Restaurant Industry Growth Is Good News For Produce Industry

By Hudson Riehle, Senior Vice President, Research & Knowledge Group, National Restaurant Association

The restaurant industry is projected to expand in 2012, according to the National Restaurant Association’s 2012 Restaurant Industry Forecast. Total restaurant industry sales are expected to reach a record high of $632 billion in 2012, a 3.5 percent increase over 2011.

The quick-service segment is again set to grow at a slightly higher rate than the table service segment, at 3.1 percent, or $174 billion, compared with 2.9 percent ($201 billion).

Segments expected to post sales growth at a higher rate than the overall industry include military foodservice, retail-host restaurants, social caterers, transportation, employee foodservice and healthcare.

In addition, the restaurant industry will continue to fuel U.S. employment in the year ahead as the nation’s second-largest private sector employer. Overall, restaurant industry employment will reach 12.9 million in 2012, representing 10 percent of the total U.S. workforce. And, this marks the 13th consecutive year that restaurant industry job growth will outpace the national job growth.

Looking ahead, the Association expects a jump in restaurant employment to 14.3 million individuals in the next decade — an increase of 1.4 million jobs, with first-line supervisors, combined food-preparation and serving workers, and counter attendants being the fastest growing positions.

While the industry is expected to grow in 2012, the top challenges cited by restaurateurs are food costs, building and maintaining sales volume, and the economy.

Because about one-third of sales in a restaurant goes to food and beverage purchases, food prices are a crucial component for operators. Last year, we saw wholesale food prices post their strongest annual increase in more than three decades. In 2012, we will see continued increases in the cost of some commodities, while price pressures will ease for others. Restaurants are expected to spend a collective $225 billion on food-and-drink purchases this year.

However, opportunities are also present for operators to be successful by understanding and leveraging consumer trends to attract new guests and make current ones come back. The good news is that there is substantial pent-up demand for restaurant services, with 2 out of 5 consumers saying they are not frequenting restaurants as often as they would like. With the right incentives, that demand can translate into sales.

Giving consumers what they want will be crucial for restaurant operators in 2012. As the recession has caused 8 out of 10 consumers to cut back on spending to some degree, it is more important than ever for operators to nudge those guests into patronizing their restaurants.

Food quality, customer service quality, and value are the top attributes consumers look for when choosing a table service restaurant. For quick-service restaurants, customers are looking for food quality, value, and speed of service when picking where to dine.

When it comes to food, the top menu trends are all about local sourcing and nutrition, especially kids’ nutrition. Nearly three-quarters of consumers say they are more likely to visit a restaurant that offers locally produced food items, and more than half of all restaurants currently offer locally sourced produce. In addition, 6 in 10 restaurant operators say they’ve noticed an increased interest in locally sourced items among their guests. This interest is most noticeable among fine dining and casual dining operators (see chart below left).

Similarly, nearly three-quarters of consumers say they are trying to eat healthier now at restaurants than they did two years ago, and a majority of restaurants agree that customers are ordering more such items (see chart below).

Another continuing menu trend is a focus on environmental sustainability as a culinary theme. Fifty-five percent of consumers say they’re more likely to visit a restaurant that offers food that was grown or raised in an environmentally friendly way. Among operators, 6 out of 10 operators agree that their guests are more interested in environmentally sustainable menu items now than two years ago. Among industry segments, this sentiment is higher in the fine dining, casual dining and fast casual operator categories.