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Despite ongoing challenges, the restaurant franchise industry is showing renewed optimism heading into 2025, driven by advancements in technology, a brighter economic outlook, and a strategic focus on customer and employee experiences. According to a TD Bank survey conducted at the 2024 Restaurant Finance and Development Conference in Las Vegas, operators and financial professionals see significant opportunities in mobile apps, artificial intelligence (AI), and mergers and acquisitions (M&A).
The survey of 175 restaurant operators and financial professionals revealed that 46% of respondents view lowering interest rates as the most critical factor for the industry’s recovery over the next 12 months, closely followed by AI and automation at 42%. Respondents noted that technological advancements, including mobile ordering and digital platforms, are reshaping the industry landscape.
Mark Wasilefsky, Head of Franchise Finance at TD Bank, highlighted this shift: “The push for convenience and efficiency to improve customer and employee experiences is driving the industry’s focus on mobile ordering. The continued focus on mobile apps and online ordering tools signals a demand to better accommodate changing consumer expectations and employee needs.”
Mobile Apps Dominate Investment Plans
Mobile apps are emerging as a key priority for restaurant operators. The survey found that 77% of respondents ranked mobile ordering as the top revenue driver for the coming year, while 59% believe that mobile apps designed for seamless online ordering will have the greatest operational impact.
In addition to enhancing the customer experience, mobile apps are helping restaurants streamline operations and better meet consumer demand for convenience.
Artificial Intelligence and Automation
AI and automation are also gaining traction as vital tools for improving efficiency and decision-making. The survey found that:
- 43% of respondents see AI’s ability to analyze customer data and predict market shifts as the most impactful innovation for operations.
- 34% identified administrative task automation as a key driver, allowing managers to focus on supporting employees.
These technologies are expected to enhance decision-making and free up resources, enabling restaurants to better serve customers and drive revenue growth.
Mergers and Acquisitions on the Rise
With optimism buoyed by lower interest rates and technological advancements, 84% of survey respondents expect an increase in M&A activity over the next year. Industry leaders anticipate that improved profitability, combined with efficiencies gained from technology and value menu strategies, will spur dealmaking and franchise expansion.
“Restaurant franchising as an industry is gearing up for an exciting time, with improved profitability and a better interest rate outlook offsetting moderating traffic,” said Wasilefsky. “Confidence in technology from AI-driven efficiencies and continual improvement in the digital experience are creating an optimistic outlook for revenue, margins, and overall industry performance.”
Value Menus Show Mixed Results
The industry’s reliance on value menus is yielding moderate success, with 60% of respondents indicating that increased foot traffic offsets the margin compression these programs create. Additionally, more than half of respondents (52%) reported improved foot traffic trends compared to three months ago, signaling cautious optimism for sustained recovery.
The findings are based on responses from 175 restaurant franchise operators and finance professionals who participated in the 2024 Restaurant Finance and Development Conference held from November 11-13 in Las Vegas.
Image: Envato
