A third of operators have told the National Restaurant Association that they were not profitable in the first half of the year. Technology isn’t helping as much as you’d expect.

A third of restaurants have told the National Restaurant Association that they were not profitable in the first half of the year, as weak traffic, particularly among low-income consumers, have kept a lid on sales.

Technology that has been all the rage in recent years has helped, but not perhaps as much as it should.

According to another association survey, 28.8% of consumers said that technology reduced corporate overhead, 27% said it reduced labor costs, and 20.4% said it reduced upfront costs.But 28.3% said that it had no significant impact on operating costs and another 12% said that technology increased costs, meaning that around 40% of restaurant operators believe new technology hasn’t cut costs.

“There are some positives I think operators are already citing in terms of positive impacts,” Chad Moutray, chief economist for the National Restaurant Association, said at the FSTEC Conference on Thursday. Yet he noted that the percentages of people saying that technology has cut costs are “not as high as I would have expected.”

The profitability numbers do highlight some of the complexities of the current market. In his presentation at the conference, a sibling company of Restaurant Business and Nation’s Restaurant News, Moutray presented a range of seemingly conflicting bits of data.

For instance, he said, the economy is “holding up a little bit better than we kind-of give it credit for.” Moutray said that measures of the gross domestic product are expected to be “very strong” in the third quarter. According to the Federal Reserve Bank of Philadelphia, forecasters expect the economy to grow at an annual rate of 2.5% in the period, compared with 1.5% in the second quarter.

But much of that growth is coming from AI. And the economy overall is “K-shaped,” Moutray said, meaning some are doing well and others are not.

Consumer confidence has weakened this year, largely due to gas prices.

Higher-income consumers are still going out and spending a lot. Lower-income consumers, on the other hand, are dining out less often. The association expects sales to grow 4.3% so far this year, or 0.8% after accounting for menu price inflation, so the expected results are somewhat muted.

Consumers are still dining at restaurants, Moutray said. Eighty percent of consumers told the association that they visited a restaurant the previous week. But higher-income consumers were far more likely to say they went out in the past week than lower-income consumers.

And, Moutray said, 39% of consumers said they visited restaurants less in the third quarter than in the second quarter, compared with 23% who said they visited restaurants more often during the period.

Operators are worried, too. Thirty-two percent of operators told the association in April that the economy was their top challenge, more than any other concern. That is up from 25% who said the economy was their top challenge in August of last year. “Despite the stronger economy, consumers and businesses are very fragile,” Moutray said.

Source https://www.restaurantbusinessonline.com/financing/more-restaurants-are-struggling-profitability-technology-isnt-always-helping