Highlights of the 2014 Restaurant Industry Forecast

Every year, the National Restaurant Association (NRA) puts out a comprehensive annual forecast for restaurant industry opportunities and challenges that are likely to arise in the year to come. The NRA bases these predictions on the most current economic data available, as well as extensive surveys of both restaurant operators and restaurant patrons alike, providing valuable insights across all dining segments. Here are some highlights of the 2014 Restaurant Industry Report.

Restaurant Industry Sales will Increase but Consumer Confidence May Remain Fragile

Sales in the restaurant industry have been steadily increasing since the recession four years ago. While the gains still aren’t near what they were after any of the previous four recessions, 2014 is actually projected to be a record year in terms of restaurant industry sales. Early reports indicate industry sales will reach $683 billion in 2014; a 1.2% increase from last year (after adjusting for inflation.) It is interesting to note that in terms of size and scope, the restaurant industry is larger than 90% of the world’s economies. If the industry were a country, it would rank number 20 in terms of economic strength!

One of the biggest factors that influences sales in the restaurant industry is consumer confidence—in other words, their willingness and ability to spend their hard-earned cash. It would appear that many consumers are stuck in a ‘recessionary mindset’ and, unfortunately, this aspect really hasn’t improved much over the course of the past several years despite the addition of several million jobs and the economy gaining momentum. An NRA survey conducted at the end of 2013 reported nearly 60% of respondents as describing their personal finances as either fair or poor. What’s more, nearly half said that they aren’t dining out or ordering in as much as they would like to, creating what some are terming a “pent up demand.” The good news is that 35% of respondents in this same survey also indicated that they felt their personal finances would improve in 2014, and the odds that restaurants will be a beneficiary of that pent up desire to spend are good.

Restaurant Industry Job Growth and Expectations in Terms of Recruiting and Retaining Employees

Another key driver of restaurant sales has always been job growth, and 2014 stands to be a good year in that arena as well. The NRA expects total employment to rise 1.8% this year (the most impressive increase since 2006.) The increase in the availability and security of jobs helps boost consumer confidence as well, which should unlock some consumer spending.

Nearly half of restaurant operators across all segments (except fine dining) expect recruiting and retaining employees to be more difficult in 2014. Many plan to put more focus on labor issues this year and bolster their training budgets in an effort to develop existing employees and enhance overall productivity.

Food Prices & Other Top Challenges Restaurants Face in 2014

The average wholesale price of food rose 2% in 2013. Food prices this year are expected to be mixed, but to continue to advance overall. Beef, in particular, is projected to move up higher than any other commodity group in 2014. In terms of other top challenges operators expect to face this year, many are similar to concerns voiced in 2013. Topping the list is complying with health care reform, followed by building and maintaining sales volume, dealing with fierce competition for the market share and the state of the economy in general.

In sum, 2014 stands to be a good year in the restaurant industry, despite cautious consumer spending and a host of operational challenges that must be addressed. If you’d like some help getting geared up for the coming year, the Restaurant Management Group provides comprehensive operational and turnaround management assistance. They can help identify specific areas of opportunity as well as effective strategies to maximize your margins, reduce your costs and improve your overall profitability.

Business Building Ideas for Restaurants to Try in 2014

In order to stay ahead in the restaurant business, operators have to be constantly on the lookout for new ways to build and strengthen their businesses. Creativity, flexibility and the willingness to try new things goes a long way in this industry. Here are a few business building ideas to put to use for your restaurant business in 2014.

Put All Our New Technology to Work In Your Restaurant

The restaurant industry is particularly well suited to benefit from the various new forms of technology that have arisen over the last several years. From smartphones, to tablets, to video menu boards, we now have the ability to instantly communicate with and engage our customers at a level that was never before possible. Although the success of marketing campaigns done through social media, email and text varies dramatically from business to business, there’s no doubt about it’s potential power in driving traffic, increasing sales and building loyalty. Nearly 75% of fine and casual dining operators say they plan to devote more resources to these arenas in 2014, with 60% of family dining operators saying the same thing. In all but quick-service, operators feel the next likely marketing and reputation tool will be online review sites; quick-service is favoring Twitter, smartphone apps and texting.

Building your digitally connected community of customers has an added benefit aside from just being a loyalty and brand awareness building strategy. You can also offer your customers discounts during off-peak hours as a way of getting incremental visits from your customer base. Roughly 25% of family and casual dining, and 36% of fine dining operators, are already offering this form of variable menu pricing. The lion’s share in table service believes this will be increasingly popular in the future. As discussed in a previous post, the demand is certainly there.

Look for Opportunities to Expand Your Restaurant’s Off-Premise Presence

Another business building opportunity lies in off-premise marketing. Some 56% of consumers say they would likely order delivery direct to their home or office if the option was available. Another 46% said they would use a curbside takeout from a table service restaurant. Even food trucks could represent a lucrative opportunity—70% of customers said they’d definitely be interested in visiting one if their favorite restaurant offered it. Taking your restaurant off-premise also has the added benefit of increasing your overall brand awareness.

Tap into Restaurant Retail, Travel and Tourism

Travel and tourism is another opportunity area that restaurants can take advantage of. This year stands to be a good year for the industry. International travelers alone are expected to spend over $100 billion on tourism-related goods. Money spent on eating out at restaurants will, of course, be a large percentage of that expenditure.

