The U.S. Restaurant Industry: Poised For Growth
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 3.5% from 2011, and total foodservice employment is expected to increase 100,000, up to 12.9 million employees. NRA expects 10,000 new eating-and-drinking places to open this year, bringing the industry total to 970,000 locations.
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, service providers, and others is accounted for.
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.
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.
The Forecast also suggests a rising level of pent-up demand for capital expenditures in the industry. Capital spending has been below pre-recession levels for four years, and restaurateurs finally appear ready to open their checkbooks and begin investing in their businesses again. More than 40% of supply-chain professionals expect the 2012 economy to improve while only 10% anticipate worsening conditions. Nearly two-thirds of these supply-chain professionals described their own business conditions as Excellent or Good, and only 2% reported Poor business conditions.
The most recent NRA Restaurant Performance Index bears out this optimistic outlook as it rose to its highest level in almost six years. 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 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 ChainStore Guide can give you access to more than 7,200 restaurant-operating companies in the U.S. and Canada as well as provide detailed demographic information down to the ZIP code level. For more information and to schedule a demo, call 800.778.9794.