2010


Forecast
                               Restaurant Industry




Profitability and Entrepreneurship
Jobs and Careers...
SHARED VISION of the National Restaurant Association,
                     National Restaurant Association Educational Fou...
Inside
The National Restaurant
Association is pleased
to provide the 2010
Restaurant Industry
Forecast, our 41st annual
pr...
2010 Restaurant Industry Forecast




            Restaurants
            Small businesses with a large impact
           ...
2010:
Uncovering Opportunity
Sales to reach record high amid economic challenges



R
          estaurants are poised to u...
FORECAST           Overview                                                                              2010 Restaurant I...
Profitability
and Entrepreneurship
Inventiveness will shape operators’ success




                                       ...
FORECAST                   Operating Environment                                                                          ...
2010 Restaurant Industry Forecast
                                                                                        ...
FORECAST                   2010 Sales Projections                                                                         ...
2010 Restaurant Industry Forecast
                                                                            FORECAST    ...
2010 Restaurant Industry Forecast




   MAJOR
  MARKETS




Major markets: projected sales, 2010
This chart offers anothe...
2010 Restaurant Industry Forecast




Lodging-place sales
What this category includes: Food-and-drink sales at hotel resta...
FORECAST                    2010 Sales Projections                                                                        ...
2010 Restaurant Industry Forecast                                                                        P&E:
            ...
FORECAST            Fullservice Outlook                                                                           2010 Res...
8
2010 Restaurant Industry Forecast
                                                                          FORECAST    ...
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
NRA (National Restaurant Assciation Forecast 2010
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NRA (National Restaurant Assciation Forecast 2010

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The National Restaurant Association is pleased to provide the 2010 Restaurant Industry Forecast, our 41st annual profile of restaurant-industry opportunities and challenges for the year ahead. The research and insights are based on analysis of the latest economic data, as well as extensive surveys of restaurateurs and consumers.
The National Restaurant Association will closely monitor incoming industry and economic data in the months ahead and provide updates to this Forecast atwww.restaurant.org/research.
The 2010 RestaurantIndustry Forecast was prepared by the National Restaurant
Association Research and Knowledge Group:
Hudson Riehle
Senior Vice President, Research and Knowledge
Bruce Grindy
Chief Economist
Molly Altman
Research and
Knowledge Specialist
Linda Busche
Denise Roach
Editors
Tim Smith
Art Director
1200 17th St., NW
Washington, DC 20036
(800) 424-5156
www.restaurant.org
© 2010 National
Restaurant Association
ISBN 1-931400-68-7

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NRA (National Restaurant Assciation Forecast 2010

  1. 1. 2010 Forecast Restaurant Industry Profitability and Entrepreneurship Jobs and Careers Food and Healthy Living Sustainability and Social Responsibility America’s Restaurants Uncovering opportunity in a new economy
  2. 2. SHARED VISION of the National Restaurant Association, National Restaurant Association Educational Foundation and State Restaurant Associations: We will lead America’s restaurant industry into a new era of prosperity, prominence and participation, enhancing the quality of life for all we serve. MISSION MISSION We exist to help our members As the philanthropic foundation — the cornerstone of their of the National Restaurant communities — build customer Association, we exist to enhance loyalty, rewarding careers and the restaurant industry’s service financial success. to the public through education, community engagement and the promotion of career opportunities. WE CREATE VALUE for our members in five ways: • Advocacy and representation Building and sustaining positive public opinion and a favorable political environment. • Tools and solutions Helping grow revenues, increase profitability and develop employees. • Education and networking Providing opportunities to connect and learn from each other. • Research and insights Anticipating and preparing for emerging trends that could impact restaurants. • Responsible stewardship Providing thought leadership to inspire community involvement and impact. www.restaurant.org FOLLOW JOIN WATCH CONNECT VIEW www.twitter.com/ www.facebook.com/ www.youtube.com/ www.linkedin.com/ www.flickr.com/photos/ WeRRestaurants NationalRestaurantAssociation restaurantdotorg groups?grid=37937 restaurantdotorg
