Operations

Restaurants expanding offerings to diversify revenue

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February 2, 2023

Well over a half of U.S. restaurants, 87%, plan to expand non-core offerings, such as cooking classes and retail goods, in a quest to diversify revenue and grow their brands.

That's a top finding of Square's Future of Commerce report that analyzes business owners' and consumers' attitudes on the evolution of retail and restaurants.

"Sellers are optimistic for the future, but also taking action to improve sales channels and technology for consumers in 2023," Alyssa Henry, head of Square, said in a press release on the findings. "At Square, we know it's critical for sellers to diversify their revenue streams and expand their offerings, and with our ecosystem, sellers have been able to evolve and thrive."

Restaurants are facing new uncertainty amid increasing competition and consumer expectations, according to the report, with 97% reported planning to take measures to weather a potential recession in 2023. Those measures include adopting automation to allow workers to focus on more meaningful tasks and expanding business offerings to include merchandise or meal kits.

Additional findings include:

• With growing inflation and economic uncertainty ahead, 31% of restaurateurs are considering raising prices. Consumers are understanding, to a point — on average, they're willing to tolerate up to a 21% price increase at their restaurants of choice.
• 20% of restaurants' revenue is currently coming from products and services outside of their core restaurant offerings.
• 37% of restaurants are planning on automating operational activities to maximize staff efficiencies and 71% of consumers said they prefer automation over live staff in at least one aspect of their experience at their favorite eateries.

"Faced with competition and an uncertain economic landscape, the restaurant industry is still feeling the need to adapt and innovate," Lisa Fong, head of product, restaurants at Square, said in the release. "Restaurant owners are hoping to do more with less without compromising on providing exceptional food and service to customers by investing in ways to automate the busy work of their businesses."