NRA Looks for Restaurants to Net $476 Billion This Year

01/14/2005

Restaurant industry sales are expected to reach a record $476 billion in 900,000 restaurant locations in 2005, according to the National Restaurant Association's 2005 Restaurant Industry Forecast. The projected annual sales would mean a solid 4.9 percent increase over last year – and a total economic impact of over $1.2 trillion, highlighting the restaurant industry's critical role as a job creator in the nation's economy.

"American consumers will spend almost 47 percent of their food dollar in the restaurant community in 2005," said Steven C. Anderson, president and chief executive officer of the National Restaurant Association. "The restaurant industry will serve as a driving force in our nation's economy by providing jobs to 12.2 million employees and continue providing a social oasis and convenience to communities nationwide as it posts its 14th consecutive year of real growth next year."

The Forecast predicts that the U.S. restaurant industry – which created, on average, about 270,000 new jobs per year during the last 10 years – is on track to add 1.8 million new jobs during the next 10 years. On a typical day, the industry will post average sales of $1.3 billion.

"The restaurant industry in the United States reaped the benefits of the robust economic growth in 2004. Steady gains in indicators such as personal disposable income and jobs continue to bode well for restaurants in 2005, despite the anticipated challenges of higher energy and food costs," said Hudson Riehle, senior vice president of Research and Information Services.

Top Trends to Watch
Some of the key trends that the Association predicts for 2005 include:

Greater use of technology and worker training as a means to boost productivity and efficiency. More than two-thirds of restaurant operators – including three out of four quickservice operators – say they are more productive than they were two years ago.

Continued increased focus on healthy lifestyles and restaurants providing customers with balance, choice and customization. Surveys of both fullservice and quickservice operators indicate that entrée salads have increased in popularity more than many other menu items.

Increased upgrades and improvements in décor with the help of new tax-depreciation rules. More than 54 percent of quickservice operators surveyed said they would dedicate a higher portion of their budget to remodeling in 2005, highlighting the focus on using ambiance and interior design to attract customers.

The sophistication of Americans' palates and knowledge of food. National Restaurant Association research indicates that 25 percent of diners can be categorized as "adventurous," and are enthusiastic about trying new foods and ingredients. Most are between 30 and 60 years old, are educated and more likely to live in larger urban areas, and are the most active restaurant diners.

Fullservice/Limited-Service Segments
Among the major segments, sales at fullservice restaurants are projected to reach $164.8 billion in 2005, an increase of 5.0 percent over 2004, for a real growth rate of 2.2 percent. Fullservice operators are optimistic about the economy, as a strong 75 percent of fine-dining operators, 69 percent of casual-dining operators and 61 percent of family-dining operators indicate that they expect their sales in 2005 to be higher than in 2004.

Limited-service, or quickservice, restaurants are projected to register sales of $134.2 billion in 2005, a gain of 4.7 percent over 2004. Consumer demand for convenience and value will continue to drive growth for this segment, while operators face stiffer competition from grocery and convenience stores. Both tableservice and quickservice restaurants will benefit from continued rebounds in international and domestic travel and tourism, which are projected to rebound to pre-9/11 volume levels.

Perspective from Across the Country
Economic growth is expected in all nine U.S. regions, with all regions also projecting job growth in 2005. The five top regions in terms of sales growth remain in the South and the West. These regions continue to have the fastest growth in local economies, disposable income and population. Specifically, the Mountain region will again lead the nation with a projected sales growth of 6.5 percent.. The state posting the highest restaurant-sales volume in 2005 will be California, with projected restaurant sales of $51.5 billion.

Legislative outlook
"With restaurant-industry sales equal to four percent of the U.S. gross domestic product, we are the largest private-sector employer in the U.S. We are poised to remain strong and will continue to grow if key opinion leaders realize the challenges of small business owners running a restaurant and can support the Association's pro-employee/pro-employer public policy agenda," said Lee Culpepper, senior vice president of Government Affairs and Public Policy.

Culpepper outlined the importance of restaurants to the economic health of the nation, emphasizing several legislative priorities for 2005 including: restaurant building depreciation, litigation reform, immigration reform, health care affordability and nutrition issues. "These are key issues that dramatically impact small businesses – the driving force of our industry and our nation's economy," said Culpepper.

For more information about the National Restaurant Association's 2005 Restaurant Industry Forecast and its public policy agenda, visit www.restaurant.org. To order a copy of the Forecast, visit the web site or call 1-800-482-9122.