  3. 3. Inside The National Restaurant Association is pleased to provide the 2010 Restaurant Industry Forecast, our 41st annual profile of restaurant- industry opportunities and challenges for the year ahead. The research and insights are based on analysis of the latest economic data, as well as extensive surveys of restaurateurs and consumers. The National Restaurant Association will closely monitor incoming industry and economic data in the months ahead and provide updates to this Forecast at www.restaurant.org/ research. 5 19 23 The 2010 Restaurant 3 5 19 Industry Forecast was prepared by the National Restaurant Association Research and Knowledge Group: Overview Profitability and Jobs and Careers Hudson Riehle Restaurant sales are Entrepreneurship The restaurant industry Senior Vice President, projected to reach a record In an industry where profit bolsters the U.S. economy. Research and Knowledge high in 2010, despite the margins are lower than Its 12.7 million employees Bruce Grindy challenging economic others, operators are represent more than 9 Chief Economist backdrop. Sales are expected concerned about managing percent of the nation’s to total $580 billion, up 2.5 costs, access to credit and workforce. Research shows Molly Altman percent from 2009. other economic pressures. the industry’s workforce will Research and Inventiveness will shape expand by 1.3 million this Knowledge Specialist operators’ success. decade. Linda Busche Denise Roach Editors Tim Smith Art Director 23 Food and Healthy 29 Sustainability and 33 Appendix: Living Social Responsibility State Information Nutrition and food safety Economic challenges haven’t Get data on key economic trends are expected to be stopped restaurants’ phil- indicators for each state, center of the plate this year. anthropic or conservation plus projections for 2010 1200 17th St., NW Restaurants are updating efforts. Restaurants recognize state restaurant sales and Washington, DC 20036 menus to reflect nutrition the vital link between their foodservice employment (800) 424-5156 policy and trends, consumer businesses and communities. over the next decade. www.restaurant.org desires for variety and They participate in commu- © 2010 National quality, and chef innovations. nity service, contribute to Restaurant Association charitable causes and work to conserve the environment. ISBN 1-931400-68-7 www.restaurant.org | National Restaurant Association | 1
  4. 4. 2010 Restaurant Industry Forecast Restaurants Small businesses with a large impact on our nation’s economy Sales $580 billion n Restaurant-industry sales are forecast Locations 945,000 to advance 2.5% in 2010 and equal 4% of the U.S. gross domestic product. Employees 12.7 million n Restaurants will provide more than Restaurant-industry 70 billion meal and snack occasions share of the food dollar 49% in 2010. n On a typical day in America in 2010, Restaurant more than 130 million people will be foodservice patrons. Sales n The overall economic impact of the 1970–2010 $580.1 restaurant industry is expected to Food-and-drink sales exceed $1.5 trillion in 2010. (Billions of Current Dollars) $379.0 n Every dollar spent by consumers in restaurants generates an additional $2.05 spent in the nation’s economy. $239.3 n Every additional $1 million in $119.6 restaurant sales generates 34 jobs $42.8 for the economy. n Eating-and-drinking places are mostly 1970 1980 1990 2000 2010* small businesses. Ninety-one percent * Projected have fewer than 50 employees. 2 | National Restaurant Association | www.restaurant.org
  5. 5. 2010: Uncovering Opportunity Sales to reach record high amid economic challenges R estaurants are poised to uncover elegant ambience and cuisine at fine- instead of cooking and cleaning up. new business opportunities in dining establishments, the newest latte With nine in 10 adults saying they 2010. Industry sales are projected at the corner coffee shop, the relaxed enjoy going to restaurants, the industry to reach a record high this year, despite atmosphere of a casual-dining concept. over the long term will continue along a the most challenging economic backdrop Indeed, a new Association survey reveals path of growth. in decades. The 2010 sales projection: $580 that nearly four in five consumers believe billion, up 2.5 percent from 2009. going to restaurants with family or friends Challenges ahead However, when adjusted for inflation, gives them opportunities to socialize and It’s evident that challenges remain. restaurant industry sales are expected to is a better way to use their leisure time Managing costs will be important, but the decline 0.1 percent in 2010, according to National Restaurant Association research. This sales projection represents an unprec- edented three straight years of real sales Adding it all up: $580.1 billion declines but an improvement over the Projected restaurant-industry sales in 2010 past two years. The Association estimates that restaurant-industry sales declined 1.2 Commercial Restaurant Services $530.4 billion percent in 2008 and 2.9 percent in 2009, in inflation-adjusted terms. n Eating places*: $388.5 billion The National Restaurant Association’s n Bars and taverns: $18.8 billion 2010 Restaurant Industry Forecast identifies numerous opportunities to n Managed services: $40.9 billion build business, attract and retain customers and control costs, despite the economic n Lodging places: $26.9 billion challenges. n Retail, vending, recreation, mobile: $55.2 billion As the industry increasingly offers consumers options to meet their varying Noncommercial Restaurant Services $47.6 billion desires, restaurants remain essential to American lifestyles. *Eating places include fullservice restaurants and Some things they’re looking for: speedy limited-service (quickservice) restaurants, cafeterias and Military Restaurant Services $2.1 billion buffets, social caterers, and snack and nonalcoholic drive-through at quickservice restaurants, beverage bars. www.restaurant.org | National Restaurant Association | 3
