Despite looming government action that could provide labor challenges, a rejuvenated economy has all signs pointing up for most of the restaurant industry.
The overall industry, which accounted for $709 billion in total sales last year (up 1.5 percent over 2013), “is definitely in a better place now than several years ago,” said Hudson Riehle of the National Restaurant Association.
Riehle, senior v.p. of the NRA’s research and knowledge group, presented the association’s annual forecast Tuesday. While there were no earth-shattering revelations, it appears some industry trends that were simmering in past years are now starting to boil. Here are five themes that seemed to dominate the conversation.
1. Mobile payment. Riehle said he is expecting rapid developments in the mobile payment arena. In a recent survey conducted by the NRA, nearly one-third of smartphone users reported they were willing to settle their restaurant bill with their phone. Mobile payment would increase convenience, they reported, also citing faster service, increased order accuracy and the ability to make the restaurant experience more fun.
About 25 percent of those same survey respondents said technology options are important features that factor into their choice of restaurant.
Hear more about the forecast from Riehle >>
2. Challenging food costs. Operators continue to see rising food costs as their No. 1 challenge, according to the NRA. On the difficulty scale, food costs outranked building sales volume, the economy and recruiting and retaining employees.
Average wholesale food prices jumped more than 5 percent in 2014, which represented the fifth consecutive annual increase, according to the association. Costs have risen more than 25 percent in the past five years.
Riehle said drought conditions in California and other parts of the U.S. continue to drive up food costs.
3. Prepare for pent-up demand. While the economy slowly but surely regains its footing, consumers remain tightfisted. NRA’s consumer survey showed that two out of five consumers are not using restaurants as frequently as they would like, partially due to the fact that the number of higher-income households remains below 2007 levels when adjusted for inflation.
“Consumers continue to have substantial pent-up demand for restaurant services,” Riehle said. “Some of that will be released.”
4. Trends are solidifying. While local sourcing is almost cliché at this point, it’s still top of mind for a wide-ranging number of restaurants. Riehle said hyper-local ingredients, such as on-site gardens and beehives, are still one of the top trends in the space today.
According to the NRA, more than 8 in 10 tableservice operators say their guests are more interested in locally sourced items this year, compared with 7 in 10 who said the same last year.
“It really doesn’t get much more local than a restaurant kitchen,” Riehle said.
In addition to local sourcing, offering a healthier and more well-rounded kids’ menu remains a top priority for many restaurants.
5. Government intervention. The Department of Labor has begun updating overtime regulations and any major changes to who is eligible and what work is considered supervisory could force restaurant operators to change their labor strategies, the NRA said. The association expects to see the first iteration of those rules in the first quarter.
As labor costs remain a concern, the NRA expects additional challenges from health insurance premium increases and the implementation of minimum-wage hikes.
