Sixty-six percent of restaurant franchise operators feel optimistic about the future, according to a survey released by TD Bank on March 21.

The poll collected insight from restaurant franchise operators and other finance professionals at the Restaurant Finance and Development Conference held November 14-16, 2022, in Las Vegas.

Inflation continues to be the top challenge restaurant franchise professionals are facing, the survey found, followed by the labor shortage (32%), supply chain disruptions (16%) and rising interest rates (11%). But investments in physical locations remain a priority from a service perspective, though a near-equal number of respondents intend to focus on developing digital and delivery services.

Labor quality and availability has been a particular pain-point. When asked to describe the labor quality and availability due to the current macro environment, 69% of respondents said they noticed a decrease in labor quality and availability, while 24% reported that they have seen an improvement in labor quality and availability.

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Forty-one percent said they plan to invest in in-store reimagining, remodeling or in digital and delivery systems. Many are looking to invest in technology to further streamline the process from placing an order to receiving food, with 38% of operators planning to invest in technology such as a new POS system, digital signage or other in-store tech, and 37% planning to invest in mobile ordering.

Respondents also reported that their restaurant franchise plans to invest in delivery service (23%) and alternative payment methods for speed and convenience (16%). Just 15% reported that their restaurant franchise had spending cuts planned, and 11% of restaurant operators said they have no investments planned.
“Our survey found that the majority of restaurant franchise operators plan to invest in store digital and delivery systems, as well as in reimaging and remodeling,” said Mark Wasilefsky, TD Bank’s head of restaurant franchise finance group. “The plethora of investment opportunities that are available to restaurant operators speaks to how much the restaurant industry is constantly changing to meet consumers’ demands.”

In the survey, two out of three operators and industry professionals said they feel optimistic amid the current macro environment, while 18% said they feel indifferent about the future of the restaurant industry and 13% said they feel negatively about it.

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“Many restaurants went through a major shift during the pandemic with an increase in demand for delivery and takeout options,” Wasilefsky said. “As many people are beginning to restart their pre-pandemic routines, restaurants are likely to see another change in dine-in options. The industry is extremely resilient, and operators must adapt to meet consumers’ demands in an ever-changing restaurant landscape.”

“There are material challenges ahead for the industry,” Wasilefsky added. “Below the revenue line, challenges in labor and inflation are creating compressed margins. At the same time, consumers are demanding a better digital and in-store experience, which requires an investment in their physical and digital presence. Brands with solid digital and delivery programs and up-to-date facilities will have a distinct advantage. In addition, operators with stronger balance sheets and overall better liquidity positions will be able to take advantage of this opportunity to grab market share.”

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