  6. 6. FORECAST Overview 2010 Restaurant Industry Forecast Job growth The restaurant industry will employ about Managing costs will be important, 12.7 million people, or 9 percent of the workforce, in 2010. And the industry but the extent of the industry’s upturn continues to grow. depends largely on consumer confidence, Over the next decade, restaurants are expected to add 1.3 million jobs. That which is critical to long-term success. means restaurants could employ 14 million people by 2020. As the industry adds more jobs, recruitment and retention will re-emerge as operators’ No. 1 challenge in the years ahead. Operators also recognize the Restaurant Industry importance of undertaking environmen- What’s ahead Share of the Food Dollar tally friendly practices — not just to This year has its challenges, but the future manage costs but to build business. is positive. Consumers forced to cut back on While the economy might have affected spending in the past two years continue to operators’ abilities to fund new green place a priority on dining out. 25% 49% initiatives, industry intent and consumer Although they say they aren’t dining interest are strong. That shows sustainability out as often as they like, they continue to 1955 Present efforts will remain a long-term trend and patronize restaurants they believe offer not a fad. value for their money. They also show interest in eating locally sourced food extent of the industry’s upturn depends State variations and seek an increasing array of ethnic largely on consumer confidence, which is Demographics is destiny. Sales will cuisines. critical to long-term success. And unsteady improve sooner and more significantly for Consumers’ pent-up demand to dine job growth is expected to further restaurants in some parts of the country. out more often, combined with myriad challenge overall economic growth. Population, employment and income consumer incentives, likely will nudge Until personal disposable income growth vary by region, and changes in consumers into America’s 945,000 increases and unemployment levels fall, those demographics will continue to restaurants and help restaurants begin to economic recovery is expected to be pro- affect restaurant sales. recover and add steam to the economy. longed and patchy. Although the economy shows signs of recovery, improvement isn’t expected until later in the year. To help spur consumer confidence, operators must take steps to provide value Promising trends to guests. Smart operators will look to build sales by marketing healthful menu items and responding to consumer demand for convenience and variety. Growth 65 Percent of adults who say their favorite restaurant foods provide flavor and taste sensations they can’t easily duplicate in their home kitchens. opportunities include delivery and other off-premise options, cooking classes and other interactive activities, and new media to reach new and returning guests. 44 Percent of adults who say restaurants are an essential part of their lifestyle. 40 Social media, such as networking and Percent of consumers who say buying restaurant, take-out and photo/video sharing sites, will become delivery meals make them more productive. more critical to restaurant marketing this year. A good plan and solid understanding of those tools can help operators mitigate the weak environment. It’s clear that “word of mouth” has moved online, and 35 Percent of adults who say they don’t eat on-premises at restaurants as often as they would like on a weekly basis. more consumers use the Web to browse menus, make reservations and get recommendations from other diners. 29 Percent of consumers who say take-out food is essential to the way they live. 4 | National Restaurant Association | www.restaurant.org
  7. 7. Profitability and Entrepreneurship Inventiveness will shape operators’ success Overview In an industry where profit margins are lower than others, rising costs and economic pressures are especially challenging for restaurants. According to National Restaurant Association research on quickservice and fullservice trends, operators in all segments are focused on attracting new guests, rising above the competition and providing value. www.restaurant.org | National Restaurant Association | 5
  8. 8. FORECAST Operating Environment 2010 Restaurant Industry Forecast percent of adults said they were more concerned about the state of the economy compared to the same time in the previous year. Sixty-four percent of adults said they were more concerned Gradual recovery about the availability of jobs in their communities, while 47 percent expressed more concern about their household expected financial situations. Restaurants felt the brunt not only of a weak domestic economy but also of As economy emerges from recession, restaurateurs weaker international tourism. Spending by cautiously optimistic about 2010 international visitors plunged 16 percent in the first 10 months of 2009 compared to the previous year, according to the Commerce Department. International arrivals to the United States through W ith the worst of the economic ment base between January 2008 and October 2009 dipped 7 percent below downturn behind them, December 2009, and the unemployment year-ago levels. restaurant operators likely rate more than doubled to over 10 percent Travelers and visitors are a key will see a gradually improving operating from 4.4 percent. customer demographic for restaurant environment in 2010. The second half of the Beginning in the first quarter of 2008, operators. They represent an average of year is likely to be stronger than the first. the gross domestic product fell in five 40 percent of fine-, 25 percent of casual- of six quarters. The GDP represents the and family-dining, and 15 percent of 2009 in review value of goods and services produced in quickservice sales, according to Association The nation’s economic slump, the worst the United States. Although GDP grew research. since the Great Depression, continued in modestly in the third quarter of 2009, 2009. More than 7.2 million net jobs were likely marking the “official” end of the Outlook for 2010 eliminated in the “Great Recession” of