The retail food industry faced challenges and opportunities in 2022. This year brought ongoing disruptions from the COVID-19 pandemic and rising financial pressures due to inflation, dramatically increasing costs for both retailers and consumers.
The Consumer Price Index for all consumers rose more than 0.4% from August to now, and all prices increased 8.2% compared to the previous year, according to the U.S. Bureau for Labor Statistics. Inflation slightly exceeded expectations of 8.1% annually.
The report showed that all six major groups of supermarket foods had higher prices, with cereals and baked goods costing 16.2% more than a year ago. Dairy and related products cost 15.9%, and the other supermarket food groups recorded increases ranging from 9% for meats, fish, and eggs to 15.7% for other food products, the BLS reported. Food costs in restaurants rose 13% compared to the previous year, which was also driven by the expansion of free lunch programs in many schools, the BLS said.
In this context, 2023 is positioned to be an incredibly important year for the industry as wholesalers and retailers seek not only to navigate but to thrive in this rapidly changing landscape. From utilizing new data and technologies to prioritizing environmental, social, and corporate governance (ESG), below are four predictions for what’s to come in 2023 and beyond.
The accounting and consulting firm asked executives from food manufacturers, restaurants, distributors, retailers, and agricultural producers about a variety of issues integral to the health of the industry. It found that 69% of respondents have a positive outlook on the industry for the coming year, compared to 20% who have a neutral perspective and 16% who have a negative view.
Nearly 70% of respondents said that revenues increased in 2022 compared to 2021, including 48% who said revenues rose by 10% or more.
Revenues are not the only thing on the rise, according to the survey. Forty-five percent of food and beverage executives said they increased their workforce by 5% or more in the last 12 months, and 20% said they increased their workforce by 10% or more. Almost half of respondents said they expect to increase their workforce in 2023.
Approximately 70% of executives expect revenues to grow in the next 12 months. Twenty-one percent of respondents said they expect revenues to remain the same in 2023, and 10% said they expect to see revenues decline.
The owner of the Italian restaurant Cremini’s in Brooklyn, Riccardo Massetti, has 20 years of experience in marketing and communication, large events, and catering. His partner, Elena Salati, a chef and architect in Italy, has always split her time between her two passions: interior design and a small business that deals with catering for events like weddings.
In 2019, they got married and decided to open the restaurant
“The idea started as a joke but turned into a real project, and we created a format for an Italian restaurant focused on the regional cuisine of the Marche region, which did not exist in the American market and is absolutely unique and special,” says Massetti.
During the lockdown, Massetti describes his business experience as a wave that began early in the year with a lot of pressure on commodity prices and, consequently, on margins. In the second half of the year, the wave hit the end consumer, prices skyrocketed, and people began to get a little scared. Consumption contracted. As for us, we kept our regular customers and ended the year with a good percentage growth compared to the previous year, which had been very good.
“COVID stimulated us and gave us new ideas, especially since we did not receive any government funding. We always remained open, expanded our menu, and served our community, as well as Park Slope Hospital. It was a creative challenge and at the same time very difficult, but we never compromised on the quality of our food. And that rewarded us in the end. 2023 is going to be a decisive year; there are several global pressures, both economic and social, but we are optimistic people at Cremini’s, and that’s why we will continue to pursue our mission, which is to share the authentic experience of food that is good for the mind and body.”
To stand out from other restaurants, Riccardo Massetti said it takes courage to take risks. They maintain their special menu from the regional tradition of Marche, Italy, and faced some difficulties in explaining the region and the food to customers at first. However, they succeeded and said that transparent communication was key.
For 2023, they want to grow sustainably without losing quality.
“We will have to make important decisions, such as making new investments to open a spin-off of Cremini’s. Regarding the implementation of the business plan, there will be many surprises; we will discover old recipes related to folk tradition that we will include both in the regular menu and in the special dishes we make every month.”
They also talk about how important it is for a restaurant to protect its logo as its identity. In fact, the Cremini’s logo – A taste of Le Marche region, Italy, is a registered trademark in the United States in 2021. Clearly, a registration alone is not enough, but it is necessary to create a relationship of trust with people by speaking honestly and as inclusively as possible every day. We like to think that we have created a lovemark.
For the co-owner of the restaurant The Queensboro in Jackson Heights, Queens, Dudley Stewart, which has been open since 2018, the experience has been more intense. “We experienced practically all the effects of COVID – Jackson Heights was the epicenter of COVID in the United States, so we witnessed everything up close. It was tragic and devastating, as well as exhausting from a business survival standpoint, but there was also a lot of hope and optimism, and many affirming stories that helped us carry on.
2023 is going to be a very challenging year for us in the restaurant industry. The current situation has led to even tighter margins than before, which will require all of us to raise our prices accordingly. While consumers in other industries understand the pressures of inflation, it is much harder to convince restaurant customers to accept paying higher prices. It is up to us to educate our customers that we are not exploiting them, and that even with the price increases, our margins are likely to be even slimmer than before, and that if they do not accept these changes and support their favorite restaurants, it is very likely that those restaurants will disappear within a year.”
Additionally, Dudley says he also managed to see – amid the chaos – an opportunity to connect with some neighbors who may not have heard of them, a chance to help people suffering from food insecurity.
He and his partners learned to pivot several times to try to keep the doors open, the ovens running, and bring in work to be able to pay their staff. “We learned how important it is to be in touch with your community. Many of our neighbors came to our rescue, and we are grateful to them for that, and we continue to keep them in mind in everything we do.”
For 2023, they hope things will be less volatile and will focus on three main aspects of their business: Maintaining the quality for which they are known and keeping it as affordable as possible, building deeper ties with their community, and expanding their reach as much as possible.
“An important part of being consistent is keeping the same staff, and we pride ourselves on having very little turnover. This allows our customers to get to know our front-of-house team, and enables the kitchen to continue producing quality food that will delight our guests. All of this comes from treating your staff with respect and basic human decency, which is not hard, but surprisingly difficult to find in this industry. To improve our position in the community, we will focus on having more events at the restaurant, opening our doors to more community groups and creative people who need a space, and bringing a more diverse set of talents when we look for musicians and artists.”
Undoubtedly, our work within our community has resulted in greater recognition and goodwill. We are lucky to be where we are; people reacted in the most positive way possible to our efforts to feed people during COVID, and they have been the best ambassadors for our restaurant. We strongly believe that a restaurant like ours should be a cornerstone in the community, so even if it did not result in positive reactions, we would continue to do this, but it is comforting to hear good things about us; it encourages us to do more, and we are grateful to everyone who stands by us.
VIVIANE FAVER
Journalist
vfaver@gmail.com