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NRA: Restaurant sales to reach $683 billion in 2014

Report forecasts industry sales to grow 3.6 percent despite fragile consumer environment. The National Restaurant Association said Thursday it expects industry sales to grow in 2014 for the fifth consecutive year, to $683 billion, despite consumer sentiment that remains less than robust.

In its “Restaurant Industry 2014” forecast and trends report, the NRA said it expects that in 2014 restaurant sales will grow 3.6 percent from $659.3 billion in 2013 at about 990,000 restaurants, which is an increase in units of about 1 percent over last year.

“From the operator perspective, obviously it is and only will continue to be an extremely competitive environment,” said Hudson Riehle, the NRA’s senior vice president for research and knowledge, in a webinar accompanying the report’s release.

Arizona is projected to see the largest growth in restaurant sales in 2014, at 4.9 percent, followed by North Dakota at 4.8 percent, Texas at 4.7 percent, Florida at 4.5 percent and Colorado at 4.1 percent. California rounds out the top half dozen in the NRA projections with an estimated growth rate of 3.95 percent in restaurant sales.

States in the Northeast and Upper Midwest are expected to see the slowest rate of growth, ranging from 2.3 percent in Rhode Island and Vermont to 3 percent in Michigan and Wisconsin.

“The consumers’ mindset really has improved very little over the last several years,” said Riehle, adding that nearly nine out of every 10 consumers said they were “not impressed by the economic situation overall.” That has gradually improved, he said, but consumer sentiment remains weak and operators “must nudge and incent that consumer into the decision to patronize a restaurant.”

Riehle added that employment, both in the general economy and specifically in the restaurant industry, continued to grow. Over the next 10 years, through 2024, Arizona is expected to lead in restaurant job growth with a 15.6-percent gain. That is followed by Texas at 15.3 percent, Florida at 15 percent, Nevada at 14.7 percent and Georgia at 14.4 percent.

Overall, the NRA expects restaurants and bars to add jobs at a 2.8-percent rate in 2014, a percentage point above the projected 1.8-percent gain in total U.S. employment. The industry added jobs at a strong 3.3-percent rate in 2013, outpacing total U.S. employment, which grew 1.6 percent.
The restaurant industry employs about 13.5 million people, or about 10 percent of the workforce, and in 2014 will remain the nation’s second largest private-sector employer behind health care, the NRA said.

Riehle did note that while the consumer environment was fragile, “the food cost situation is definitely better than it was a couple of years ago.” In 2011, wholesale food prices rose 8.1 percent, but the growth rate fell in 2012 to 2.2 percent and in 2013 to 2.3 percent.

Pent-up demand among consumers wanting to dine in restaurants more often has also increased, Riehle said. The percentage of surveyed adults who are not eating on-premise at restaurants as often as they like grew to 43 percent in December 2013, up from 31 percent in October 2007.

“Unfulfilled demand for restaurant services remains elevated; more than two out of five are not dining on premises or using take-out as much as they would like,” Riehle said. “It is highly indicative that these consumers want to be nudged into that decision to patronize [a restaurant].”

Riehle said technology, such as in smartphone apps, can help “nudge” consumers into restaurants. “Technology will have substantial implications going forward in terms of how restaurants boost their loyalty,” he said, and it will also be used to increase labor productivity.

Video menu boards in quick-service restaurants and the growing application of tabletop devices in casual dining give operators some tools to help push sales, Riehle added. “The capability now exists for operators to offer different incentives by times of day,” he said.

And consumers are open to those approaches, Riehle noted. NRA surveys have found nearly one-fifth of consumers say technology options are an important feature that factors into their decision when choosing a full-service restaurant.

NRA surveys found 24 percent of 18- to 34-year-olds say they consider a restaurant’s technology options when selecting where to go. That number falls off among those age 65 and older, among whom only 11 percent consider technology important.

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