Restaurant retail is another interesting option to build your business. A number of restaurants have been expanding in this arena over the last few years. About one quarter are currently offering packaged food items for retail sale or have opened a grocery store section.

The take home message is that there are a number of business building opportunities out there for restaurants to take advantage of this year. The key to success lies in the operators’ ability to be creative, flexible and open to opportunity.

Greater Focus on Family Opens Opportunity for Restaurants

The last several years have seen a heightened appreciation in the populace for meaningful moments and experiences. We are focusing more on what we have and less on what we don’t. We want to give our energy to what is most important in our lives. For many people, that means family. In fact, for 62% of today’s consumers, it is a sign of success or accomplishment to be able to spend a lot of time with their families. This sentiment holds true across age groups, and while it’s stronger in females, it’s a significant feeling among males too. What’s this information have to do with the restaurant business? It’s an opportunity. Families are looking for ways to spend time with each other, and restaurants are perfectly suited to provide the setting.

Restaurant Marketing Campaigns Should Target a Broad Definition of Family

Restaurants have always been favorite gathering places for families. That part hasn’t changed since the restaurant industry began. What has changed is the definition of what people now consider to be family. It used to be that a “traditional” family meant a husband, a wife and maybe some kids. According to the U.S. Census Bureau, however, that type of family now makes up less than half of all American households today. The larger group is now composed of multi-generational households, single parent families, same-sex families, families in which the adult children still live at home, and households that consider themselves family, but are not actually related. The take home message for the restaurant operator is that marketing campaigns need to take this diversity into account and target these various demographics accordingly if they wish to truly tap into the opportunities that await in the arena of family business.

What Families Really Want from Restaurants

It’s important to remember that most people’s primary objective when they go out to eat together is to have an enjoyable experience with each other. The choice about where they go to do that is secondary. Ensuring that your restaurant provides a warm and welcoming atmosphere, where people can focus on and hear each other, goes a long way toward facilitating the meaningful experience families are looking for. Of course, family deals and discounts, platters geared toward large groups and perks for making a group reservation ahead of time go a long way too.

On Premise Service Isn’t the Only Opportunity for Restaurants Catering to Families

Providing your family patrons with a service and experience that they love doesn’t have to end on the premises. There’s a huge opportunity in take-out and delivery from family customers as well. Families that order out want to feed a lot of people without a lot of hassle. Deals that provide a full course meal which feeds multiple people are appealing, and it makes sense to have them on hand as part of your overall marketing strategy geared toward family groups.

It’s not uncommon for families to pick one restaurant in particular to return to as a group again and again for years. The experiences that have together over your food become treasured memories for the customers, and they often become some of the most loyal and best referring patrons you have. It only makes sense then, to take extra effort to ensure that your marketing plans include targeting this important demographic.

Important Questions Restaurants Should Answer Before Putting a Mobile Ordering Platform in Place

Having a mobile ordering platform in place is becoming more and more essential to any restaurant’s future longevity. Restaurants around the country are rolling out mobile initiatives left and right, and there’s no question about the success of that endeavor. However, there are a lot of decisions that need to be made before your new mobile ordering platform is ready to go public. Here are a few key questions operators need to answer before joining the mobile ordering movement.

Should Your Restaurant Invest in its Own Mobile Ordering Hardware and/or Software?

The first question to consider is whether or not it makes sense for your restaurant to invest in its own, customized mobile ordering platform. There are a lot of advantages to doing so. You can create your own proprietary software and apps, perfectly customized to your particular restaurant and customer demographic. You can also add nifty bells and whistles. One of these “bells” is a GPS locator that sends an order to the kitchen when it recognizes the person who has placed the order is near.

The downside, of course, is that it takes more time and money to develop your own platform, and doing so may not make sense for every restaurant out there. There are a number of mobile ordering technologies that already exist. It might be smarter to simply use an API (application program interface) to put one of those to use for your business—especially if time or money is an issue.

How Is Your Restaurant Going to Handle the Costs, Data and Security Issues that Arise with Mobile Ordering Platforms?

The next questions to think about in terms of rolling out a mobile ordering platform have to do with properly and efficiently handling money, data and security. For instance, you must decide who is going to host, manage and process payments from your customers. Are you going to use an existing service such as Google Wallet or Square, or are you going to look for a different solution? If you do decide to use a third-party, what transaction fees are involved? Vendor fees vary widely, so be sure to shop around.
Mobile ordering has excellent potential for drawing on demographic data if properly designed and payment processing security is paramount for any business. So, in terms of data, operators need to consider the following questions: What data are you collecting? Who owns it? Where is it going to be stored? How safe and secure is that data? What are the security levels?

What Goals and Strategies Will Your Restaurant Put in Place for its Mobile Platform?

Last but not least, it’s important to set goals and strategies in order to maximize the effectiveness of your new mobile ordering system. What kind of budget are you going to allocate? How can you capture the biggest audience quickly? Do you have a marketing plan in place to get people to use your new system? Are you going to pair your mobile ordering platform with any sort of loyalty program? And, most importantly … have you set success metrics and set up the ability to track the results of your endeavors?

Putting a mobile ordering platform in place for your restaurant doesn’t have to be difficult, but it does require some strategic planning and a bit of shopping around. If your restaurant business if ready to make the move to mobile, making sure you’ve done your homework ahead of time will make a big difference in how effectively you can roll out your new mobile initiative.