Q4 Trends Report: Catering Orders Surge with New Digital Ordering Channels, Food & Alcohol Insights & Tipping Data

Rhea-AI Summary

Toast (NYSE: TOST) releases its Q4 2023 Restaurant Trends Report, offering insights into the U.S. restaurant industry's performance during the holiday season, large events, food and alcohol preferences, and tipping trends.

Insights

Market Research Analyst

The Q4 2023 Restaurant Trends Report released by Toast offers a comprehensive look at the restaurant industry's performance during a critical period. Holiday seasons typically see a surge in dining out and catering services, making this quarter a significant indicator of consumer spending patterns and economic health in the hospitality sector.

From a market research perspective, analyzing catering activity and food and alcohol preferences during cold weather can provide businesses with actionable insights to optimize their menus and marketing strategies for maximized revenue. Additionally, understanding weekly tipping trends might reflect the changing dynamics of customer service expectations and employee satisfaction.

For stakeholders, such as investors and restaurant owners, the data from this report can serve as a benchmark for industry standards. It's essential to compare these trends with previous quarters to identify growth opportunities or potential red flags that could affect future profitability.

Financial Analyst

Toast's position as a digital platform serving a substantial portion of the restaurant market provides a unique vantage point for financial analysis. The breadth of data covering approximately 106,000 restaurant locations gives a robust sample size that can be extrapolated to gauge the sector's performance.

Investors should look at this report to assess the financial health of the restaurant industry. Revenue trends around the holidays are particularly telling of discretionary spending, which correlates with broader economic trends. Shifts in consumer behavior, as indicated by the report, can have implications for stock valuations in the hospitality and food service industries.

Moreover, the report's findings on tipping trends could indirectly signal labor market conditions, which are a critical component of operating costs for restaurants. An uptick in tipping could suggest a healthy consumer sentiment, while a downturn might hint at economic tightening that could affect restaurant margins and, consequently, their stock performance.

Economist

The data from Toast's report can serve as an economic indicator, particularly in understanding the discretionary spending within the U.S. economy. During colder months, consumer spending patterns can shift and the hospitality industry must adapt to these changes to maintain profitability.

An economist would be interested in the correlation between economic confidence and the increased activity in restaurants during the holiday season. A rise in catering activities and premium alcohol consumption could suggest a robust economy, while a decline might indicate economic headwinds.

Long-term, these trends can influence labor market dynamics, supply chain decisions and investment in the hospitality sector. Stakeholders should monitor such trends for signs of inflationary pressures or shifts in consumer preferences that could necessitate strategic adjustments.

The Q4 2023 Restaurant Trends report looks into catering activity around the holidays, large events, cold-weather food and alcohol preferences, and weekly tipping trends.

BOSTON--(BUSINESS WIRE)-- Toast (NYSE: TOST), the all-in-one digital platform built for restaurants, today announced its Q4 2023 Restaurant Trends Report, providing insight into the overall state of the U.S. restaurant industry through an analysis of aggregated data from selected cohorts of restaurants and in select U.S. metropolitan areas on the Toast platform, which serves approximately 106,000 restaurant locations as of December 31, 2023. Read more details about our methodology below.

This report looks into catering and large event transactions on the Toast platform, trends in 27 food types and nine alcohol categories, weekly tipping trends, and tips in all 50 U.S. States, from Q4 2023. View the full report on the Toast Newsroom.

Food & Alcohol Trends

To better understand food and alcohol trends in Q4 2023, Toast analyzed order counts for 27 restaurant dishes and nine alcohol types. Toast then compared the Q4 2023 average of these categories to the average for the remaining quarters in 2023 to determine which foods and drinks guests ordered more frequently as the year ended.¹

Spoiler: It isn’t salads or hard seltzers.

Cold weather associated with Q4 seemed to drive many consumer food trends — guests ordered warm comfort foods more than the average of Q1 through Q3. Soups/stews saw the largest increase, with +25% more orders than the average for the first three quarters of the year, followed by ramen/noodles (+13%), curry (+12%), dumplings (+8%), steak (+5%), and rice (+5%).¹

On the other end of the spectrum, salads saw the most significant decrease in orders, compared to the average for the first three quarters of the year, followed by bowls, nachos, hot dogs (-7%), and tacos (-6%). Interestingly, data suggest that some food categories, like desserts and enchiladas, had no significant change in orders in Q4 compared to the average for Q1 through Q3.

