As we look towards 2024, the foodservice industry's dramatic post-pandemic transformation will continue. It's both an exciting and challenging time for the industry. And it's a time to keep asking the bold questions: How should we improve our go-to-market strategy to accelerate our growth? How can we reshape the dining experience to meet the evolving demands of the 21st-century consumer? What role will technology play in bridging the gap between tradition and innovation? As we navigate the year ahead -- for both operators and manufacturers -- we must balance our focus against the critical issues and opportunities the industry continues to wrestle with, including a renewed focus on the basics of great customer service, maintaining a sharp eye on the value-equation, adopting the right technology, ensuring profitability, and building unparalleled customer experiences.



Here, we explore eight predictions Kinetic12 has for the ongoing transformation of our industry.

1. THE INSATIABLE CONSUMER

Consumers in 2024 will become insatiable, craving experience and demanding quality without compromise. With discretionary spending down and post-COVID tolerance for sub-par service waning, consumers' expectations will be relentless, and their patience for mistakes, late delivery, and poor service will be unforgiving. In 2024, both operators and suppliers must invest in understanding how consumers' expectations are evolving and how their definition of value is changing. While price is important, it's not the only factor bringing consumers in. We expect an accelerated focus on the basics of great hospitality and an emphasis on creating unique customer experiences as operators fight for share in an increasingly competitive space.

2. THE PRIORITIZATION OF OPERATOR PROFIT

Profitability and creating a sustainable business model will be the #1 priority for operators in 2024. We expect this profit-centric mentality to proliferate and affect every aspect of the restaurant business model. Costs have increased so rapidly that many operators have struggled to keep up, and many have pushed price increases to the limit in an attempt to recapture lost margins. As we look forward to 2024, we expect a more significant embrace of technology and automation in an effort to reduce reliance on labor, smaller operator store designs that minimize overhead, and increased scrutiny around innovation to ensure new items truly drive traffic.

3. THE CHAIN LANDSCAPE RE-DEFINED

In 2024, we expect to see increased mergers and acquisitions activity and a surge in regional chain growth, reshaping the chain landscape. The current real-estate glut, much of which is already built out for restaurant operations, will undergo a major reshuffle as underperforming units close, trendy concepts consolidate and close due to oversaturation, and regional chains gobble up available spaces with their aggressive growth as the look to become the next national player. Additionally, we expect to see more multi-branded concepts leveraging corporate buying programs to help scale smaller brands more efficiently and effectively as companies look for new avenues of growth while leveraging the brain power and resources only available through scale.

4. THE OFF-PREMISE REVOLUTION 

The off-premise revolution continues in 2024. We expect an elevated investment by operators in the sophistication of off-premise capabilities. Every operation, from fine dining to fast casual, has made some sort of improvement in its off-premise capabilities over the past few years. In 2024, we expect things to go from quick fixes like catering and curbside to expanded digital investments as operators embrace social media to drive traffic. Operators will continue to reconfigure their spaces and prototypes for off-premise and introduce new technology and equipment to bring these programs to the next level. Packaging is also a central off-premise opportunity area, and we expect operators will be investing more in custom and logo packaging to help elevate their brand experience outside of the restaurant.

5. THE NEW LABOR-MANAGEMENT MINDSET 

Labor availability, quality, and retention have been a significant struggle over the past few years. A critical part of solving this has been to build employee engagement and work-life balance and focus on making work a fun place to be. This will be an important area of advancement for the industry in 2024. Operators clearly understand the importance of an engaged workforce in achieving their sales goals and increasing guest loyalty. Accepting the costs of this new labor-management mindset has been a tough pill to swallow. Still, the results are in, and we've learned that by focusing on staff experience, making it an enjoyable place to work, and providing growth opportunities, operators can provide a more consistently positive guest experience that translates into repeat business. In 2024, we expect hospitality to have a come-back, fueled directly by an improved employee experience.

6. THE INSTABILITY OF THE GLOBAL SUPPLY CHAIN

2024 will likely be a year of global supply chain instability. Wars, a presidential election, and the continued unpredictability of inflation, recession, and the stock markets will impact supply reliability. The past 3 years have been a painful time for supply chain professionals, resulting in a broad array of tactics to combat the unpredictable supply – from dramatically cutting SKUs to simplifying menus to changing suppliers. Unfortunately, there's still work to be done. The good news is that the industry has learned from the hardship, and the resulting new processes, new relationships, and expanded contingency plans put us in a better place to handle whatever 2024 brings.

7. THE EVOLUTION OF THE DISTRIBUTOR BUSINESS MODEL

Foodservice distributors are still working on optimizing their business models to meet the new realities post-pandemic, even with the improvement in service levels witnessed in 2023. We anticipate that the focus on assortment and value chain efficiencies will persist as the stocked SKU counts increase. Distributors, like operators, will adopt more labor retention strategies to deal with the high employee turnover rate. However, technology will have the most significant impact on distributors in 2024. An e-commerce platform is now a basic requirement for broadline distributors, and new tech firms have enabled even the smallest distributor to provide an e-commerce experience to their customers. Distributors will continue to experiment and invest in technologies that can help them provide better customer engagement and expanded services. We will see more testing of process automation and robotics at warehouses, and having robust data and analytic capabilities will become even more critical in 2024 as the industry responds to increased regulations and consumer demand for transparency in the food supply chain.

8. THE MANUFACTURERS HUNT FOR GROWTH

With operator purchases expected to be flat in 2024 (per IFMA Scope), manufacturers will be looking for more creative ways to grow their business. With the pandemic disrupting many operator-supplier relationships, we expect manufacturers to leverage new data tools to conduct more detailed analyses of their existing customers' business to uncover opportunities to sell them a broader array of categories and products. Manufacturers are also expected to invest more to train their teams in a customer planning approach that ensures they are consistently assessing opportunities for growth as well as maximizing retention efforts for key customers. Manufacturers seeking to grow are looking beyond traditional foodservice segments to capture consumers who are expanding where they source food away-from-home. Convenience stores and supermarket deli-prepared food offerings will continue to grow, and they'll be looking for suppliers who can help them further develop their food service offerings.

The year 2024 is set to be a landmark year in the foodservice industry, one that will set the tone for years to come. It's a year that challenges us to think beyond the conventional, to be bold in our aspirations, and visionary in our strategies. This is an invitation to embark on a journey that reimagines the very essence of dining, leveraging technology, embracing sustainability, and prioritizing human connections. Let's seize this opportunity to craft a future that's not just profitable but also enriching and inspiring. 

The future is not just about adapting to change; it's about leading it. Together, let's challenge the status quo, adapt the business model to address the market's evolving needs, and be the architects of change that make 2024 a year to remember.

About Kinetic12: Kim Letizia, Tim Hand, Bruce Reinstein and Art Bell are with Kinetic12 Consulting, a Chicago-based Foodservice and general management consulting firm. The firm works with leading Foodservice suppliers, operators, and organizations on customized strategic initiatives as well as guiding multiple collaborative forums and best practice projects. They also engage as keynote speakers at operator franchise conferences and supplier sales meetings. Their previous leadership roles in restaurant chain operations and at Foodservice manufacturers provide a balanced industry perspective. 

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