recession, job losses continued through This year likely will be a period of gradual 2008 and 2009, surpassing the 7.1 million the end of the year — as did consumers’ economic recovery, as the labor market jobs lost in the 1981/82, 1990/91 and uncertainty about the economy. struggles to catch up with rising economic 2000/01 recessions combined. The nation In the National Restaurant Associa- output. Growth is expected to return in lost more than 5.2 percent of its employ- tion’s December 2009 consumer survey, 71 earnest in the second half of 2010. Economic growth Income growth Job growth GDP expected to grow in 2010 Disposable personal income growth Job growth will resume in 2010, but Real growth in GDP to improve in 2010 average employment levels will remain Real growth in disposable personal income below 2009 U.S. job growth 2.5% 4.0% 3.6% 3.3% 3.4% 3.1% 2.5% 2.7% 2.5% 1.2% 2.1% 2.4% 2.2% 1.8% 1.7% 1.8% 1.1% 1.3% 1.1% –0.8% 1.0% 1.1% 0.4% 0.5% 0.0% –0.3% –0.4% –1.1% –2.5% –3.7% ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09* ‘10* ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09* ‘10* ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09* ‘10* *projected *projected *projected Source: Bureau of Economic Analysis, National Source: Bureau of Economic Analysis, National Source: Bureau of Labor Statistics, National Restaurant Restaurant Association Restaurant Association Association 6 | National Restaurant Association | www.restaurant.org
  9. 9. 2010 Restaurant Industry Forecast FORECAST Operating Environment • Jobs: The national unemployment rate income — a key indicator of restaurant- thought they would be worse than in will remain high in the first half of 2010 industry performance — is projected to 2009, and 52 percent say they expect their before slowly declining in the second half. increase 1.2 percent in 2010. This would household financial situation to be about The national economy is expected to add be the largest increase since 2007, but a the same. The numbers vary significantly about 750,000 jobs during 2010, mostly in modest gain by historical standards. across age groups, with younger adults the second half of the year. generally more optimistic. Younger consumers • GDP: Building on the momentum estab- more optimistic lished in the second half of 2009, national On the whole, consumers are cautiously Food prices expected output is projected to rise moderately this optimistic that their household financial to resume growth in 2010 year. The Association expects real GDP to situations in 2010 will be better or about Wholesale food costs likely are on their increase 2.5 percent, up from a 2.5 percent the same as they were in 2009. In the way up this year. Food costs are one of decline in 2009. It would mark the Association’s December 2009 consumer the most important line items for res- strongest gain in four years. survey, 32 percent of adults say they taurants, representing roughly 33 cents expect their household financial situations of every dollar in restaurant sales. For • Income: Real disposable personal to improve in 2010. Just 16 percent that reason, fluctuations in food costs significantly impact restaurants’ bottom lines. After six consecutive years Operators expect economic improvement of steady gains in wholesale food prices, average wholesale prices fell Restaurant operators surveyed by the National Restaurant Association in December 2009 were somewhat optimistic about the economy’s direction. nearly 4 percent in 2009. Yet food prices remained elevated, as 2007 and 2008 Restaurateurs’ outlook for general economic conditions in first half of 2010, by industry segment were the largest spikes in nearly three decades. 28% 29% 27% 27% 25% 22% 23% 20% 21% 11% Family dining Casual dining Fine dining Quickservice Fast casual Expect economic conditions in six months will be … n Better than December 2009 n Worse than December 2009 2010 commodity Source: National Restaurant Association, Restaurant Industry Tracking Survey, December 2009 price outlook Projected growth rates for primary market prices (high-low scenarios) International tourism dips 2008 2009 2010 Restaurateurs were likely affected in 2009 by a drop in interna- Beef 1% –10% 4% to 12% tional arrivals to the United States. The dip in international visits was the first decline in six years and the largest since 2002. Pork 2% –15% 5% to 13% Broilers 4% –3% –3% to 5% Percent change in international arrivals to the United States Turkeys 7% –9% –1% to 7% 11% 11% 8% Eggs 12% –22% –1% to 7% 6% 6% 4% Milk –4% –30% 28% to 35% Cheddar 9% –32% 25% to 31% –4% –8% –7% Butter 7% –16% 18% to 27% –12% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 YTD Source: U.S. Department of Agriculture, November 2009 projections Source: U.S. Department of Commerce; 2009: YTD represents year-to-date growth through October 2009 www.restaurant.org | National Restaurant Association | 7
