Industry News | December 11, 2012 |
Quick-Service Industry to Grow by 4.9 Percent in 2013
In a year when restaurant sales are projected to reach a record-high $660 billion, the quick-service industry will play its part by bringing in an estimated $188.1 billion in 2013, according to the National Restaurant Association’s 2013 Restaurant Industry Forecast.
Though growth is projected to be modest—just 4.9 percent in the quick-service industry—and many challenges await operators, fast-casual operators are more optimistic than their quick-service counterparts when it comes to economic outlook.
A quarter of quick-serve operators and one-third of fast-casual operators believe the economy will improve in 2013, while 28 percent of quick serves and 18 percent of fast casuals expect it to worsen.
However, operators in the limited-service sector generally expect business to improve in 2013. Thirty-six percent of quick serves and 54 percent of fast casuals estimate that their sales will be higher in 2013 than in 2012.
Unfortunately, consumers remain bleak when it comes to their outlook on the economy, and for good reason: Personal income is only expected to grow by a modest 1.5 percent in 2013.
“From the restaurant industry perspective, this is important because there always has been and will continue to be a very strong correlation between growth in incomes and growth in restaurant usage,” said Hudson Riehle, senior vice president of research and knowledge for the NRA, in a webcast on Tuesday.
The restaurant industry as a whole—which is larger than 90 percent of the world economies—is projected to bring in an average of $1.8 billion each day next year. Restaurant operators will purchase $237 billion in food and beverages, with quick serves contributing $59 billion to this total.
“The industry truly has become an economic juggernaut in our country’s economic and business infrastructure,” Riehle said.
To support this kind of sales volume, restaurants will employ 13.1 million individuals in 2013, which equates to 10 percent of the national workforce. In 2012, industry employment expanded at its strongest rate in eight years.
“One out of every 10 individuals is directly employed in the restaurant industry,” Riehle said, adding that one-half of the adult population has worked in the industry at some point in their lives. “And roughly about one out of three got their first job in the restaurant industry.”
Though employment growth is great news for the industry, 54 percent of quick-serve operators and 45 percent of fast-casual operators say they expect recruiting and retaining employees to be more challenging in the year ahead.
To help with this problem, 64 percent of quick serves and 53 percent of fast-casual operators say they plan to devote more resources to training in 2013.
Frequency of visits is also helping bolster the higher sales numbers expected in 2013. The forecast reports that the average adult visits a restaurant 5.2 times each week, with 18–34-year-olds visiting most often (though they account for a lower per-person spend).
The forecast shows that repeat customers represent 71 percent of sales at quick serves and 68 percent at fast casuals. In addition, almost three in five quick-service operators and half of fast-casual operators reported repeat visitors accounted for a larger portion of sales in 2012 than in 2011.
However, 30 percent of quick serves and 28 percent of fast casuals say it was more challenging to bring back repeat customers in 2012.
Another major challenge—one that 26 percent of quick-serve and 28 percent of fast-casual operators point to as the No. 1 obstacle they expect to face in 2013—is wholesale food costs. The NRA expects wholesale price inflation to sit at 4.2 percent in 2013.
“Since food and beverage purchases by the operators typically account for about a third of the sales dollar, what goes on in terms of wholesale-food price inflation means that operators really have to diligently look at that internal cost structure and manage around these high and consecutive increases in wholesale food,” Riehle said.
Another challenge—or opportunity, depending on how operators view it—in the years ahead is meeting the increasing demand for and expectation of technology in the restaurant experience.
Fifty-nine percent of Americans now view menus online, one-third of consumers use online reservations, and 70 percent of 18–34-year-olds say they would use mobile ordering if restaurants offered it.
“This is no longer a wish for how a restaurant experience … unfolds,” Riehle said. “It is a basic expectation.”
By Mary Avant
Food & Beverage
Thank you for signing up to receive QSR's flagship e-newsletter, A.M. Jolt. To help us better serve the information needs of our audience, please complete the information below.
In addition to A.M. Jolt, we also offer the following e-newsletters and communications. Please mark those you would like to receive.
- Business Services
- Cleaning & Sanitation
- Computer Systems/Software
- Dispensing Equipment
- Disposables, Packaging, Plastics
- Equipment Installation/Repair
- Financial Products/Services
- Food Products
- Franchise Opportunities
- Kitchen Equipment
- Safety Services/Products
- Security Systems