Restaurant Industry Outlook Brightens in 2010 as Sales, Economy Are Expected to Improve

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 released today. Industry sales are projected to reach $580 billion this year, a 2.5 percent increase in current dollars over 2009 sales. 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 quickservice restaurant segment is expected to fare slightly better than the fullservice segment as diners focus on value and specials. Quickservice restaurants are projected to post sales of $164.8 billion in 2010, a gain of 3.0 percent over 2009. Sales at fullservice restaurants are projected to reach $184.2 billion in 2010, an increase of 1.2 percent in current dollars over 2009.

The eating-and-drinking place segment expected to show the strongest growth in 2010 is social caterers, whose sales are expected to increase by 4.5 percent. Among all commercial industry segments, the strongest growth is expected in retail-host restaurants (including those located in gas/service stations and drug and grocery stores) with a 4.9 percent sales increase.

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.

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). 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 National Restaurant Association's 2010 Restaurant Industry Forecast, consumers will continue to seek value, convenience and expanded menu options in 2010 - and restaurants will deliver. Consumers forced to cut back on spending say they aren't dining out as often as they would like, and this pent-up demand will turn into restaurant traffic as economic recovery continues.

The Association predicts that growth opportunities can be found in delivery and other off-premise options, cooking classes and other interactive guest activities, and using new media to reach new and returning guests.

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 YouTube - can help operators mitigate the economic environment. "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.

Restaurant operators continue to step up their efforts to go green, investing in energy-efficient equipment and fixtures, using recyclable materials and reducing their water use. Green initiatives not only help manage costs, they can also drive traffic. Four of 10 fullservice and 31 percent of quickservice operators plan to devote more resources to green initiatives in 2010 than they did in 2009, and 4 in 10 consumers say they choose restaurants based on their conservation practices.

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.

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which is comprised of 945,000 restaurant and foodservice outlets and a work force of 12.7 million employees. Together with the National Restaurant Association Educational Foundation, the Association works to lead America's restaurant industry into a new era of prosperity, prominence, and participation, enhancing the quality of life for all we serve.