CALIFORNIA BUSINESS MINUTE
Restaurants
03-10-10
Hi, I am Tim Johnson and welcome to the California Business Minute.
With the economic downturn easing, the restaurant industry is expected to show
gradual improvement in 2010, according to the National Restaurant Association's
2010 Restaurant Industry Forecast.
Industry sales are projected to reach $580 billion this year, a 2.5 percent
increase in current dollars over 2009 sales. And when adjusted for inflation,
2010 sales will be essentially flat, which is an improvement over the 1.2 percent
and 2.9 percent negative growth in real sales that the industry experienced in
2008 and 2009, respectively.
Restaurants will continue to be strong contributors to the recovery of the nation's
economy, with industry sales representing 4 percent of the U.S. gross domestic
product and employees comprising 9 percent of the U.S. workforce.
"The past two years have been a very challenging time for our industry. While
there are still substantial challenges ahead, we are encouraged that the outlook
is improving," said Dawn Sweeney, President and CEO of the National Restaurant
Association. "With a total economic impact of more than $1.5 trillion, the
restaurant industry is a strong player in the economic recovery. Restaurants are
the cornerstone of communities across this nation and we are a key player in
propelling job retention and creation across the United States."
Industry Segment Growth
Continuing the trend from last year, the quick service restaurant segment is
expected to fare slightly better than the full service segment as diners focus
on value and specials. Quick service restaurants are projected to post sales
of $164.8 billion in 2010, a gain of 3.0 percent over 2009. Sales at full service
restaurants are projected to reach $184.2 billion in 2010, an increase of 1.2
percent in current dollars over 2009.
Workforce Outlook
For only the second time in nearly half a century, the restaurant industry lost
jobs in 2009. Despite the losses, the industry still outperformed the national
economy, and job growth is expected to resume in 2010. The restaurant-and-foodservice
industry remains one of the nation's largest private sector employers with its
12.7 million employees. By 2020, the industry is projected to employ 14 million
people – an increase of 1.3 million jobs. For California, the state with the
largest restaurant employment sector, employment growth is forecasted to continue.
State Sales Growth
Colorado is expected to post the strongest sales growth in 2010 at 2.9 percent
(2010 industry sales of $8.7 billion), followed by Idaho at 2.8 percent ($1.6 billion).
Additionally, the following states are forecasted to post growth of 2.7 percent:
New Jersey ($12.8 billion), New York ($29.0 billion), North Carolina ($12.8 billion)
and Texas ($34.8 billion).
The top states by restaurant sales volume in 2009 will be California at $58.0
billion (2.3 percent growth); Texas at $34.8 billion (2.7 percent growth); New York
at $29.0 billion (2.7 percent growth); Florida at $27.6 billion (2.4 percent growth);
and Illinois at $18.7 billion (1.9 percent growth).
Consumer and Menu Trends
According to the Forecast, consumers will continue to seek value, convenience and
expanded menu options in 2010
"Word of mouth" has moved online, and more consumers use the Web to browse menus,
make reservations, and get recommendations from other diners. Restaurants' use of
e-mail, Internet and cell phone text messages in marketing efforts is also a growing
trend. Hence social media will become more critical to restaurant marketing this
year. A good plan and solid understanding of those tools – including Facebook,
Twitter, Yelp, and You Tube – can help operators mitigate the economic environment.
Locally sourced food, sustainability, and health and nutrition will be the top
trends on restaurant menus this year. Seventy percent of consumers say they are
more likely to visit restaurants that offer locally produced food, and nearly three
out of four say they are trying to eat healthier in restaurants now than they did
two years ago. The top 10 menu trends in the Association's "What's Hot in 2010"
survey of more than 1,800 professional chefs (American Culinary Federation members)
are: locally grown produce, locally sourced meat/seafood, sustainability as a
culinary theme, bite-size desserts, locally produced beer/wine, healthy kids'
meals, half-potions, farm/estate-branded ingredients, gluten-free/allergy-conscious
items, and sustainable seafood. Ethnic cuisines and flavors are also a hot menu
trend this year, including regional ethnic cuisine and fusion cuisine. Consumers
are interested in trying French, Spanish, Japanese (other than sushi), Thai,
Cajun/Creole, soul food and sushi.
For more information about the National Restaurant Association's 2010 Restaurant
Industry Forecast, visit www.restaurant.org/research/forecast.
I am Tim Johnson and this has been the California Business Minute.
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