Hospitality Know-how

Hospitality Challenges in 2024: How to Overcome Them

Discover the challenges confronting the hospitality industry in 2024 and discover successful approaches to surmount them.

We know that the past few years have been tough for restaurants, with closures due to the pandemic, staff shortages, global conflicts and rising prices. Let us now shift our focus to the future and examine the challenges ahead for the restaurant industry and their impact on your customers.

In this article, you will learn more about the challenges facing the hospitality industry in 2024:

Tackling the staff shortage in hospitality industry

It is well known that the hospitality industry has recently been facing a shortage of qualified staff. The hospitality industry, especially restaurants and bars, has faced severe challenges due to global events such as the coronavirus pandemic.

Since March 2020, there have been significant layoffs and job losses in the US hospitality sector, highlighting the industry's struggle amid changes in the job market. The food and beverage sector suffered the most, with over 8 million jobs lost in the first two months of the pandemic, affecting two-thirds of its workforce.

Jobs that require physical presence and traditionally pay lower wages were already struggling to retain workers before the pandemic. The hospitality industry has experienced the highest quit rates of any industry, with the accommodation and food services subsector experiencing a quit rate consistently above 4,5 % since July 2021.

In the coming year, the hospitality industry will continue to struggle with staffing shortages, increased not only by global events, but also by inadequate wages that make it difficult to attract and retain employees. The result is high turnover rates, escalating costs, and added strain on existing staff.

The good news is that there are many effective ways to address the labor shortage in the hospitality industry: 

Embrace digitalization

Implementing digital solutions can streamline operations. One exciting example is the "Bella Bot" from Sebotics, designed specifically for the hospitality industry. This robot efficiently delivers food and beverages from the kitchen to the table, effectively counteracting staff shortages. And by automating simple tasks with restaurant software solutions, your staff can be freed up to do more with less.

Increase your business appeal

For example, offer discounts or other incentives to attract the right talent. Foster a culture of open communication where ideas and opinions are welcome, and be transparent about your expectations for your team and your future plans for your restaurant business. This will give you a significant competitive advantage, especially in the hospitality industry.

Manage labor costs

Labor costs are becoming increasingly important in the hospitality industry, especially as skilled labor shortages lead to rising labor costs. As a result, it is critical to continually monitor labor costs and implement effective strategies to ensure the long-term success of your hospitality business.

A cook is chopping vegetables in the kitchen

The rise of Artificial Intelligence

Many operators already have AI in their technology stack-some may not even know it. AI takes many forms in a restaurant, including voice AI for phone orders, menu development, and personalizing the customer experience.

As technology advances, AI will expand its capabilities and reduce the need for human intervention in various aspects of the business. For example, automated inventory management systems can help monitor inventory levels and reorder supplies as needed.

AI will provide a personalized experience by taking into account individual customer factors, such as preferences and dietary restrictions. For example, AI-powered recommendation engines can suggest menu items based on a customer's previous orders and preferences.

The increased use of AI in restaurants will also lead to reduced operational costs. One example is the use of AI-powered chatbots to handle customer inquiries and reservations, reducing the need for additional staff. AI can quickly respond to inquiries, answer basic questions immediately, and maintain a consistent approach across different communication platforms, increasing customer satisfaction. In addition, AI tools are accessible to customers 24/7, ensuring prompt responses to inquiries around the clock, day or night.

In 2024, customer expectations will evolve to include AI as part of the dining experience. For example, AI-powered virtual servers can provide real-time updates on order status and make personalized menu suggestions based on customer profiles.

The possibilities for incorporating AI into your own business are many and offer numerous ways to improve overall efficiency and customer satisfaction. 

However, to realize the full potential of AI, restaurateurs should not only allocate financial resources, but also develop a strategic approach to integration, data security, and employee buy-in. It is critical to create a balanced synergy between human expertise and technology to deliver a guest experience that meets the rising expectations of your customers.

→ Check out the power of Artifical Intelligence in the hospitality industry

An employee operates a tablet at the counter in a café

Prices continue to surge in 2024

In 2023, inflation left its mark on various sectors of the economy, with the hospitality industry experiencing notable effects. Rising costs of goods and services, changes in consumer behavior, and rising labor costs have all been influenced by inflation and have had a significant impact on the industry.

Restaurants, in particular, have seen a significant impact from inflation on their cost of goods sold. Food and beverage inflation has reached over 10 % as of September 2023, resulting in increased expenses for restaurants. This increase in costs has resulted in a significant increase in the percentage of revenue used to cover commodities compared to previous years.

However, the latest Food Price Report predicts that food prices will continue to rise in 2024, but at a slower pace than before.

Optimize your kitchen operations

Take a comprehensive look at your kitchen operations to identify areas where you can reduce costs. Evaluate energy, gas, and oil consumption to identify opportunities for savings. Examine your inventory to minimize food waste and explore ways to make your kitchen processes more efficient. In addition, consider working with vendors who offer competitive pricing on the products you need.

Embrace dynamic pricing

Analyze your menu and consider introducing seasonal dishes. Not only will this help you avoid supply shortages, but it will also allow you to save on expensive, exotic ingredients. Implementing a dynamic pricing strategy allows your business to adjust prices based on demand, ensuring that your prices remain competitive and your restaurant remains profitable.

Transparent communication

Keep your guests informed of any changes. Highlight seasonal offers and menu adjustments, and proactively prepare your staff to address potential customer questions and concerns. Transparent communication builds trust and understanding with your customer base, fostering a positive relationship that can withstand economic challenges.

Unlocking opportunities in 2024 – are you ready?

The hospitality industry continues to face several challenges this year. These include ongoing labor shortages, continued inflation, and the increased adoption of artificial intelligence in the hospitality industry.

Despite potential challenges, there are numerous opportunities and strategies to effectively prepare for upcoming changes and optimize operational processes. Leveraging digital technologies, managing labor costs, and re-evaluating pricing are all critical to achieving this goal.

It may sound challenging, but the hospitality industry has proven time and again that it can adapt and thrive. Exciting times lie ahead for the hospitality industry, requiring creativity and adaptability.

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