The U.S. foodservice industry is expected to post its fourth consecutive year of sales growth in 2013, with an estimated 3.8-percent increase in sales to $660.5 billion, according to the National Restaurant Association's 2013 Restaurant Industry Forecast, which will be released today.
The sales expansion expected next year from the United States' more than 980,000 restaurants followed this year’s growth of 4.2 percent, the largest growth year following the recession-driven declines of 2008 and 2009. In inflation-adjusted terms, real sales growth in 2013 would total 0.8 percent, following 2012 inflation-adjusted growth of 1.3 percent.
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The NRA also will note Thursday that the foodservice industry will continue to outpace the overall economy in job growth. Next year will be the 14th consecutive year that foodservice industry employment outpaces the rate of hiring for the economy as a whole, as restaurants are projected to post an employment growth rate of 2.4-percent, nearly a full point higher than the 1.5-percent increase expected for all employers.
"Ours is a resilient and flexible industry that continually finds new ways to keep growing," NRA chief executive Dawn Sweeney said in a statement, "relying on the creativity and innovation exhibited by the entrepreneurial spirit. In 2013, restaurant operators will continue to explore ways of navigating the rocky economic landscape to find the road to success."
All sectors of the foodservice industry, including traditional restaurants, as well as on-site facilities and military and noncommercial accounts, are expected to report nominal sales growth next year, the NRA forecasted. Social caterers and managed-services accounts at industrial plants, hospitals and nursing homes are projected to lead the way and grow sales by more than 5 percent. Restaurants serving hotels and other lodging places, as well as those in travel centers, are expected to grow near that level.
Quick-service restaurants and social caterers will power much of the commercial-restaurant sector's projected 3.8-percent sales increase to $441.9 billion next year, which would represent 0.9-percent inflation-adjusted growth. The NRA forecast expects sales to rise 4.9 percent for fast feeders, 2.9 percent for full-service restaurants, and 0.1 percent at cafeterias and grill-buffets in 2013.
Including bars and taverns, total sales at all eating-and-drinking places are projected to increase 3.8 percent to $461.3 billion, a 0.9-percent expansion in real terms, in 2013.
“Income and cash-on-hand do remain constrained, so consumers are much more deliberative in their spending,” Hudson Riehle, the NRA's senior vice president of the research and knowledge group, said in an interview with Nation’s Restaurant News Monday. “But the industry's inherent strength is that consumers enjoy going out to eat and as such would act to preserve their restaurant spending.”
The 2013 Restaurant Industry Forecast included several other highlights:
Hiring growth: In 2013, restaurants will employ 13.1 million, or 10 percent of the U.S. workforce, the NRA found. The organization added that the restaurant industry expanded its employee ranks by 3 percent in 2012, more than double the 1.4-percent increase in overall employment for the year.
The NRA expects restaurants to add 1.3 million new positions in the next 10 years, which would bring total industry employment to approximately 14.4 million people by 2023.
“The industry truly has become a jobs juggernaut," Riehle said.
“Employment growth reflects not only sustained increases in overall sales but also that consumers have and will continue to allocate their spending toward meal solutions away from home,” he noted.
Looming challenges: Several years of strong employment growth are likely to bring labor challenges not seen since before the start of the last recession, namely tougher recruitment and retention, the NRA said. Operators in all segments reported that they expect recruitment and retention to be more challenging in 2013 than in 2012.
The most concerning challenges operators cite vary by industry segment, but they include food cost inflation, the overall economy and the effects of health care reform.
The NRA said food costs would continue to rise in 2013, as they have steadily for the past four years. Labor costs also are likely to increase as restaurants comply with the requirements of the Patient Protection and Affordable Care Act, the organization said.
Sluggish growth in wages and consumer confidence could weigh down restaurants' growth potential, the NRA said, but surveys showing that two out of every five consumers say they are not eating out as much as they would like to suggest that there is real pent-up demand for restaurants. That level of unmet demand is as elevated as it was last year heading into 2012, and significantly higher than five years ago, according to Riehle.
A significant improvement in the unemployment rate could accelerate that demand, he noted.
"In the end, the most important development for the economy at large and the industry specifically would be growth in national employment," Riehle said. "When more individuals are employed, that have higher demand for convenient meal solutions away from home, and they also have higher incomes, which has always correlated to growth in restaurant sales. … As the employment situation improves and consumer anxiety diminishes, we'll expect to see some of that pent-up demand released."
Consumer trends: Restaurants looking to meet increased demand from guests also could satisfy increasingly prevalent needs by leveraging new technologies or making a commitment to source food locally, the NRA found.
Significant percentages of consumers surveyed said they would be open to using tableside ordering and payment systems, mobile payments, or smart-phone or tablet apps for viewing menus, ordering or making reservations. However, fewer than 10 percent of table-service restaurants currently use such technology, though a majority of those establishments said they would invest in those platforms in 2013, the NRA said.
Large majorities of consumers also say they increasingly are considering where restaurants procure their ingredients and food when deciding where to dine out and say they are trying to eat more healthfully at restaurants.
The NRA provides its annual forecast free of charge to members. More information can be found at www.restaurant.org/forecast.
Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN