Q4 Trends Report: Catering Orders Surge with New Digital Ordering Channels, Food & Alcohol Insights & Tipping Data

The Q4 2023 Restaurant Trends report looks into catering activity around the holidays, large events, cold-weather food and alcohol preferences, and weekly tipping trends. 

BOSTON, MA – Toast (NYSE: TOST), the all-in-one digital platform built for restaurants, today announced its Q4 2023 Restaurant Trends Report, providing insight into the overall state of the U.S. restaurant industry through an analysis of aggregated data from selected cohorts of restaurants and in select U.S. metropolitan areas on the Toast platform, which serves approximately 106,000 restaurant locations as of December 31, 2023. Read more details about our methodology below.

Food & Alcohol Trends

To better understand food and alcohol trends in Q4 2023, Toast analyzed order counts for 27 restaurant dishes and nine alcohol types. Toast then compared the Q4 2023 average of these categories to the average for the remaining quarters in 2023 to determine which foods and drinks guests ordered more frequently as the year ended.1

Spoiler: It isn’t salads or hard seltzers.

1Methodology: Toast analyzed transactions on the Toast platform from January 1, 2023, to December 31, 2023, to determine the popularity of dishes labeled “salads, bowls, nachos, tacos, burgers, chicken tenders, roast chicken, fries, quesadillas, sandwiches, sushi, BBQ, burritos, desserts, enchiladas, pizza, cheese, omelette, pasta, wings, rice, steaks, dumplings, curry, ramen/noodles, and soups/stews.” Toast then compared the Q4 2023 average volume with the average volume for the other quarters in 2023.

Cold weather associated with Q4 seemed to drive many consumer food trends —  guests ordered warm comfort foods more than the average of Q1 through Q3. Soups/stews saw the largest increase, with +25% more orders than the average for the first three quarters of the year, followed by ramen/noodles (+13%), curry (+12%), dumplings (+8%), steak (+5%), and rice (+5%).

On the other end of the spectrum, salads saw the most significant decrease in orders, compared to the average for the first three quarters of the year, followed by bowls, nachos, hot dogs (-7%), and tacos (-6%). Interestingly, data suggest that some food categories, like desserts and enchiladas, had no significant change in orders in Q4 compared to the average for Q1 through Q3. 

So what did restaurant guests drink with their meals and order at bars in 2023? Whiskey orders were up +21% in Q4 compared to the average of Q1 through Q3, followed by wine (+13%), vodka (+12%), rum (+11%), gin (+10%), tequila (+9%), and beer (+5%).2

2Methodology: Toast analyzed transactions on the Toast platform from January 1, 2023, to December 31, 2023, to determine the popularity of beverages containing “hard seltzer, hard cider, beer, tequila, gin, rum, vodka, wine, and whiskey.” Toast then compared the Q4 2023 average volume with the average volume for the other quarters in 2023.

Interestingly, hard cider was down -1% compared to the average of Q1 through Q3, despite “cider season” falling partially in Q4. Hard seltzer — which often peaks in popularity in the summer months — was down the most out of the alcohols that Toast observed at -13% compared to the average of Q1 through Q3. While hard seltzer is down overall in Q4, the popularity of the drink spikes on Sundays during the NFL season. 

Overall, restaurant and bar guests drank approximately +11% more alcohol in Q4 2023 compared to the average of Q1 through Q3.

’Tis the Season for Catering

3Methodology: Toast analyzed catering transactions from a cohort of restaurants on the Toast Catering & Events platform in Q4 2022 and Q4 2023. Toast used a cohort of same-store customers on the platform since Q3 2022. 

With so many holidays and end-of-year parties jammed into Q4, it’s no surprise that it’s a busy time for catering and large parties. 

Same-store catering transactions increased by +71% in Q4 2023 compared to Q4 2022, and approximately 30% of that increase came through Catering Online Ordering, which launched in Q3 2023. Restaurants serving bakery items, coffees, teas, and desserts had the most catering transactions in Q4 2023, which accounted for approximately 32% of all transactions.3

On average, catering order ticket sizes in Q4 2023 were $160. Tips on catering orders were much lower than other service channels. However, those who did choose to tip on a card or digital payment typically tipped 13% — up +1.3% from Q4 2022. Guests really showed their holiday spirit on New Year’s Eve, where tips on catering orders averaged 23.2%.

4Methodology: Toast analyzed catering transactions from a cohort of restaurants on the Toast Catering & Events platform in Q4 2022 and Q4 2023. Toast used a cohort of same-store customers on the platform since Q3 2022. Catering online ordering was launched in Q3 2023. 

So when did these catering orders take place? In Q4 2023, there were fewer catering orders on the weekends. Saturdays were approximately 36% slower than the weekly average, and Sundays were 53% slower. Generally speaking, Tuesdays (+25%) and Wednesdays (+26%) are the busiest days for catering orders.4

Catering orders also saw a significant bump the week before Thanksgiving and a steady buildup during the first three weeks of December. On Friday, November 17, there were 92% more catering orders than the daily average for Q4.

5Methodology: Toast analyzed catering transactions from a cohort of restaurants on the Toast Catering & Events platform in Q4 2022 and Q4 2023. Toast used a cohort of same-store customers on the platform since Q1 2023. 

