Industry News | May 18, 2009

NRA Predicts October Rebound for Industry

Read More About

With the recession dominating headlines for the last six months, the question on everyone’s mind at the biggest hospitality gathering in the world, the National Restaurant Association Restaurant, Hotel-Motel Show, is when will it be over.

According to Hudson Riehle, the National Restaurant Association’s senior vice president of research and information, there are signs the industry has reached “the bottom of the cycle.”

For one, sales in the eating and drinking segment were up 1.4 percent in April over last year, its third consecutive monthly increase. In comparison, retail sales were down 10.1 percent last month.

Industry confidence seems to be returning as well. For the first time in more than a year, operators reported a positive outlook for the economy in the next six months.

“It doesn’t necessarily mean that trends are growing, but just that there’s a deceleration in the deterioration, which is usually associated with having reached the bottom,” Riehle says.

According to NRA figures, first quarter sales were down more than 6 percent and there are expectations that second quarter will come in with a loss of 1-2 percent. If the trend continues, the third quarter could see the industry breaking even and even growing by the fiscal year’s end.

“Our expectation, short of any major externalities, is, in terms of GDP, that it will turn positive once we get to October, basically the fourth quarter,” Riehle says.

What most affects consumer’s confidence in spending and as a result the industry’s ability to recover is the job market. While mass layoffs have slowed, employment is still down more than 3 percent this year.

Good news is the organization is predicting flat employment growth for next year, a signal that the economy has already reached its lowest point.

Sales in the restaurant industry overall are expected to reach $566 billion in 2009 with quick-service capturing $164 billion of that market.

--Blair Chancey

Add new comment