RESTAURANT TECH CONFRONTS A TOUGH MARKET
Tech Check: A weak restaurant business, AI backlash, and a swing back to human-centric hospitality are putting pressure on restaurant tech companies. But restaurants still want tech. By Joe Guszkowski
Chad Moutray, chief economist for the National Restaurant Association, spoke about how restaurants can navigate market challenges. Photo by Jon Mouer
T he recent FSTEC conference was a bit of a reality check for restaurants. Data shared at the event showed that traffic remains weak, profits are shrinking, menu price inflation is rising again, and U.S. population growth is slowing, among other concerns. It’s tough out there, to say the least. But it might be even tougher for the other half of the audience at the event — the companies trying to sell technology to those restaurants. It’s not just a sluggish restaurant market that’s getting tech vendors down. They’re grappling with AI and the opportunities and risks it represents. They’re also dealing with deeper
questions about whether tech is even helping restaurants at all. It all bubbled up at FSTEC, the annual celebration of restaurant technology that this year felt more like a referendum at times. We’re going to get into it, though I will note, for the faint of heart: Despite all of the doom and gloom you’re about to read, there is reason for optimism, which I have buried at the end of the column. But first, the bad news. Restaurant margins are shrinking As mentioned, running a restaurant is a lot less profitable these days. In
2019, median pretax income for full- service restaurants was about 4%; this year, that’s down to 2.8%, according to National Restaurant Association data presented at FSTEC. For limited service, that number has dropped from about 6% to 4%. “The restaurant industry has a profitability crisis,” said Rich Shank, VP of innovation for Technomic. That means restaurants are looking to cut their costs, not add to them, which makes it that much harder to justify new technology investments. Of course, tech could help restaurants grow their profits by making them more efficient, driving in more traffic, or getting customers to spend more. But
4 | FSTEC 2026
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