Overall, 35% of same-store catering orders on the Toast platform in 2023 occurred in Q4. Whether it’s a return to the office or just a return to large events, a catering channel is a great revenue source for restaurants seeking to expand their offerings — especially considering the busiest days for catering are weekdays when restaurants may be slower.5

It’s Party Time

6Methodology: Toast analyzed transactions with eight or more guests from a cohort of restaurants on the Toast platform in Q4 2022 and Q4 2023. Toast used a cohort of same-store customers on the platform since Q3 2022. 

The fourth quarter is also a big time for holiday parties, gatherings, and catching up with family and friends. Overall, “large parties,” or a party with eight or more guests, had a +2% increase in same-store transactions in Q4 2023 compared to Q4 2022.6

The average ticket size for large parties was approximately $162, and the busiest date of the quarter for large parties was December 9, 2023.

7Methodology: Toast analyzed transactions with eight or more guests from a cohort of restaurants on the Toast platform in Q4 2022 and Q4 2023. Toast used a cohort of same-store customers on the platform since Q3 2022. 

Unsurprisingly, large parties occur most frequently on Fridays, Saturdays, and Sundays. In Q4 2023, Sundays averaged +8% more large parties than the weekly average, followed by Fridays with +33% more large parties than the weekly average. However, Saturday had +73% more transactions from large parties compared to the quarter's weekly average. 7

Large-party occurrences were relatively consistent in Q4, aside from a noticeable spike in the first few weeks of December and dips around the Thanksgiving and Christmas holidays. 

Overall, 27% of large parties on the Toast platform in 2023 occurred in Q4, which is the busiest for any quarter and just slightly above Q2 at 26%.8

8Methodology: Toast analyzed same-store transactions with eight or more guests from a cohort of restaurants on the Toast platform in 2023. Toast used a cohort of same-store customers on the platform since Q1 2023.

The State of Tipping in America

Overall, tips remained generally flat in Q4 2023 compared to Q3 2023, which is good news for restaurant employees. Total tips averaged 18.9% in Q4 2023, the same as Q3 2023. Full-service restaurant tips also remained flat at 19.4%. Quick-service restaurant tips dipped just .1% from Q3 2023 to 16%. 9

When observing weekly tipping data during Q4 2023, a trend suggests that tip percentages are at their lowest at the beginning of the week, which steadily progresses and peaks on Thursdays, then drops again on Fridays and Saturdays. 

9Methodology: Data from applicable restaurants on the Toast platform where a tip was added to the order via a card or digital payment from October 1, 2023, to December 31, 2023. Cash tips are not included in the analysis.

On average, guests tend to be the stingiest when tipping on Sundays and the most generous on Thursdays. Tips on Sundays averaged 18.73% in Q4 2023, whereas tips on Thursdays averaged 19.06% for the quarter. 

There are some exceptions — guests tipped a bit less on Halloween — 18.86 % compared to the average of 18.95% for Tuesdays. Guests also reeled in tipping at the beginning of December but then increased tips in the lead-up to Christmas, peaking on Christmas Eve — a Sunday— with an average tipping rate of 19.51%. 

The dip in tips in early December is potentially due to consumers reeling in their finances ahead of the holiday season when most people shop. Tips increasing during the holidays is understandable as consumers spread some holiday cheer, a trend Toast also observed last year.

Guests visiting quick-service restaurants (QSRs) tipped substantially more on holidays like Thanksgiving and Christmas, while guests at full-service restaurants (FSRs) tipped less on those days,  which may be due to automatic gratuities being added to bills on holidays.  QSR guests also tend to tip the most on Fridays and Saturdays and the least on Mondays. 

FSR guests are more generous during the week and tip less on Saturdays and Sundays. A common trope in full-service restaurants is that your regulars visit during the week — while those who don’t eat out as frequently dine out on the weekends. 

Delivery and takeout tipping trends also vary slightly. Tips for delivery tend to peak on Saturdays and dip on Mondays and Tuesdays, while tips for takeout food often dip on Fridays, Saturdays, and Sundays. 

The daily nuances may be due to different demographics and dining trends on specific days, such as brunch. Paydays may also have an effect. Most American companies pay workers on Friday, so guests may feel more generous on Thursdays, knowing that their direct deposit will hit their bank account when they wake up on Friday. 

Another possible explanation is that Sundays are often associated with the end of the weekend and the beginning of the workweek for many individuals. People may be more frugal with their spending, including when it comes to discretionary expenses like tips. On the other hand, Thursdays are closer to the end of the workweek, and individuals may be more inclined to celebrate or unwind with a meal out. Happy guests tend to tip more. 

10Methodology: Data from applicable restaurants on the Toast platform where a tip was added to the order via a card or digital payment from October 1, 2023, to December 31, 2023. Cash tips are not included in the analysis.

The state with the highest total tip percentage in Q4 was Delaware, averaging 21.9%. But when it comes to tipping at full-service restaurants, guests in New Hampshire took the prize with an average of 21.4%, two percentage points higher than the national average of 19.4%. As for quick-service restaurant tips, West Virginians dished out the most, with an average of 18.9%.10

California was once again the state with the lowest total average tip percentage, raking in an average of 17.4%, the same as Q3 2023.