The Biggest Takeaways from NRN's The State of Independent Restaurants 2024

publication date: Jan 9, 2025
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author/source: David "Rev" Ciancio
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2024 was a tough year for the restaurant business, especially for independent operators. I feel like we say this every year in the restaurant business, but the past 12 months have felt like an anomaly.

The year started with a blood bath in January and February across the country and didn't get any easier with inflation, rising cost of goods, labor shifts, competition from chains with bigger budgets, and an election. We had a dog fight this year. So what did that look like?

We can take a look at the 2nd annual State of Independent Restaurants from Nation’s Restaurant News, with support from sponsor, Unilever Food Solutions, for the overview and insights.

It's always good for everyone in the business to read reports like this. Whether you are an independent operator, a multi-unit brand, or a supplier, it's always good to read a report like this and gain valuable insights to help you read the tea leaves.

Do you love industry reports? I love industry reports. I especially love industry reports when they have accuracy and relevancy and share insights on what I need to be thinking about to move my business forward!

Vendors -- more insightful reports, please!

According to the report, independent restaurants and small brands account for approximately three out of every five restaurant locations in the United States, staying essentially the same from the previous period.

"Both independents and chains recorded positive sales growth for the year, Technomic estimated, including a 1.5% uptick for independents and small brands to $206 billion and an 8.2% increase for chains to $451 billion."

"Technomic found that quick service and fast casual were the only industry segments to record net growth in locations in 2023, driven by net increases for chains."

Here are the biggest takeaways from The State of Independent Restaurants 2024 Report from Nation’s Restaurant News and Unilever Food Solutions, along with my suggestions on how to activate around them!

HOW ABOUT THEM TACOS?!??!

"The limited-service Mexican segment expanded 45% to nearly 42,000 locations from 2022 to 2023, and during that time, independents’ share of those restaurants grew from 46% to 62%. Similarly, independents’ share of locations in the limited-service chicken category tripled from 8% to 24% while that segment grew its total number of restaurants by more than 25% to nearly 25,000 locations."

If you serve Mexican food and did not see an increase of this nature in your off-premise business, I'd suggest focusing your marketing in Q1 to drive to-go orders, ideally first-party (higher profitability), but would not overlook well-built promotions on third-party delivery services.

If you are not a Mexican restaurant but have Mexican inspired items, increase the frequency of marketing those items.

TURN ON THE TRAFFIC FAUCET

"Nearly half of all respondents (47%) indicated that their customer traffic had decreased compared with the same point a year earlier. Meanwhile, 37% said their traffic had risen, and the remaining 16% said their traffic was flat."

Digging a little deeper reveals that traffic right now is an independent's game to win:

"Chains fell harder than independents on sales performance as well. Three in four chain operators reported sales growth last year, but that number fell to 39% in 2024. By comparison, three in five independent respondents indicated their sales were growing last year, and that number was down to 43% in 2024."

My two-pronged recommendation for all restaurants:

1. AUTOMATED ACQUISITION

Ignite, increase, and bolster acquisition activities that work in the background:

2. SCALABLE RETENTION

PS: "Operators also named secondary priorities that support traffic growth, such as improving marketing (26% of all respondents), increasing check averages (26%), and boosting average unit volumes (25%)."

AFTER MARKETING, THEN WHAT?

The standard areas of focus apply here: lower operating costs & improve labor metrics. IF you haven't checked out TimeForge Labor yet, I highly recommend it.

GET OUT OF HERE!

Off-premise is a big area of focus and a huge area of growth. Eating at home and the office continues to be a strong channel for sales. If your third-party catering and first-party ordering did not increase in 2024 or at least become more profitable, it's worth taking the time to optimize these channels.

SNACKIN' & DRINKIN'!

"More than two in five operators said their culinary teams devote most of their time to coming up with new entrees,

including 43% who said so for center-of-the-plate entrées and 44% who said this for handhelds like burgers, sandwiches,

and burritos. However, last year, those figures were slightly above 50% among all operators."

BUT .....

"appetizers and alcohol: Those are the two categories with the highest perceived profitability. Nearly half of all respondents (46%) named alcohol as one of their highest-margin menu categories, naturally led by participants from full-service brands. Another 39% of respondents called appetizers one of their most profitable categories."

This section of the report is about menu innovation. I have an easier to start suggestion ... increase the frequency of marketing appetizers and alcohol TODAY in both digital and in-store efforts. Want to really increase the sales of these categories? Have your in-store team focus on up sells.

DID YOU HEAR WHAT YOUR GUESTS SAID!

That does require asking them! The report revealed that guest feedback took the #2 spot behind team members on where menu innovations are coming from.

Want more feedback from guests? I use Ovation.

I work with Jay from Pizza Buzz and we take this even further. Pizza Buzz has done Pizza of the Month for years now. 100% of the pizzas that have been featured come from guests. In fact, we have a robust system where guests submit pizzas and then vote on the top 3. The winner gets added to the menu.

It's not just a huge driver of sales. It's a huge driver of engagement on social media, plus it creates a repeatable marketing plan that can be measured both online and in the cash register!

MARKETING > EVERYTHING ELSE

"Fitting their need to turn around falling traffic, operators indicated repeatedly in this year’s study that they’re seeking more impactful marketing programs. Marketing appeared top of mind for independents and full-service respondents, who likely have fewer campaigns and programs already in place than chain operators tend to have."

"Operators across all segments agreed broadly, however, on how challenging marketing has become. In response to an earlier question about their biggest pain points, “finding effective marketing strategies” grew the most year over year, rising from 9% of all respondents in 2023 to 15% this year."

TIME TO SEGMENT

Independent operators - you have the momentum, and its fuel is marketing. If you want one of the secrets of the chains, it's segmented marketing.

1. Know who your ideal customers are and where they are looking for restaurants online, and speak to them in a way they want to be spoken to.

2. Look into your guest data, identify three segments, and start these activities:

There is a whole lot more in the report, and I highly recommend you download, read, take notes, and create an action plan. It took me less than an hour to do this myself.

Do you need help with any of this? Send me an email rev@brandedstrategic.net.


David Rev CiancioDavid "Rev" Ciancio is a co-owner of Handcraft Burgers & Brew and also a Brand, Customer & Technology Evangelist. Rev helps tech and software companies generate more leads, quicken the sales cycle, create memorable customer journeys, all while building fervent brand ambassadors and growing business & sales. He helps restaurants to make tech decisions and to create guest acquisition and retention marketing that works. Get more marketing tips from Rev at #revsmarketingtips. If you ever have questions about restaurant marketing, just email me.


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