Restaurant industry outlook bright for 2015 and beyond

By Ann Tracy Mueller

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Jan. 27, 2015 - The National Restaurant Association has released its 2015 industry forecast, and for the sixth straight year, restaurant sales are expected to increase.

Restaurant sales in 2014 were $683 billion. This year, more than one million restaurants are expected to provide more than 14 million jobs and generate more than $709 billion in sales, as the industry claims nearly half of the money Americans spend on food. In 1955, restaurants only got 25 percent of American's food dollars. Today, that number is 47 percent.

“Population growth and Americans' continued desire for convenience and dining out continues to fuel industry growth,” said Hudson Riehle, senior vice president of research for the National Restaurant Association. “Certain components of the business climate remain a challenge, however, as regional variability in employment levels and disposable income gains still put a damper on the overall environment.”

Lets Talk Food

People aren't eating out at sit-down restaurants as much as they'd like, though. About 38 percent of American adults say they'd like to eat out on-premises more often. That number is 7 percent higher than it was in 2007, before the economic downturn. Real household income is down 8 percent for the same time period.

In the coming year, sales are expected to increase for both limited-service (up 4.3 percent from $192 billion to $201 billion) and snack and non-beverage bar sales (up 5.2 percent from $31.2 billion to $32.8 billion).

In a media call with reporters, Riehle shared that, over the past three years, the top challenges facing restaurant operators have changed annually. At the end of 2012, their top concern was the economy, with 29 percent naming it over other worries. By December 2013, the government topped the list, with 30 percent saying it was the biggest challenge.

This year, however, food costs worry 31 percent of operators, followed by the government (20 percent), sales volume (14 percent) and recruiting employees (13 percent). This time around, the economy was listed as the top challenge by only 8 percent of those responding. 

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Riehle also talked in the media call about what's hot in the table-service restaurants: locally served meats and seafoods, locally grown produce, environmental sustainability, healthful kids' meals, and natural ingredients and minimally processed foods.

In limited-service establishments, here is what's hot: gluten-free foods, sustainable food items, locally sourced produce, fruit and vegetable sides in kids' meals, and mini-desserts or dessert bites.

The local movement carries over to the beverage market, with the hot items being micro-distilled or artisan spirits; locally produced beer, wine or spirits; onsite barrel-aged drinks; regional signature cocktails; and culinary cocktails (with savory, fresh ingredients).

Another request of restaurant patrons is breakfast for dinner. More than 70 percent of adults of all ages want to see this as a menu option - almost the same percentage that own smart phones or tablets. This trend toward mobile may be among the reason consumers are more likely to use restaurant technology than they were two years ago.

In fact, 88 percent of adults look up locations, directions and restaurant hours online, while 70 percent look at menus. Yet, many see technology as a tool, not an ultimate solution. About 37 percent of consumers think technology makes restaurant visits and ordering more complicated.

The forecast also predicted the top five states for restaurant sales in 2015: California ($72.3 billion), Texas ($44.5 billion), Florida ($36.4 billion), New York ($35.8 billion) and Illinois ($23 billion).

Riehle said that food and drink establishments added about 360,000 new jobs in 2014. As restaurant jobs grow, the states predicted to see the greatest percentage of increases in the next 10 years are: Arizona (23.8), Florida (22.4), Texas (22), Georgia (21.1) and Utah (21). By 2025, the industry is expected to provide 15.7 million jobs.

When it comes to food, it seems Americans like visiting restaurants a lot more than they do going to the grocery store. Nine of 10 say they enjoy visiting restaurants, while only 66 percent say grocery shopping is enjoyable. Yet two of every five Americans say they don't eat out - dining in or from fast-food spots - as much as they'd like.

Though food and drink establishments added a significant number of jobs in 2014, getting and keeping employees is getting harder. “With the economy slowly improving and the jobless rate trending downward, restaurant operators are finding that the competition for employees is intensifying,” Riehle said. “While not quite at pre-recession levels, the challenge of recruiting and retaining employees is making its way back onto the top-challenges list for restaurant operators, who have benefited from a deeper labor pool for the past several years.”

As consumers show increasing confidence in the economy, Riehle also pointed out one way restauranteurs can draw customers - with technology. He stressed the importance of “nudging” them on social media.

#30

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