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State of the Hospitality Industry: Trends, challenges and opportunities for venues in 2023

  • Written by Simon Le Grand, Senior Director, Marketing at Lightspeed

Few industries felt the impacts of the pandemic more severely than hospitality; with Australia’s bars, restaurants and cafes forced to pivot and adapt to stay open and operational. Those businesses treated the challenge as an opportunity to boost their resilience and innovation. And now, as we embark into a new year, Lightspeed set out to understand the fears and aspirations, challenges and opportunities businesses faced in 2022 and what that might tell us about 2023.

We surveyed over 8,000 restaurant owners, operators, managers and guests worldwide - many of whom are in Australia’s vibrant food and drink scene - to understand how 2022 changed their views on the industry, for better or worse, and how they’re approaching 2023. Here are the key trends driving the hospitality industry in Australia.

Digital transformation

In 2022, Australian restaurants, bars and cafes were forced to grapple with rising inflation, staff shortages, and global economic uncertainty. In turbulent times, technology became essential. For Australian hospitality operators, doing better with less is essential - especially today. According to Lightspeed’s State of the Hospitality Industry report, the majority of respondents credit the adoption of a point-of-sale or restaurant management software in helping them streamline shifts, implement or expand online ordering and improve efficiency across the business.

In fact, two in three Australian restaurants say technology adoption over the last two years has been critical for their business. The most widely adopted tools in 2022 include new or expanded online ordering, contactless payments, ordering via QR code and point-of-sale or restaurant management software. With digital transformation underpinning their operations, it enabled venues to focus more on what their customers need.

Conscious consumption

Climate change and sustainability have become two of the defining issues for Australians today. That extends to their consumption habits, and the way venues are trying to cater to their needs and wants. In fact, according to our report, almost half (48%) of business owners say that implementing environmentally friendly initiatives into their operations will attract more customers.

To improve their sustainability credentials, 67% of businesses with multiple locations - such as chain restaurants - are adopting food waste policies while 54% of fine dining venues are now offering more vegan options. Meanwhile, 50% of bars and pubs, 43% of cafes and bakeries, and 37% of quick casual venues are integrating more local, farm-fresh foods to their menu; tapping into the Aussie ‘support local’ sentiment.

Inflation and staff shortages

While lockdowns and social distancing restrictions appear to be behind us, the medium- to long-term impacts of the pandemic set in for venues in 2022. The biggest, according to our research, are economic pressures and staff shortages. Specifically, the rising cost of food and supplies, which 35% of Australian hospitality businesses indicate is their biggest challenge. To offset inflation, many venues are increasing menu prices - particularly cafes and bakeries (79%) and bars and pubs (70%).

The hospitality industry has traditionally been reliant on overseas students and short-term visa holders. With immigration and tourism yet to return to pre-pandemic levels, hiring and retaining staff was another pressing concern facing many business owners. Concerningly, almost two thirds of venues are working with a smaller workforce than they’d like, while 70% are increasing wages to attract and retain employees. Technology, again, is crucial with half of respondents adopting new technology to streamline shifts. Many, though, are being forced to limit the number of days or hours of operation.

Support local

With these challenges set to endure in 2023, it’s going to be crucial for venues to tap into their loyal customer base and ensure that every new guest has an exceptional experience. Aussies still love to dine out, with three in four respondents most likely to socialise with family and friends at a restaurant. However, while 40% want to support venues during present-day challenges, inflation is putting a strain on spending for some. Almost a third feel they are unable to show any support to the industry as a result. That’s why exceptional experiences that drive loyalty are essential.

Cashless payments are here to stay

Loyalty can be driven by exceptional experiences, but also convenient experiences. That extends to every interaction, including the point of sale. Aussies are renowned as early adopters of trends and technology, and that’s certainly the case in how they’re paying at venues.

Digital payments have surged in recent years; to promote health and safety and to provide the quick and convenient payment options consumers’ demand today. Today, only 13% of Aussies pay with cash, while debit card is the most popular payment option for 40% of us. While it sounds simple, sometimes the smallest margins can make the biggest difference for consumers.

As we embark further into 2023, challenges will persist. However, by tapping into technology, leveraging loyalty and focusing on sustainability and strategy, venues can overcome whatever hurdles they’re faced with in the year ahead.

By Simon Le Grand, Senior Director, Marketing at Lightspeed


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