5 Things QSR Brands Can Expect in 2024

 Key takeaways

  • Food Away from Home vs. Food at Home price gap: Monitor the gap between FAFH and FAH prices; a significant difference can impact customer traffic.
  • Younger generations as growth drivers: Increased interest from Gen Z and millennials presents new opportunities for growth and loyalty.
  • Technology as a catalyst: Leverage AI for effective, competitive pricing and operational efficiencies.

As dining trends for the new year are revealed, Revenue Management Solutions (RMS) is focused on how and where quick-service restaurant (QSR) operators and brands can boost profitability. True, the current landscape presents economic and other challenges (staffing shortages, rising wage requirements and cost of food, to name a few). But there are opportunities to stay afloat and ahead, especially when aided by technology.

RMS checked in with two of our industry experts, Jana Zschieschang, RMS Chief Brand Officer, and Richard Delvallée, RMS Senior Vice President of Consulting Services, to get their perspectives on what’s in store for QSRs in 2024. Here’s what they had to say:

According to recent Consumer Price Index (CPI) data, Food Away from Home (FAFH) prices are trending nearly two percentage points higher than Food At Home (FAH) prices. And on this front, says Delvallée, history has a lesson.

“In the past, when FAH prices were significantly lower than FAFH prices, customer traffic took a hit. The current scenario is no different,” he says, “with Q4 QSR traffic trends showing a 1.7% decrease from 2022 and nearly 20% from 2019.”

This trend signals a crucial moment for brands. “There’s no doubt this presents a challenging environment,” Delvallée adds. To compensate and avoid further traffic loss, RMS recommends a robust “mind the gap” approach. If the differential widens, the industry may face additional significant headwinds, requiring careful pricing strategies.

Regional Challenges and Opportunities

Brands operating in California and 21 other states face even stronger headwinds. As minimum wage requirements climb, operators will need to pursue innovative strategies to balance profitability and compliance.

That said, Zschieschang advises that operators take a look at streamlining monthly financial reporting before investing heavily in new initiatives. “Often, it can take multi-unit systems months to collect, organize and standardize financial reports,” she explains. “However, when you can understand and manage multi-unit financial data and find it all in one place, at any time, you can absolutely find opportunities to drive unit profitability.” For example, users of RMS’ financial insights solution, metiRi®, see average annual cost savings of up to $55,500 (or 4% profit margin) per location.

Encouraging Signs Amidst Challenges

Delvallée also offers a glimpse of optimism: Net sales are still positive, and according to RMS’ Q4 consumer survey, drive-thru and takeout usage has increased compared to the previous quarter. Particularly amongst younger generations (Gen Z and millennials), 40% said they order more frequently from QSRs and 86% reported making at least one weekly drive-thru visit in the past month.

Strategic Pricing for Competitive Advantage

In light of these insights, RMS recommends surgical pricing strategies that account not only for customer purchasing patterns but preferences such as menu bundles and value items. Take it one step further by exploring how competitors price their menu offerings. For example, tools, such as RMS’ Price Maps, can help you stay informed about the latest average prices for burgers, chicken sandwiches and pizza across all US states.

Technology Can Change the Outcome

Moving forward, harnessing the power of technology will be crucial, says Zschieschang. “The restaurant industry is at a critical juncture where adapting strategies to evolving market dynamics is not just about survival — but about setting a path for future success.”

When margins are razor thin, technology can help identify savings and opportunities for profits from unexpected places. With tech-driven solutions such as RMS’ Competitor Price Intelligence, brands can gain complete visibility into competitors’ pricing strategies on a national level and across regions, cities or neighborhoods. Its proprietary, AI-driven Restaurant Price Index (RPI) allow operators to measure pricing evolution for up to 170,000 restaurant locations across brands, segments and cuisines.

Finally, brands that optimize their apps and other loyalty platforms to keep high-frequency customers engaged will have a significant advantage in an uncertain environment.

The 2024 QSR forecast? Success will require a multifaceted approach. Brands must stay vigilant about the FAFH-FAH price gap, tailor strategies to specific regional issues and capitalize on the potential of younger consumer demographics. Embracing technology and data-driven insights will be key in navigating these uncertain times, ensuring brands not only survive but thrive.

For almost 30 years, RMS has remained steadfast in its commitment to empowering restaurant operators and brands. Our mission? Enable you to boost profitability and unlock invaluable customer insights. If your QSR brand is interested in how you can drive sales and achieve greater profitability in 2024, please reach out. We’re here to help.

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