5 takeaways from the ICR Conference

The annual ICR Conference concluded earlier this week in Orlando, Fla., featuring a bevy of restaurant companies – both public and private – presenting their updates and guidance for the year ahead and, in some cases, beyond. All told, more than 200 companies participated in the conference across the restaurant and hospitality sector, as well as digital commerce, CPG, healthy/beauty/fitness, home and lifestyle, media/sports and entertainment, and retail.

Attendance was up about 15% versus last year, according to ICR representatives, while the mood was far more optimistic as well, according to several restaurant executives I spoke to throughout my three days on site. Driving that optimism? The belief that 2024 will be the first normal year this decade. Of course, “normal” is now relatively speaking, but several people are confident we’ve worked our way out of most Covid-induced challenges and bumpiness. Of course, the companies at this event are likely to be in a stronger position than others because they either have the scale to navigate persistent headwinds or because their balance sheets are healthy. There are several takeaways from the conference, but the bigger, stronger brands gaining an advantage and, by extension market share, in an increasingly volatile environment and a softening consumer set is takeaway No. 1.

Related: Expect restaurant consumers to get much more value conscious in 2024

Consider Rob Lynch’s comments as an example of this prediction. The CEO of one of those bigger brands in Papa Johns said, “I’ve never been more bullish – even when we were up 17% in 2020.”

Here are four more takeaways from the 2024 ICR Conference:

Growth inching back toward or surpassing 2019 levels

Those market share gains will be driven in large part by ambitious expansion algorithms that are either at or beyond 2019 levels for most of these brands. Salad and Go is now opening a restaurant per week, for instance. Portillo’s CEO Michael Osanloo and CFO Michelle Hook noted the company is “very comfortable” dialing up growth from about 10% to 12%-plus in the next couple of years.

Black Bear Diner CEO Anita Adams said her company Is returning to 2019 growth levels of about 14 or 15 openings a year. First Watch’s chief brand officer Matt Eisenacher said the company has a target of 2,200 units, from its current 500-plus, and Firebirds Woodfired Grill CEO Steve Kislow said his company is ramping up from two to four openings per year to six per eight. And so on and so forth.

Marketing becomes a bigger part of the conversation

The further the industry gets away from Covid, the more the industry seems to be investing in marketing and there are plenty of case studies to support such a focus. During ICR, Red Robin CEO GJ Hart said his company’s updated burger platform has earned a marketing ramp up this year and that will be done through multiple channels, including digital, social and local. CEO Christine Barone said Dutch Bros is also making more investments in marketing to build brand awareness as the company’s footprint grows.

Much of Potbelly’s traffic gains in recent quarters have been driven by an increase in marketing spend, and CEO Bob Wright said the brand is still underrepresented and it’s “early innings” on this strategy. Shipley Do-Nuts is experiencing a major growth spurt, with record unit and AUV growth in 2023. CEO Flynn Dekker said that pace is expected to continue, driven in part by increased marketing/brand awareness.

“This brand has never had a real marketing engine. It does now,” he said, adding that one of his first moves after he was named CEO in May 2023 was to add a marketing co-op. “Now we can promote things like limited-time offers. We rolled out a loyalty program. We have all these tools in our tool belt that just haven’t between active yet.”

For Chip City, marketing is a north star. The New York-based cookie company has a full in-house marketing team to ensure the brand connects with customers “even when they’re not in the store,” CEO Peter Phillips said.

The margin equation

Inflation is cooling and many of the supply chain challenges have dissipated and that could provide some margin tailwinds, but how strong of a tailwind is still anyone’s guess. For Burger King, finding the margin sweet spot came from its recent $2.99 crispy wraps promotion. Deb Derby, CEO of BK franchise company Carrol’s Restaurant Group, said the company executed this offering “perfectly,” as it drove value customers while also generating a great margin.

Adams noted that Black Bear Diner is back to “just shy” of its pre-pandemic margins, which “we’re very excited about.”

Papa Johns readjusted its marketing spend to boost restaurant margins, requiring a 6% rate for franchisees from the company’s historical 8%. Lynch said this will create an opportunity for franchisees to pick up 200 basis points of margin at the restaurant level.

Investment priorities

So, as companies become a bit more bullish, what are their biggest investment priorities given a likely backdrop of “normalization” in 2024? Aside from unit development and marketing, that is…

For Black Bear Diner, it is staffing and technology. For the past 18 months, the company has been evaluating its point-of-sale system, for instance, and has moved to handheld devices for servers to increase table turns and improve accuracy. Indeed, tech investments will continue to accelerate according to many executives’ presentations and that’s no surprise as having a digital presence is now a “must have” versus a “nice to have.”

Barone said Dutch Bros will also continue to invest in its team members and their development to “elevate their experience even more.” She said those team members, called “broistas,” are the biggest drivers behind the company’s aggressive expansion.

Potbelly also plans on investing in its digital channels, its catering program, and its employees, including a sales team that will support the company’s development engine. Firebirds Woodfired Grill will focus on keeping its restaurants fresh and maintained and, like the others, its employees.

“If you asked me this question 15 years ago, I would have given you three answers – people, people, and people. If you ask me 20 years from now, my answer would be people, people, people,” Kislow said. “And today, it’s the same three answers.”

Contact Alicia Kelso at [email protected]