of this year menu prices increased 7.7%, per the U.S. Bureau of Labor Statistics. That’s the same rate as in 2022 and almost triple 2018’s rate of 2.6%. Thanks to strong employment and growing wages, consumers have been able to absorb the price increases from the past few years. But that’s also not sustainable. Continued price increases will lead consumers to start trading down if they have not done so already.
Despite these challenges, the foodservice industry has several critical factors in its favor heading into 2024. (For a more complete look at 2024, be sure to read the forecast story.) Consumers still have plenty of pent-up demand when it comes to wanting to use restaurants more, per Chicago-based market research firm Datassential. And consumers continue to crave experiences that only restaurants and foodservice can provide. The use of technology continues to grow and evolve in ways that help restaurants operate more effectively and efficiently. And the off-premises upgrades operators made in recent years are here to stay, well-positioned to deliver a positive return on investment.
That said, operators cannot rest on their laurels. The complex business environment and shifting consumer preferences will not allow it. To remain relevant and successful in 2024 and beyond operators will need to continue to innovate to overcome both the barriers they know of and those that have yet to emerge. In doing so, operators will need to remain true to their brand promise, making sure any innovations support it. Finally, operators can’t go it alone. Successful business leaders will continue to lean into technology to operate more efficiently and get to know their customers better. Further, they will continue to leverage their trusted supply chain partners to find best-in-class solutions to their challenges.
If this last part sounds familiar, it should. It’s pretty much the same recipe the industry has successfully followed for years. This tried-and-true recipe has gotten operators and their supply chain partners through challenging times before and it will do so again in 2024 and beyond.