Despite current challenges, the restaurant franchise industry shows renewed optimism heading into 2025, driven by advances in technology, a brighter economic outlook and a strategic focus on customer and employee experiences. According to a TD Bank survey conducted at the 2024 Restaurant Finance and Development Conference in Las Vegas, operators and financial professionals see significant opportunities in mobile apps, artificial intelligence (AI), and mergers and acquisitions (M&A).
The survey of 175 restaurant operators and financial professionals revealed that 46% of respondents consider lowering interest rates to be the most critical factor for the industry’s recovery over the next 12 months, followed closely by AI and automation with 42%. Respondents noted that technological advancements, including mobile ordering and digital platforms, are reshaping the industry landscape.
Mark Wasilefsky, director of franchise financing at TD Bank, highlighted this shift: “The drive for convenience and efficiency to improve customer and employee experiences is driving the industry’s focus on mobile ordering. “The continued focus on mobile apps and online ordering tools indicates a demand to better adapt to changing consumer expectations and employee needs.”
Mobile applications dominate investment plans
Mobile apps are becoming a key priority for restaurant operators. The survey found that 77% of respondents ranked mobile ordering as the top revenue driver for the coming year, while 59% believe mobile apps designed for seamless online ordering will have the greatest operational impact.
In addition to improving the customer experience, mobile apps are helping restaurants streamline operations and better meet consumer demand for convenience.
Artificial intelligence and automation
AI and automation are also gaining ground as vital tools to improve efficiency and decision-making. The survey found that:
- 43% of respondents consider AI’s ability to analyze customer data and predict market changes to be the most impactful innovation for operations.
- 34% identified automating administrative tasks as a key factor allowing managers to focus on supporting employees.
These technologies are expected to improve decision-making and free up resources, allowing restaurants to better serve customers and drive revenue growth.
Mergers and acquisitions on the rise
With optimism fueled by lower interest rates and technological advances, 84% of respondents expect an increase in M&A activity over the next year. Industry leaders anticipate that improved profitability, combined with efficiencies gained from technology and value menu strategies, will spur franchise trading and expansion.
“Restaurant franchising as an industry is gearing up for an exciting time, with increased profitability and improved interest rate prospects offsetting the softening of traffic,” Wasilefsky said. “Confidence in technology thanks to AI-driven efficiencies and continuous improvement of the digital experience is creating an optimistic outlook for revenues, margins and overall industry performance.”
Stock Menus Show Mixed Results
The industry’s reliance on value menus is generating moderate success, with 60% of respondents indicating that increased foot traffic offsets the margin compression these programs create. Additionally, more than half of respondents (52%) reported an improvement in foot traffic trends compared to three months ago, indicating cautious optimism about a sustained recovery.
The findings are based on responses from 175 restaurant franchise operators and financial professionals who participated in the 2024 Restaurant Finance and Development Conference held Nov. 11-13 in Las Vegas.
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