  10. 10. FORECAST 2010 Sales Projections 2010 Restaurant Industry Forecast Breaking down the numbers restaurants experiencing sales growth Get a detailed look at sales projections by segment, as of 1.2 percent and quickservice growth well as historical data projected at 3 percent. Although real sales growth (sales adjusted for the impact of inflation) is projected to be -0.1 percent for the industry overall, some segments of the industry will see higher growth rates. T he restaurant industry is expected remaining challenges. The National The charts on the following pages to experience positive sales growth Restaurant Association’s 2010 Restaurant examine the industry’s sales-growth record in 2010. Restaurateurs’ outlook for Industry Forecast projects that industry over the past 40+ years, as well as the 2010 will be boosted by a better operating sales will grow 2.5 percent in 2010 to expected 2010 performance of key environment but tempered by substantial reach $580.1 billion, with fullservice restaurant-industry segments. HISTORY 40 years of restaurant industry sales This chart shows sales growth for the restaurant industry since 1971, when the National Restaurant Association began issuing its annual forecast. The chart shows growth in the number of dollars spent each year in restaurants as well as real (inflation-adjusted) sales growth. 12.8% 12.4% 11.8% 11.5% 12.3% 11.6% 9.9% 10.8% 8.3% 7.7% 9.2% 8.0% 7.9% 8.4% 7.2% 6.6% 6.1% 6.2% 6.9% 5.8% 5.8% 5.3% 5.3%5.5% 5.3% 5.3% 5.1% 5.0% 5.0% 4.7% 4.6% 4.6% 4.8% 4.4% 4.5% 4.4% 4.2% 4.2% 4.2% 4.0% 2.5% 3.8% 3.8% 4.7% 3.4% 3.2% 3.0% 3.0% 3.2% 3.0%2.9% 3.0% 3.0% 2.8% 2.9%2.7% 2.5% 2.3% 2.1% 2.1% 2.0% 2.1% 2.2% 1.6% 1.6% 1.5% 1.6% 1.2% 1.2% 1.2% 1.0% 0.8% 0.5% -0.7% -0.2% -0.1% -0.2% -1.2% -0.1% -2.9% 1971 1975 1980 1985 1990 1995 2000 2005 2010 n Current dollar growth n Real (inflation-adjusted) growth *Growth rates are estimated for 2006 to 2008 and projected for 2009 and 2010. Providing final estimates for restaurant-industry sales from previous years is an ongoing process. The National Restaurant Association’s Restaurant TrendMapper offers updated sales estimates as they become available. Visit www.restaurant.org/trendmapper to learn more. Source: National Restaurant Association 8 | National Restaurant Association | www.restaurant.org
  11. 11. 2010 Restaurant Industry Forecast FORECAST 2010 Sales Projections INDUSTRY SEGMENTS Footnotes: What’s in store for 1 Data are given only for establishments with payroll. restaurant industry sales 2 Waiter/waitress ser- vice is provided, and the order is taken while the patron is Restaurant-industry food and drink sales: Projections for 2010 seated. Patrons pay after they eat. 3 Patrons generally or- ‘09-’10 % der at a cash register 2009 projected 2010 projected ‘09-’10 % Real growth or select items from a food bar and pay F&D sales ($000) F&D sales ($000) change change before they eat. 4 Formerly commercial GROUP I COMMERCIAL RESTAURANT SERVICES1 cafeterias. EATING PLACES 5 Food and drink sales for non-payroll Fullservice restaurants2 $181,992,532 $184,176,442 1.2% -1.5% establishments are Limited-service (quickservice) restaurants3 160,035,527 164,836,593 3.0% 0.4% projected to total $13,303,516,000. Cafeterias, grill-buffets and buffets4 7,505,948 7,671,079 2.2% -0.4% 6 Also referred to as Social caterers 6,784,828 7,090,145 4.5% 1.9% onsite foodservice and food contractors. Snack and nonalcoholic beverage bars 24,156,717 24,736,478 2.4% -0.2% 7 Includes drug- and TOTAL EATING PLACES $380,475,552 $388,510,737 2.1% -0.5% proprietary-store Bars and taverns 18,474,870 18,844,367 2.0% -1.1% restaurants, general- merchandise-store TOTAL EATING-AND-DRINKING PLACES $398,950,422 $407,355,104 5 2.1% -0.6% restaurants, variety- MANAGED SERVICES6 store restaurants, food-store restau- Manufacturing and industrial plants $6,685,577 $6,652,613 -0.5% -3.1% rants and grocery- store restaurants Commercial and office buildings 2,520,897 2,565,265 1.8% -0.8% (including a portion Hospitals and nursing homes 4,735,380 5,052,651 6.7% 4.1% of delis and all salad bars), gasoline- Colleges and universities 12,911,951 13,648,985 5.7% 2.9% station restaurants Primary and secondary schools 5,564,018 5,862,847 5.4% 2.8% and miscellaneous retailers. In-transit restaurant services (airlines) 2,046,530 2,061,110 0.7% -2.0% 8 Includes movies, Recreation and sports centers 4,831,185 5,025,324 4.0% 1.3% bowling lanes, TOTAL MANAGED SERVICES $39,295,538 $40,868,795 4.0% 1.3% recreation and sport centers. LODGING PLACES 9 Includes sales of hot Hotel restaurants $25,368,042 $26,534,972 4.6% 1.9% food, sandwiches, pastries, coffee and Other accommodation restaurants 394,970 407,610 3.2% 0.5% other hot beverages. TOTAL LODGING PLACES $25,763,012 $26,942,582 4.6% 1.9% 10 Business, educa- Retail-host restaurants7 29,480,534 30,935,713 4.9% 2.3% tional, governmental or institutional Recreation and sports8 12,212,322 12,517,759 2.5% -0.2% organizations that Mobile caterers 646,363 635,116 -1.7% -4.3% operate their own restaurant services. Vending and nonstore retailers9 10,966,372 11,096,872 1.2% -1.4% 11 Includes indus- TOTAL — GROUP I $517,314,563 $530,351,941 2.5% -0.1% trial and commercial organizations, seagoing and GROUP II NONCOMMERCIAL RESTAURANT SERVICES10 inland-waterway Employee restaurant services11 $417,317 $426,243 2.1% -0.4% vessels. Public and parochial elementary, secondary schools 6,011,356 6,143,606 2.2% -0.4% 12 Includes voluntary and proprietary Colleges and universities 6,169,059 6,083,266 -1.4% -4.5% hospitals; long-term general, TB, nervous Transportation 1,754,173 1,829,948 4.3% 1.7% and mental hospitals; Hospitals12 14,534,908 15,225,316 4.7% 2.2% and sales or com- mercial equivalent to Nursing homes, homes for the aged, blind, orphans and employees in state the mentally and physically disabled13 6,963,721 7,144,778 2.6% 0.4% and local short-term hospitals and federal Clubs, sporting and recreational camps 8,479,792 8,554,233 0.9% -1.9% hospitals. Community centers 2,041,828 2,139,836 4.8% 2.6% 13 Sales (commercial TOTAL — GROUP II $46,372,154 $47,547,226 2.5% -0.1% equivalent) calcu- lated for nursing TOTAL — GROUPS I AND II $563,686,717 $577,899,167 2.5% -0.1% homes and homes for the aged only. GROUP III MILITARY RESTAURANT SERVICES14 All others in this grouping make no Officers’ and NCO clubs (open mess) $1,428,713 $1,481,576 3.7% 1.0% charge for food served either in cash Military exchanges 658,941 679,369 3.1% 0.5% or in kind. TOTAL — GROUP III $2,087,654 $2,160,945 3.5% 0.8% 14 Continental United States only. GRAND TOTAL $565,774,371 $580,060,112 2.5% -0.1% www.restaurant.org | National Restaurant Association | 9
