The Restaurant Industry Looks Ahead
The National Restaurant Association (NRA) recently released its annual Restaurant Industry Forecast, and the outlook is promising. The Association projects total industry sales of $631.8 billion for 2012, up $21 billion (or 3.5%) from 2011, and total foodservice employment is expected to increase 100,000, up to 12.9 million employees. A total of 970,000 locations are expected to be open, 10,000 more than last year.
The foodservice industry accounts for 4% of the U.S. gross domestic product, and the $632 billion in annual sales is larger than 90% of the world’s economies. In fact, according to the NRA, if the U.S. restaurant industry annual sales was a country’s gross domestic product, it would rank #18 out of 194 countries and be more than the economic output of such countries as Saudi Arabia, Switzerland, and Indonesia! The ripple effect of the revenue generated at restaurants translates to a $1.8 trillion impact when money generated by suppliers, manufacturers, producers, and others is accounted for. The restaurant industry now takes in nearly half of every food dollar, compared to just a fourth in the mid-50’s.
Sales are expected to rise most (3.9%) in the West South Central region (which includes AR, LA, OK, and TX), followed closely by a 3.5% increase in the South Atlantic region and 3.4% in the Mountain region. North Dakota and Texas are projected to have the largest percent increase (4.1%) in foodservice sales in 2012, but California’s total sales volume of $63.8 billion makes it the industry’s leader. Full-service segment sales are projected to rise 2.9% over last year, and limited-service restaurants will take in 3.2% more this year.
Results show that 93% of the eating-and-drinking place businesses included have fewer than 50 employees, and more than seven out of 10 are single-unit operations. The industry’s nearly 13 million employees represent almost 10% of the nation’s workforce, and the employment number is expected to rise to 14.3 million over the next 10 years. The NRA notes that half of all adults have worked in the restaurant industry at some point, and a third got their first work experience in a restaurant.
During the media presentation, Hudson Riehle, NRA’s Senior VP of Research and Knowledge, noted that in the restaurant business ‘demographics is destiny’ and emphasized the importance of restaurateurs having an in-depth understanding of their target customers and the areas in which they do business (or are planning to do business). In 2010, the average household spent just over $2,500 for food away from home, and 77% of the adults surveyed by the Association agreed that going out to eat is a better way for them to spend their leisure time than cooking and cleaning up. He discussed the correlation between rising employment and demand for convenience, and the data shows a significant level of pent-up demand – among consumers who described themselves as Hunkered-Down, 68% said they would eat out more often if they were financially able.
In spite of ongoing problems regarding access to capital, concerns about commodity price increases, and the continuing issues of high unemployment and an unstable housing market, the most recent Restaurant Performance Index rose to its highest level in almost six years. The Current Situation Index shows solid increases in same-store sales and customer traffic – 69% of operators reported higher same-store sales versus the same month last year and 57% noted higher customer traffic levels. Looking forward, the Expectations Index projects a 4.3% increase in same-store sales and a 2.8% increase in business conditions, with 51% of those surveyed expecting higher sales in six months and 39% expecting better general business conditions by the summer.
For suppliers, brokers, manufacturers, executive search firms, realtors, and anyone else who does business in the foodservice industry, conditions are ripe for growth, and only Chain Store Guide can give you access to more than 7,200 restaurant operating companies in the U.S. and Canada. For more information and to schedule a demo, please contact us.