Restaurant industry CFOs are pessimistic about the state of the economy and optimistic about the state of their own companies.
That, at least, is according to a survey by consulting firm BDO, released this week.
Seventy percent of CFOs in the survey said they expect a recession in 2021 or 2022, buying into the idea that an economic downturn is increasingly inevitable following a decade of growth.
But they don’t think that downturn will hurt them in the near-term: Two-thirds said they expect an increase in revenue in the next 12 months, and 68% expect an increase in profitability.
In other words: A recession is coming, but it won’t affect restaurants, at least not yet, according to the CFOs.
Fear of recession is not keeping restaurant companies from expansion: 64% of CFOs expect their store count to increase this year, while 34% expect that number to stay the same. Fast-food companies are the most optimistic, with 86% of quick-service CFOs expecting store count growth, compared with 57% of casual-dining and just 50% of fast-casual financial executives.
Unit count growth and remodeling are both top spending priorities in the coming years.
BDO, a business consulting firm with an extensive restaurant practice, polled the CFOs of 100 restaurant companies with revenues from $250 million to $3 billion. The executives were asked about a wide range of issues, concerns and spending priorities.
Not surprisingly, technology is the biggest investment priority heading into the coming year. Sixty-five percent of the CFOs said they expect to increase their investment in technology this year, while 30% expect their tech spending to remain the same.
Digital and delivery have been a major source of investment: 80% of CFOs said they invested in delivery, and 80% said they invested in the digital customer experience, while 76% said they invested in online and mobile ordering and 75% invested in “influencer marketing.” Voice commerce is less important, though 65% said they have invested in that form of technology, according to BDO.
More payment options are coming, with 89% expecting to offer Apple Pay by the end of the year and 86% expecting to add PayPal. Amazon Pay, Venmo and even Bitcoin are expected to increasingly be options for payment.
Restaurant companies’ investments in the coming year are expected to shift, however, toward sustainability: 55% of CFOs plan to invest in sustainability this year, while 44% expect to invest in meat alternatives.
As it is, 32% of fast-food companies in the survey offer a meat alternative, but 50% plan to offer one in the next 12 to 18 months.
Meanwhile, 56% of fast-casual restaurants plan to offer a meat alternative, and 50% of casual-dining restaurants are planning to do so. Interestingly, upscale-casual and fine-dining chains have already been adding them: 47% of upscale-casual and 54% of fine-dining restaurants already offer meat alternatives.
That suggests the recent flurry of plant-based meat options in the restaurant industry is only expected to continue this year as more chains of all types look to offer more meatless options.
As for labor: It remains the biggest cost concern for financial executives, with 37% of them saying that it’s the biggest risk to their business heading into 2020. Fast-food executives were most concerned, with 54% of them saying it’s their biggest risk, while 46% of fine-dining CFOs listed it as their top concern.
Interestingly, casual-dining and fast-casual CFOs were less concerned about labor: 25% of each of those companies’ financial executives said labor was the biggest concern.
The biggest worry regarding labor: The availability of workers (25%), followed by labor costs (21%) and training and development (20%).
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