  12. 12. 2010 Restaurant Industry Forecast MAJOR MARKETS Major markets: projected sales, 2010 This chart offers another way to look at the restaurant industry’s projected sales of $580.1 billion for 2010. While about 70 percent, or $407.4 billion, of the industry’s projected 2010 sales are in the “eating and drinking places” category, the remaining $172.7 billion of sales are driven by other important foodservice markets. This chart provides more detail on the National Restaurant Association’s projections for sales in these other markets in 2010, including foodservice sales at schools, worksites, health-care facilities, lodging places and the military. Educational sales What this category includes: Food-and-drink sales by foodservice companies that manage restaurant services in colleges, universities, primary and secondary schools, as well as food-and-drink sales by schools that operate their own restaurant services. 2009 projected 2010 projected ‘09-’10 % ‘09-’10 % real 2010 projected food-and-drink sales $31.7 billion F&D sales ($000) F&D sales ($000) change growth change Colleges and universities Managed services $12,911,951 $13,648,985 5.7% 2.9% Noncommercial 6,169,059 6,083,266 -1.4% -4.5% Subtotal 19,081,010 19,732,251 3.4% 0.5% Primary and secondary schools Managed services 5,564,018 5,862,847 5.4% 2.8% Noncommercial 6,011,356 6,143,606 2.2% -0.4% Subtotal 11,575,374 12,006,453 3.7% 1.1% TOTAL EDUCATIONAL $30,656,384 $31,738,704 3.5% 0.7% Employee sales What this category includes: Food-and-drink sales by for-profit companies that manage restaurant services for employees at manufacturing and industrial plants and in commercial office buildings, as well as food-and-drink sales by plants and companies that run their own noncommercial employee restaurant services. 2009 projected 2010 projected ‘09-’10 % ‘09-’10 % real 2010 projected food-and-drink sales $9.6 billion F&D sales ($000) F&D sales ($000) change growth change Managed services Manufacturing and industrial plants $6,685,577 $6,652,613 -0.5% -3.1% Commercial and office buildings 2,520,897 2,565,265 1.8% -0.8% Noncommercial employee restaurant services* 417,317 426,243 2.1% -0.4% TOTAL EMPLOYEE $9,623,791 $9,644,121 0.2% -2.4% *Includes sales for industrial plants and office buildings, seagoing ships, and inland-waterway vessels Health-care sales What this category includes: Food-and-drink sales by foodservice companies that manage restaurant services in hospitals and nursing homes, as well as food- and-drink sales by hospitals and nursing homes that operate their own restaurant services. 2009 projected 2010 projected ‘09-’10 % ‘09-’10 % real 2010 projected food-and-drink sales $27.4 billion F&D sales ($000) F&D sales ($000) change growth change Managed services in hospitals and nursing homes $4,735,380 $5,052,651 6.7% 4.1% Hospitals* 14,534,908 15,225,316 4.7% 2.2% Nursing homes** 6,963,721 7,144,778 2.6% 0.4% TOTAL HEALTH CARE $26,234,009 $27,422,745 4.5% 2.0% *Includes voluntary and proprietary hospitals; long-term general, TB, mental hospitals; and sales or commercial equivalent to employees in state and local short-term hospitals and federal hospitals. **Includes homes for the aged, blind, orphans,mentally and physically disabled; sales (commercial equivalent) calculated for nursing homes and homes for the aged only. All others in this group make no charge — either in cash or in kind for food served. 10 | National Restaurant Association | www.restaurant.org
  13. 13. 2010 Restaurant Industry Forecast Lodging-place sales What this category includes: Food-and-drink sales at hotel restaurants and other accommodation restaurants. 2009 projected 2010 projected ‘09-’10 % ‘09-’10 % real 2010 projected food-and-drink sales $26.9 billion F&D sales ($000) F&D sales ($000) change growth change Hotel restaurants $25,368,042 $26,534,972 4.6% 1.9% Other accommodation restaurants 394,970 407,610 3.2% 0.5% TOTAL LODGING PLACES $25,763,012 $26,942,582 4.6% 1.9% Military sales What this category includes: Food-and-drink sales at military clubs and exchanges. 2009 projected 2010 projected ‘09-’10 % ‘09-’10 % real 2010 projected food-and-drink sales $2.2 billion F&D sales ($000) F&D sales ($000) change growth change Officers’ and NCO clubs (Open mess) $1,428,713 $1,481,576 3.7% 1.0% Military exchanges 658,941 679,369 3.1% 0.5% TOTAL MILITARY* $2,087,654 $2,160,945 3.5% 0.8% *Continental United States only. Recreational sales What this category includes: Food-and-drink sales at recreation and sports centers, such as movie theaters, sports arenas and bowling lanes. 2009 projected 2010 projected ‘09-’10 % ‘09-’10 % real 2010 projected food-and-drink sales $26.1 billion F&D sales ($000) F&D sales ($000) change growth change Recreation and sports centers Managed services $4,831,185 $5,025,324 4.0% 1.3% Noncontractors 12,212,322 12,517,759 2.5% -0.2% Subtotal 17,043,507 17,543,083 2.9% 0.2% Clubs, sporting and recreational camps 8,479,792 8,554,233 0.9% -1.9% TOTAL RECREATIONAL $25,523,299 $26,097,316 2.2% -0.5% *Includes sales as movies, bowling lanes, and recreation and sports centers. **A portion of food-and-beverage sales in clubs is business-related. Transportation sales What this category includes: Food-and-drink sales at military clubs and exchanges. 2009 projected 2010 projected ‘09-’10 % ‘09-’10 % real 2010 projected food-and-drink sales $3.9 billion F&D sales ($000) F&D sales ($000) change growth change Managed services, in-transit commercial airlines $2,046,530 $2,061,110 0.7% -2.0% Noncommercial transportation 1,754,173 1,829,948 4.3% 1.7% TOTAL TRANSPORTATION $3,800,703 $3,891,058 2.4% -0.3% Other sales 2009 projected 2010 projected ‘09-’10 % ‘09-’10 % real 2010 projected food-and-drink sales $44.8 billion F&D sales ($000) F&D sales ($000) change growth change Retail hosts $29,480,534 $30,935,713 4.9% 2.3% Mobile caterers 646,363 635,116 -1.7% -4.3% Vending and non-store retailers 10,966,372 11,096,872 1.2% -1.4% Community centers 2,041,828 2,139,836 4.8% 2.6% *Includes drug- and proprietary-store, general-merchandise store, variety-store, food-store and grocery-store restaurants (including a portion of delis and all salad bars); gasoline-service-station restaurants; and miscellaneous retailers. **Includes sales of hot food, sandwiches, pastries, coffee and other hot beverages. www.restaurant.org | National Restaurant Association | 11