So what did restaurant guests drink with their meals and order at bars in 2023? Whiskey orders were up +21% in Q4 compared to the average of Q1 through Q3, followed by wine (+13%), vodka (+12%), rum (+11%), gin (+10%), tequila (+9%), and beer (+5%).²

Overall, restaurant and bar guests drank approximately +11% more alcohol in Q4 2023 compared to the average of Q1 through Q3.

’Tis the Season for Catering

With so many holidays and end-of-year parties jammed into Q4, it’s no surprise that it’s a busy time for catering and large parties.

Same-store catering transactions increased by +71% in Q4 2023 compared to Q4 2022, and approximately 30% of that increase came through Catering Online Ordering, which launched in Q3 2023. Restaurants serving bakery items, coffees, teas, and desserts had the most catering transactions in Q4 2023, which accounted for approximately 32% of all transactions.³

On average, catering order ticket sizes in Q4 2023 were $160. Tips on catering orders were much lower than other service channels. However, those who did choose to tip on a card or digital payment typically tipped 13% — up +1.3% from Q4 2022. Guests really showed their holiday spirit on New Year’s Eve, where tips on catering orders averaged 23.2%.

The State of Tipping in America

Overall, tips remained generally flat in Q4 2023 compared to Q3 2023, which is good news for restaurant employees. Total tips averaged 18.9% in Q4 2023, the same as Q3 2023. Full-service restaurant tips also remained flat at 19.4%. Quick-service restaurant tips dipped just .1% from Q3 2023 to 16%. ⁴

View the full report on the Toast Newsroom.

Methodology:

¹Methodology: Toast analyzed transactions on the Toast platform from January 1, 2023, to December 31, 2023, to determine the popularity of dishes labeled “salads, bowls, nachos, tacos, burgers, chicken tenders, roast chicken, fries, quesadillas, sandwiches, sushi, BBQ, burritos, desserts, enchiladas, pizza, cheese, omelette, pasta, wings, rice, steaks, dumplings, curry, ramen/noodles, and soups/stews.” Toast then compared the Q4 2023 average volume with the average volume for the other quarters in 2023.

²Methodology: Toast analyzed transactions on the Toast platform from January 1, 2023, to December 31, 2023, to determine the popularity of beverages containing “hard seltzer, hard cider, beer, tequila, gin, rum, vodka, wine, and whiskey.” Toast then compared the Q4 2023 average volume with the average volume for the other quarters in 2023.

³Methodology: Toast analyzed catering transactions from a cohort of restaurants on the Toast Catering & Events platform in Q4 2022 and Q4 2023. Toast used a cohort of same-store customers on the platform since Q3 2022.

⁴Methodology: Data from applicable restaurants on the Toast platform where a tip was added to the order via a card or digital payment from October 1, 2023, to December 31, 2023. Cash tips are not included in the analysis.

About the Restaurant Trends Report:

The Restaurant Trends Report, powered by Toast, uncovers key trends across the restaurant industry through aggregated sales data from a selection of cohorts of restaurants on the Toast platform, which has approximately 106,000 locations as of December 31, 2023. This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Individual results may vary. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation. The Restaurant Trends Report is not indicative of the operational performance of Toast or its reported financial metrics.

About Toast

Toast [NYSE: TOST] is a cloud-based, all-in-one digital technology platform purpose-built for the entire restaurant community. Toast provides a comprehensive platform of software as a service (SaaS) products and financial technology solutions that give restaurants everything they need to run their business across point of sale, payments, operations, digital ordering and delivery, marketing and loyalty, and team management. We serve as the restaurant operating system, connecting front of house and back of house operations across service models including dine-in, takeout, delivery, catering, and retail. Toast helps restaurants streamline operations, increase revenue, and deliver amazing guest experiences. For more information, visit www.toasttab.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240307325934/en/

Media: media@toasttab.com

Investors: IR@toasttab.com

Source: Toast

FAQ

What does the Q4 2023 Restaurant Trends report by Toast focus on?

The report delves into catering activity during holidays, large events, cold-weather food and alcohol preferences, and weekly tipping trends.

What is the ticker symbol for Toast?

The ticker symbol for Toast is TOST.

How many restaurant locations does the Toast platform serve as of December 31, 2023?

The Toast platform serves approximately 106,000 restaurant locations as of December 31, 2023.