Restaurant sector set for record growth

Hudson Riehle, senior vice president of research at the National Restaurant Association, outlines key trends in the US restaurant sector

The operating environment for America’s nearly one million restaurants will remain generally positive this year, despite a range of challenges carried over from the previous year, as well as some new ones emerging. The restaurant industry is expected to post record-high sales in 2013, underscoring its flexibility and resilience. According to the National Restaurant Association’s (NRA) 2013 Restaurant Industry Forecast, industry sales are expected to exceed $660bn this year – a 3.8% increase over 2012.

In addition, the NRA’s latest Restaurant Performance Index shows stronger operator optimism over future business conditions, as well as modest improvement in their current environment.

Restaurants will employ 13.1 million individuals in 2013 as the nation’s second-largest private-sector employer, which equals one in 10 working Americans. Restaurant job growth has outpaced national job growth for 13 straight years, and is expected to do so again this year.

Because of the strong growth in restaurant employment, labor challenges will start to reemerge. Recruitment and retention, which was a top challenge pre-recession, will make its way back onto restaurant operators’ radar as the US labour pool is starting to become shallower; restaurant operators in all segments expect recruitment and retention to be more challenging in 2013 than in 2012.

The top challenges cited by restaurateurs vary by industry segment, and include food costs, the economy and health care reform.

After increasing steadily in the last three years, wholesale food costs will continue on an upward trajectory through 2013, putting significant pressure on restaurants’ bottom lines as about one-third of sales in a restaurant goes to food and beverage purchases.

The sluggish economic and employment recovery impacts consumers’ cash-on-hand situation, which in turn impacts restaurants as there is a strong correlation between consumers’ disposable income and restaurant sales.

Preparing for the implementation of health care reform will put additional cost pressure on some restaurant operators in the near future. One-third of a typical restaurant’s sales go toward labour costs, so significant increases in those costs will result in additional cost management measures.

When it comes to consumer trends, interest in technology will continue unabated, especially in the electronic ordering and payment options arena. Restaurant operators recognize that technology can appeal to consumers, but they are not fully meeting consumer demand in this area yet.

On menus, local sourcing and nutrition remain the hottest trends. More than seven out of 10 consumers say they are more likely to visit a restaurant that offers locally produced menu items, and more than seven out of 10 consumers say they are trying to eat healthier at restaurants now than they did two years ago.

Leveraging the latest trends and market conditions to make smart decisions is in every restaurant operator’s – and therefore, every foodservice consultant’s – best interest. The NRA offers a range of research and opportunities to learn hands-on information and strategies that can help them do so. For example, our Restaurant TrendMapper service provides regular updates on trends in employment, food and menu costs, sales and traffic, and more. And, our Executive Study Group conference series and annual NRA Show are premier forums to learn from both experts and peers on the top issues facing our industry today.


Hudson Riehle is senior vice president of research at the National Restaurant Association. He directs consumer, economic, market, human resources, tourism and operations research and oversees the NRA’s Knowledge Center, which provides information services to restaurant operators and researchers.