  14. 14. FORECAST 2010 Sales Projections 2010 Restaurant Industry Forecast Demographics are destiny Disposable income, employment, other factors affect state and regional restaurant sales estimates that restaurant-sales growth in the nine Census regions in 2010 will range from a high of 2.6 percent in the Middle Atlantic states to a low of 1.8 percent for the East North Central region. Among G rowth in the restaurant industry population. In 2010, as the economy states, Colorado is expected to lead the typically varies significantly by improves, some regions that were harder nation in 2010 restaurant-sales growth. region of the country, and is hit by the recession will see proportionally (Note: The appendix on page 34 offers most heavily influenced by gains in stronger recovery in restaurant sales. details on restaurant-sales growth in employment, disposable income and The National Restaurant Association each state.) REGIONS Regional Snapshots East North Central East South Central Middle Atlantic Mountain Restaurant-sales growth1 2010 projected growth: 2010 projected growth: 2010 projected growth: 2010 projected growth: projected for 2010 in the nine Regional National Regional National Regional National Regional National U.S. census regions. In general, • Jobs -1.4% -0.8% • Jobs -0.9% -0.8% • Jobs -0.6% -0.8% • Jobs -0.8% -0.8% restaurant-sales growth is strongest in regions where the • Income 0.5% 1.2% • Income 0.8% 1.2% • Income 1.4% 1.2% • Income 1.2% 1.2% three key indicators — jobs, • Population 0.3% 1.0% • Population 0.9% 1.0% • Population 0.2% 1.0% • Population 1.7% 1.0% income and population2 — out- Restaurant Restaurant Restaurant Restaurant perform the national average. Sales 1.8% 2.3% Sales 2.1% 2.3% Sales 2.6% 2.3% Sales 2.4% 2.3% New England Pacific South Atlantic West North Central West South Central 2010 projected growth: 2010 projected growth: 2010 projected growth: 2010 projected growth: 2010 projected growth: Regional National Regional National Regional National Regional National Regional National • Jobs -0.9% -0.8% • Jobs -0.9% -0.8% • Jobs -0.9% -0.8% • Jobs -0.6% -0.8% • Jobs 0.2% -0.8% • Income 1.0% 1.2% • Income 1.2% 1.2% • Income 1.1% 1.2% • Income 1.4% 1.2% • Income 1.9% 1.2% • Population 0.2% 1.0% • Population 1.2% 1.0% • Population 1.2% 1.0% • Population 0.5% 1.0% • Population 1.4% 1.0% Restaurant Restaurant Restaurant Restaurant Restaurant Sales 2.1% 2.3% Sales 2.3% 2.3% Sales 2.4% 2.3% Sales 2.0% 2.3% Sales 2.5% 2.3% 1 Regional restaurant-sales-growth figures are based on current dollars and not adjusted for menu price inflation. For definition of restaurant sales included in this grouping see page 34 footnote. 2 Economic indicators show growth in region’s total employment, real disposable personal income and total population. 12 | National Restaurant Association | www.restaurant.org
  15. 15. 2010 Restaurant Industry Forecast P&E: FORECAST 2010 Sales Projections STATES Colorado to post fastest growth in restaurant sales in 2010 Restaurant sales growth in 2010 (projected) See State Information appendix on page 34 for full sales projections for all states. WA 2.4% NH 2.4% ME VT MT ND 1.9% 2.1% 2.3% 2% OR 2% MA ID 2.0% MN WI NY 2.8% SD 2.4% 2% 2.7% RI WY 2.4% MI 2.3% 2.1% 1.6% CT NV IA PA 2% 2% NE 1.6% 2.4% 2.1% OH NJ UT IL IN DE 2.7% 1.9% CA 2.6% CO 1.9% 1.7% WV 2% 2.3% 2.9% KS 0.8% VA MD 1.4% MO KY 2.5% 2.6% 2.1% 2.0% DC NC 2.4% TN 2.7% AZ OK NM 2.3% 2.0% 2.1% AR SC 2.3% 2.4% 2.3% MS 1.9% AL GA 2.2% 2.5% TX 2.7% LA 2% AK FL 2.5% 2.4% Less than 2% n 2% to 2.2% HI 2% n 2.3% to 2.5% n 2.6% or higher *State restaurant-sales figures are in current dollars and not adjusted for menu price inflation. For definition of restaurant sales included in this grouping see page 34 footnote. National sales for this group are projected to increase at a 2.3 percent rate in 2010. Source: National Restaurant Association 2010 restaurant 2010 restaurant Top States Top 10 States sales growth sales volume Projected increase in restaurant sales in 2010 Projected restaurant-sales volume in 2010 Colorado 2.9% ($000) Idaho 2.8% 1 California $58,033,073 New Jersey 2.7% 2 Texas $34,845,154 Texas 2.7% 3 New York $29,023,207 New York 2.7% 4 Florida $27,649,697 North Carolina 2.7% 5 Illinois $18,789,263 Maryland 2.6% 6 Ohio $16,962,377 Utah 2.6% 7 Pennsylvania $16,225,096 Georgia 2.5% 8 Georgia $14,441,619 Alaska 2.5% 9 Michigan $13,449,252 Virginia 2.5% 10 New Jersey $12,856,026 www.restaurant.org | National Restaurant Association | 13
