Catersource State of the Industry 2023, Part 3

Editor's note: This is part three in our Catersource State of the Industry 2023 report. Check out part one here and part two here.

Caterers are still having to find ways to adapt to the three-headed monster that has plagued the industry for the past couple years: a tight labor market, a chaotic supply chain, and runaway inflation. According to a survey from the International Caterers Association, these challenges equate to a 75% decrease in business for Q1 year-over-year.

A tight labor market

The hospitality industry began 2023 with optimism, with the majority of people expecting revenue to rise by 10% or more, even as they increased pay to attract workers in a competitive market, according to Instawork’s State of Hospitality Staffing report. 

During the International Caterers Association Workshop in August, attendees enjoyed an al fresco dinner at The Foundry Courtyard hosted by Dish Food & Events. Photo courtesy International Caterers Association/Dish Food & Events

However, despite consecutive employment growth for 24 months, the industry is still roughly 450,000 jobs below pre-pandemic levels, according  to a white paper from SupHerb Farms, Facing the Labor Dilemma. 

Additionally, relative to consumer spending and adjusted for inflation, employment in key industries like foodservice and accommodation is still well below pre-pandemic levels, with almost two million jobs below the trend based on consumer spending, according to the Instawork report. 

These continued labor shortages limit how much revenue the industry can bring in. For example, operators have had to reduce the number of events they accept because they literally can’t find enough employees to staff them. 

Additionally, SupHerb Farms reported that 65% of operators are hiring less qualified staff, with 32% reporting that their culinary skill is lower today than it was a year ago (just 6% reported higher culinary skill). 

Staff prep dinner during the International Caterers Association Workshop at Dish Food & Events in August. Photo courtesy International Caterers Association/Dish Food & Events

Turnover is steep and the staff that food businesses do retain are demanding more money than ever—with 75% of operators noting an increase in labor costs, according to SupHerb Farms. 

“We all know that staffing is a big issue,” said Francisco Christian (Taylored Hospitality Solutions) in an ICA webinar. 

A chaotic supply chain 

Caterers continued to grapple with supply chain disruptions throughout 2023, and this is expected to continue into 2024. According to SupHerb Farms’ white paper, Navigating the Supply Chain, three in four operators are experiencing more out-of-stock ingredients this year than ever before. 

Methods for building resilient supply chains included such solutions as exploring local sourcing options and strategic partnerships. Technology also played a crucial role in enhancing supply chain visibility and mitigating risks, ensuring a steady and reliable stream of ingredients for catering operations.

Operators have discovered that versatile ingredients used across numerous menu items can help to ease sourcing headaches while also offering the benefit of price breaks. What’s more, by reducing the number of ingredients on which your staff needs to be trained, operators are seeing an upturn in overall efficiency. According to a press release from Craftable, a hospitality management program designed to drive profitability and lower labor costs, menu engineering—a technique that analyzes each item’s contribution to the profit against how often it is purchased—is the key to consistently high margins when used effectively. 

Runaway inflation

Pricing is obviously one of the more challenging areas of running a business, as you must balance the market value of your offerings with the costs of operating. For catering and foodservice companies, such a calculation gets trickier as the cost of ingredients and other products are subject to change with the market.

“Runaway inflation and staff shortages have increased the cost of food and labor. Surfing the breaks and swells brought on by circumstances beyond their control requires the restaurant industry to adopt a new way of thinking to adapt to the ebbs and flows,” said Brian Duncan, President of me&u USA, in a press release.

Food prices rose 3.7% between September 2022 and September 2023, according to the most recent consumer price index (CPI) report from the Bureau of Labor Statistics. By comparison, at the same time in 2022 prices rose 11.2% over a one-year period. According to SubHerb Farms, there has been a 29% average price inflation reported by fresh fruit and vegetables this year. According to Christian, inflation will most likely end the year around 4.3% with a potential drop in January and February. 

“Those prices are not going to come down, we just hope they stay the same,” said Clint Elkins (SB Value) in the ICA webinar. 

In addition to food prices, inflation is also having an impact on what clients are willing to spend on their events. 

