This year marks the first time since 2008 that the restaurant outlook has brightened, said NRA SVP of research Hudson Riehle. Consumer confidence is at a two-year high, gas prices are trending lower, and operators across the board are finally looking toward the sunrise: around 50 percent of operators, according to NRA stats, are more optimistic about sales in 2010.
Of course, challenges remain. Menu prices are slated to rise 2.6 percent, up from 2.2 percent last year and Riehle said a full recovery isn't expected until about 2012. When that time comes, things might look a little different. Here's his short-term roadmap on current indicators, and the opportunities and challenges they present.
Consumers have pent up demand, but â€¦
One of the best things about a recession's dwindling is the amount of pent-up demand lying in its wake. Projected restaurant industry sales for 2010 are $580 billion – up 2.2 percent, which represents no real change, but at least it's not on par with the losses of the past two years.
Riehle said a good amount of higher income households have expressed not eating on-premise at restaurants as often as they'd like. In fact, a majority of 35–54 year-olds reportedly feel a need to reduce stress, and restaurant-going is part of their cure. Ninety-two percent of them enjoy going to restaurants, up 2 percentage points from last year.
However, there's a twist to this slight uptick and building demand. These days, 70 percent of restaurant traffic is now off-premise, putting more emphasis on takeout, delivery, grocery and other segments. The amount of people who say they enjoy going to the grocery store also made healthy gains from 2008 to 2009, so that DiGiorno craze wasn't all in our heads.
Neither was extra government meddling. The government was ranked as the No. 3 challenge facing operators as of May 2010, up four spots from where it had been in May '08 and '09.
Gaining an edge
The light at the end of the tunnel is that before the restaurant industry makes a full recovery, it will have more demand building for the time it totally rebounds.
Until then, Riehle revealed some helpful and telling percentages about what people are spending their money on, and how they can be reached.
Sustainability and social responsibility, and food and healthy living are two of the NRA's industry imperatives that seek to focus operators on consumer demand. The themes recurred in this presentation as tools to capture traffic: 40 percent of adults are likely to make restaurant choices based on its practices in the areas of energy and water conservation, according to presentation slides. And three out of four operators said emphasizing fresh produce in their marketing efforts drove more customers to their restaurants.
Technology poses opportunities as well: Of the "new generation" comprised of 18–34 year olds, 58 percent would reportedly use a self-service terminals if offered to them in the QSR space. The demand is still relatively high for 35–44 year olds, at 51 percent.
And of course, use of the social web is not merely recommended, but imperative. Riehle dubbed the word-of-mouth marketing that has moved online as the "tsunami of whispers." To capture this powerful form of brand building, almost half of family dining outlets are using Facebook, and some, even a restaurant blog to stay connected. They'd do well to include menus: In 2009, 54 percent of Americans viewed menus online.
Riehle's full slides from the presentation can be viewed in our White Papers section, along with other PES 2010 session slides.