  16. 16. FORECAST Fullservice Outlook 2010 Restaurant Industry Forecast Sales Fullservice 1.2% Fullservice nominal $184 $182 growth billion billion -1.5% restaurants 2009* real growth 2010* to post slight *projected Source: National Restaurant Association gains in 2010 Competive pressures to intensify as restaurants seek opportunities to build sales HIGHLIGHTS n Nominal sales to rise slightly in 2010. The National Restau- rant Association projects fullservice restaurant* sales in 2010 to be $184.2 billion, a 1.2 percent increase from 2009. That represents a Business outlook real sales decline of 1.5 percent after accounting for inflation. for fullservice operators in 2010 Percent of fullservice operators, by type of operation, n 2009 recap. The Association estimates that fullservice restaurant who expect business to be better in 2010 than 2009, or down from 2009 sales were $182 billion in 2009, a 3.9 percent decline in nominal sales Business Business down and a 6.2 percent drop in real sales compared to 2008. Nearly six in better than 2009 from 2009 10 casual- and fine-dining operators and 54 percent of family-dining operators say sales were lower in 2009 than 2008. Many operators Family dining 48% 11% reported that customer traffic declined across all three dayparts Casual dining 50 8 (breakfast, lunch and dinner). Fine dining 61 8 Source: National Restaurant Association, operator survey, October 2009 n Competition heats up. Competitive pressures will intensify for fullservice restaurant operators as they compete for limited consumer dollars. Operators in all fullservice segments expect building and maintaining sales to be their greatest challenge behind the economy. No. 1 challenge Attracting new customers is a growing challenge: 50 percent of family-, for fullservice operators in 2010 47 percent of casual- and 38 percent of fine-dining operators expect Percent of fullservice-restaurant operators, by type of bringing in new guests will be tougher in 2010 than it was in 2009. operation, who mention as their top challenge in 2010: Family Casual Fine * Fullservice restaurants provide wait staff service and take orders dining dining dining while guests are seated, and patrons pay after they eat. The Associa- The economy 29% 35% 30% tion’s operator survey categorizes fullservice operators as family-, Building/maintaining sales volume 24 23 28 casual- or fine-dining. Family-dining operations typically have lower Government mandates 15 5 4 per-person check averages than casual-dining restaurants. If they serve Operating costs 7 7 4 alcohol, they frequently limit service to beer and wine. Casual-dining operations tend to register higher per-person check averages and Recruiting and retaining employees 6 3 4 usually offer full alcoholic-beverage service. Per-person check averages Source: National Restaurant Association, operator survey, October 2009 for fine-dining or “white tablecloth” operations generally exceed $25. 14 | National Restaurant Association | www.restaurant.org
  17. 17. 8 2010 Restaurant Industry Forecast FORECAST Fullservice Outlook 2 The social media stratosphere. Fullservice operators are becoming more social-media 4 savvy: Nearly four in 10 of the Interactive activities. operators not on Facebook plan to begin using it in the Fullservice restaurants can 3 next two years, according stand out in the crowd by to the Association’s October focusing on their cuisine and ways 2009 survey of fullservice creativity. By offering private operators. About a fifth of E-mail marketing. tastings and similar events, fullservice fullservice operators in all fullservice restaurants can tap operators segments say they plan to use YouTube or other video-shar- Fine-dining operators know the value of e-mail marketing. into consumer interest in TV cooking shows and celebrity can build ing sites in the next two years. That’s why nearly seven in 10 say they use e-mail marketing chefs. Sixty-four percent of adults surveyed by the sales: or newsletters. But just half of Association say they would casual- and little more than a patronize chef’s table dinners third of family-dining opera- and private tastings, while tors report using such tools. 57 percent say they would Why social media is impor- participate in interactive 1 tant: Consumers increasingly use the Internet to engage Why they should try it: 41 percent of consumers sur- cooking demonstrations. Similarly, 54 percent say they Value-focused with restaurants and other veyed by the Association say would attend cooking classes. options. restaurant-goers. According they choose new restaurants to Association research, about because of e-mail promotions. Consumers will continue to one in five adults posted or Close to 30 percent say they’d demand restaurant value in read restaurant reviews on likely opt to receive e-mail 2010. One-third of fine-dining sites like Yelp! Twenty-six notification of daily specials operators expect guests to be percent of these are likely to if restaurants offered it. But more value-conscious in 2010 use Yelp! or similar consumer- their responses show restau- than in 2009, along with 46 driven sites to find new rants need more of an online percent of family- and 40 per- restaurants, and 59 percent of presence than just electronic cent of casual-dining operators. these adults say a restaurant newsletters. Fifty-six percent Restaurant frequent-dining or manager or owner’s response of consumers visit restaurant customer-loyalty programs likely to a negative review makes Web sites, 54 percent view will become more popular. them less likely to believe the restaurant menus and 54 Twenty-five percent of adults bad review. While only 12 percent use the Internet to participate in those programs, percent of consumers report learn about restaurants they which about a third of restau- visiting Facebook, YouTube or haven’t patronized. Thirty- rants offer. More than half of other restaurant fan pages, one percent went online to all customers say they likely and only 2 percent of respon- get nutrition information would patronize restaurants dents follow restaurants on about restaurant foods, and that offer customer-loyalty or Twitter, those percentages are 25 percent made restaurant reward programs. expected to increase in 2010. reservations online. www.restaurant.org | National Restaurant Association | 15

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