According to the Catersource survey, clients are becoming more budget conscious. “Clients are requesting to sacrifice quality for price,” said one respondent. 

“Budgets are tighter than 2022 and that is driving menu selection,” said another.

The tech revolution 

Efficiency is the name of the game in catering, and technology is the linchpin; the modern kitchen is becoming a tech hub. 

Constellation Culinary Group employed a kitchen robot during its Apéritif Reception. Photo courtesy Carolina Guzik Photography

From AI-powered menu customization to blockchain-enabled supply chain transparency, catering businesses are leveraging technology to streamline operations and stay ahead of the curve. Online ordering platforms, virtual tastings, and interactive menus are becoming standard practices, catering to the digital preferences of today’s consumers.

“When new technology comes out, people tend to fall into one of two camps: either they are excited by the potential benefits and become early adopters or they are leery about the downsides that may come with it, and they wait to explore it until the kinks have been worked out or it becomes absolutely necessary to adopt,” said Anthony Lambatos in an article for Catersource.

Artificial intelligence

In 2023, artificial intelligence (AI) has emerged as an essential ingredient of food and beverage innovation. AI is being used to optimize everything from crop growth to formulating innovative products to recommending menu items. 

“Though AI is far from its full potential, it’s clear that the food industry will find countless tasks and uses for this emerging technology,” says the SupHerb Farms’ trend report. 

A few of the ways AI can be applied in the catering industry include:

AI can even help improve sales processes and results.

Throughout 2023 there was also growing demand for smart appliances, such as smart ovens that can automatically adjust cooking times and temperatures based on the type of food being prepared or AI-powered refrigerators that can monitor expiration dates and suggest recipes based on the ingredients available.

The AMEX 2024 Global Meetings and Events Forecast found that 42% of respondents said they expect to use AI in 2024.

“As caterers and event professionals we must embrace these advancements, the stage is set for a tech-driven renaissance that will define the industry landscape in 2024 and beyond,” says Meryl Snow (SnowStorm Solutions).

Robotics

Robots, once limited to the realm of science fiction, are now making their mark in the catering world. These intelligent machines are transforming the way caterers prepare, cook, and serve food, offering unprecedented levels of efficiency, precision, and consistency.

Between the emergence of robot chefs, fully-automated robotic kitchens, and service robots, 2023 has been a game-changer in the catering industry.

These technology innovations that automate and streamline processes are freeing up catering and event professionals to focus on the creative and relational work that is so pivotal to the industry, leaving the repetitive, tedious tasks to tech. 

Bear Robotics displayed its Servi robots during the 2023 National Restaurant Association Show. Servi can help run food or bus dishes. Photo courtesy National Restaurant Association 

“Humans do what they do best. Let robots do the rest,” said Steve Kane, who works with Pringle Robotics in their Hospitality Innovation department in an article for Catersource. “Robots, especially service robots, exist to do the dull, dirty, or dangerous jobs that can sap people’s time, joy, and motivation at work. Now no one’s saying that catering is dangerous, but there can be a lot of repetition, a lot of physical strain, and steps involved in catering and events work. When robots can automatically do some of the not-so-fun tasks, it creates a better environment for workers and their customers. People can focus on the higher-value work that’s uniquely human. And they do all of this without tiring. Basically, they allow great catering staff to be even better because they have the time and energy to focus on guest experience.”

The key to harnessing the power of these new and emerging technologies, though, is a thorough evaluation of the benefits. 

Pringle Robotics currently offers a number of different service robots including KettyBOT, which can simplify hosting, guiding, delivery, and advertising. Photo courtesy Pringle Robotics 

“Just because new technology exists doesn’t mean it should be implemented,” said Lambatos. “While artificial intelligence tools, robots, and other emerging technologies dominate headlines, leaders need to determine what is applicable to their businesses and their teams both in the short and long term. By evaluating the resources necessary as well as the impact on both guests and employees, they can make informed decisions that will lead to the successful implementation of new technology.” 

Check back next week for part four of our State of the Industry 2023 report where we'll look at sustainability and what's ahead for 2024

Get industry insight from these experts during Catersource + The Special Event, February 12–15 in Austin, TX.