Outlook 2011: What the industry expects in 2011

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More than 130 subscribers to NRN a.m. — the daily e-newsletter from Nation’s Restaurant News — took an online survey last month, helping to shed light on what the industry is expecting in the year ahead. Respondents to the NRN a.m. 2011 Restaurant Operator Survey said higher commodity costs will be the industry’s biggest challenge this year. Nearly 39 percent chose higher commodity costs from a selection of five challenges. The high U.S. unemployment rate and stalled consumer spending came in behind commodity cost concerns as leading industry challenges, with about 20 percent of the vote for each selection. The increased scrutiny foodservice faces from the federal government and lack of growth capital each garnered about 10 percent of the vote.

Respondents of the survey expect to benefit most from increased consumer spending in 2011. From a selection of five choices, nearly 45 percent of respondents said they expect increased consumer spending to help drive the industry. Nearly 21 percent chose “none of the above,” however, when asked what the industry can expect to benefit from in the New Year. The other choices included a decreasing U.S. unemployment rate (18.5 percent); an improved lending environment (12.3 percent); and stabilized commodity costs (3.8 percent).

Of the 132 respondents, 70.2 percent expect their restaurant sales to be better in 2011 than they were in 2010; 27.5 percent expect sales to be about the same as in 2010; and just 2.3 percent said they expect sales to be worse than they were last year.
 

Expectations for profit also were positive. About 65 percent of the survey respondents expect improved profit at their operations in 2011 versus 2010; about 25 percent predict profit levels about the same as last year's; and 10.8 percent expect their 2011 restaurant profit to be worse than it was in 2010.

Unit growth expectations were not as clear cut as projections for sales and profit growth. About 38.9 percent of respondents expect to open more restaurants in 2011 than they did in 2010, while just a few more, or 39.7 percent of respondents, said they expect no unit growth for their brands in 2011. About 16 percent of respondents said they had been growing on a consistent basis throughout the recession, and 5.3 percent said they would open fewer units in 2011 than they did in 2010.

Of the 132 participants, nearly 60 percent of respondents said they plan to increase menu prices at their restaurants in 2011. About 35 percent will keep menu prices about the same as they were in 2010, and 5.3 percent plan to reduce menu prices.

Beyond pricing, participants evaluated current menu trends and selected the most important aspect of their menus. Nearly 39 percent of the respondents said value pricing was the biggest priority out of the five choices. Twenty-four percent said improved food quality would drive their decision making. About 15 percent selected the use of local or seasonal items; 12 percent bold or spicy flavors and 10 percent said low food-cost items would be the most important menu driver.

Respondents said they plan to put more dollars in 2011 behind various initiatives, without a clear winner. About 28 percent said they would spend more on marketing; nearly 24 percent will look to add dollars behind restaurant redesigns; about 18 percent on technology and about 17 percent on equipment upgrades. About 13 percent of respondents chose none of those areas for reinvestment or spending plans.

With marketing spending looking to be up in 2011, respondents also delved into what specific marketing strategies they would pursue. About 43 percent deemed social media efforts as their largest marketing priority. Thirty-one percent said in-store promotions are key, and about 12 percent deemed local television advertising as their main strategy. About 9 percent will focus on national cable advertising and about 4 percent will rely on radio advertising.

Workforce outlooks suggest that operators will be maintaining staff levels or adding employees. About 56 percent of respondents said they will keep staff levels the same at their restaurant operations, while about 39 percent will look to hire additional employees in 2011. Just 5 percent said they would cut their workforce this year.


 

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