The Future for Restaurants is Bright (and Tech-Driven), TD Bank Survey Finds

Rhea-AI Summary

TD Bank's survey at the 2024 Restaurant Finance and Development Conference reveals optimistic outlook for the restaurant industry, driven by digital innovation and anticipated lower interest rates. The survey of 175 restaurant operators and financial professionals indicates that 46% believe lower interest rates will have the greatest impact in the next 12 months, followed by AI and automation (42%).

Mobile ordering emerged as the top predicted revenue driver (77%), while 59% believe mobile apps for online ordering will significantly impact operations. The industry sees value menus paying off, with 60% reporting increased foot traffic offsetting margin compression. Additionally, 84% of respondents anticipate increased M&A activity in the coming year, while 36% expect investments in digital platforms and automation technologies.

Following recent industry challenges, appetite for expansion and investment in mobile apps and artificial intelligence grows

CHERRY HILL, N.J.--(BUSINESS WIRE)-- The last five years have provided significant challenges to the restaurant franchise industry. However, the industry has renewed optimism, driven by the adoption of digital and mobile ordering, menu creativity and heightened expectations around AI. This is according to a survey conducted by TD Bank at the 2024 Restaurant Finance and Development Conference in Las Vegas, Nevada. The poll collected insights from 175 restaurant operators and financial professionals to uncover their expectations for 2025.

Continued technological advancements, better value meal strategies, as well as a better interest rate outlook are driving optimism. In fact, respondents believe lowering interest rates will have the greatest impact on the restaurant industry in the next 12 months (46%), followed closely by artificial intelligence and automation (42%). The industry's addiction to value menus appears to be moderately paying off, with a slight majority of operators indicating that the associated increase in foot traffic (60%) offsets the margin compression from these programs (40%). Furthermore, more than half (52%) of respondents say they've seen improved underlying foot traffic trends as compared to just three months ago.

Franchise 2.0: Prioritizing Investments in Mobile Apps and Artificial Intelligence

Looking ahead, restaurant operators and financial professionals are focusing on investments that drive revenue and simplify operations – especially mobile apps. When asked about their predictions for the top three revenue drivers for restaurants over the next 12 months, more than three-fourths (77%) of respondents ranked mobile ordering number one. Similarly, 59% of respondents believe mobile apps that offer easy online ordering will have the greatest impact on operations over that same time period.

“The push for convenience and efficiency to improve customer and employee experiences is driving the industry's focus on mobile ordering,” said Mark Wasilefsky, Head of Franchise Finance, TD Bank. “The continued focus on mobile apps and online ordering tools signals a demand to better accommodate changing consumer expectations and employee needs.”

Meeting these consumer expectations and employee needs is pushing restaurant franchises towards artificial intelligence and automation. The survey found 43% of respondents believe that using AI to analyze customer data and predict market shifts will have the greatest impact on operations, followed by the automation of admin tasks to let restaurant managers spend more time helping employees (34%).

Ultimately, mobile apps and automation are key growth areas over the next 12 months, with 36% of respondents predicting restaurants/franchises will invest in digital platforms, mobile apps and online ordering to enhance customer experience, as well as technology to automate and streamline operations.

2025: The Year of M&A Growth

As lowering interest rates and technological innovation boost optimism, restaurant franchise leaders are turning their attention to mergers and acquisitions. Over the next 12 months, 84% of respondents believe mergers and acquisitions (M&A) activity will increase.

“Restaurant franchising as an industry is gearing up for an exciting time, with improved profitability and a better interest rate outlook offsetting moderating traffic and portending a reemergence in dealmaking and franchise expansion,” said Wasilefsky. “Despite 2024's challenges with foot traffic and AUVs, a few factors are coming together to bolster the outlook – including the careful application of value menus, confidence in technology from AI driven efficiencies and continual improvement in the digital experience. Together, they are creating an optimistic outlook for revenue, margins and overall industry performance."

Survey Methodology

This study was conducted at the 2024 Restaurant Finance and Development Conference held in Las Vegas, Nevada from November 11-13, 2024. A total of 175 restaurant franchise operators and finance industry professionals were polled.

About TD Bank, America's Most Convenient Bank^®

TD Bank, America's Most Convenient Bank, is one of the 10 largest banks in the U.S. by assets, providing over 10 million customers with a full range of retail, small business and commercial banking products and services at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Auto Finance, a division of TD Bank, N.A., offers vehicle financing and dealer commercial services. TD Bank and its subsidiaries also offer customized private banking and wealth management services through TD Wealth^®. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Instagram at www.instagram.com/TDBank_US/.

TD Bank is a subsidiary of The Toronto-Dominion Bank, a top 10 North American bank. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol "TD". To learn more, visit www.td.com/us.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241212094383/en/

Media:

Nick Villano

TD Bank

Communications Manager

Nick.Villano@td.com

Source: TD Bank

FAQ

What are the key findings from TD's 2024 restaurant industry survey?

TD's survey reveals that 46% expect lower interest rates to have the biggest impact, 77% see mobile ordering as the top revenue driver, and 84% anticipate increased M&A activity in the next 12 months.

How are value menus affecting restaurant performance according to TD's survey?

According to the survey, 60% of operators report that increased foot traffic from value menus outweighs the margin compression, with 52% noting improved foot traffic compared to three months ago.

What technology investments are restaurants prioritizing for 2025?

Restaurants are prioritizing mobile apps for online ordering (59%), AI for customer data analysis (43%), and automation of administrative tasks (34%).

What percentage of restaurants plan to increase M&A activity in 2025?

84% of survey respondents believe mergers and acquisitions activity will increase over the next 12 months.

How is AI expected to impact restaurant operations in 2025?

43% believe AI will significantly impact operations through customer data analysis and market prediction, while 34% expect it to automate administrative tasks.

What are the main drivers of restaurant industry optimism for 2025?

The main drivers are expected lower interest rates, technological advancements, better value meal strategies, and improved digital ordering capabilities.