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.

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.

3 Restaurant Marketing Trends to Watch in 2014

Marketing in today’s world can feel like a fragmented endeavor, what with all of the various options that are available. Traditional media marketing through television, radio and print remain important cornerstones of successful restaurant campaigns, but modern marketing options through social networks and digital and mobile platforms are equally critical. Rather than despairing over the fragmented nature of all of these options however, restaurant operators should embrace them as an opportunity to shine in multiple avenues and look for ways to implement integrated marketing and branding plans that build consumer awareness in new ways. Here are three restaurant marketing trends you will see a lot more in 2014.

Utilizing Restaurant Industry Applications and Refining Social Media Interactions

Smart phones now account for some 64% of all mobile phones in the U.S. and that figure grows steadily year by year. Consumers increasingly expect to be able to use their phones to interact with your business. Restaurants around the country are rolling out mobile-coupon and mobile-loyalty platforms with great success. Along with payment, loyalty, ordering and reservation functions, several restaurants are also developing games that align with brand messages or give food rewards to players to entertain and engage users. There is as much fragmentation within the type of device on which an application runs as there is in marketing avenue options. So, until there is an ‘ultimate device’ that everyone uses, it’s best for restaurant operators to keep versatility as top priority when developing and improving their applications. 

On the social media front, restaurant operators need to be more mindful than ever about how they look in the eyes of the public, and be prepared to deal with crisis should it arise. Previous years have shown us how quickly a brand’s reputation can get damaged through social media by careless responses from moderators regarding customer concerns. With a number of hot topics, such as minimum wage, poised to make headlines in 2014, restaurant operators should have a response plan of action or think about adjusting their cultural identities to best turn politics to their advantage. 

Old-Fashioned Restaurant Marketing Still Works, Especially on T.V.

With the rise of digital and social marketing, it can be easy think that you can let traditional media marketing fall by the wayside. This couldn’t be further from the truth. Despite the increasing popularity of digital and social marketing, television, in particular, remains a highly influential form of advertising. In fact, 68% of consumers surveyed in September of last year said they take action at least some of the time after viewing a TV commercial. The only thing that inspires a higher action rate than that is recommendations from friends and opinions posted online.  This underscores the folly of neglecting traditional forms of media marketing. 

Restaurants Co-Brand for Greater Reach

There is one final trend to watch in 2014 that we’ll discuss here. That trend is the potential that can be unlocked by partnering with the right companies and getting your research and development teams to collaborate. Such unions can be wildly successful for both businesses. Think of Taco Bell’s Dorito Locos Tacos, Cinnabon lending its signature flavor to Burger King’s breakfast products, as well as bottles of vodka, and McDonald’s and Kraft’s McCafe-branded coffee scheduled to hit grocery stores this year. Looking for ways to partner up and collaborate with other businesses in your area is a smart way to create a win-win situation for everyone, and you can count on seeing more such unions in the upcoming year.

Media marketing strategies will continue to evolve with technology and consumer demand. To be successful in the coming years, restaurant operators should focus on building integrated marketing plans and recognize that multiple media avenues are opportunities for creatively reaching and engaging customers.

3 Restaurant Industry Trends to Watch in 2014

Another year has come and gone and the restaurant industry has seen its fourth year of positive, albeit modest, growth. The sentiment is that things are generally headed in the right direction, but that it’s also going to take both shrewdness and creativity for restaurateurs to succeed in 2014 and beyond. Here are three of the bigger trends on which to keep your eye.

Restaurants Getting Tech Savvy With Yield Management 

With all the shifts in demand, competition and the price of inventory over the last couple of years, there’s been a lot of talk about whether or not the restaurant industry should shift to a ‘yield management’ strategy. The airline and hotel industries have been utilizing it for years. There are a lot of advantages to being able to have up-to-the-minute price adjustments, and today’s technology makes it easier to do than ever before.

Restaurants Build Consumer Confidence and Broaden the Scope of Competition

Despite overall positive growth in the restaurant industry, consumer confidence is still down. Only about 13% of consumer spending is on food, and this figure has been steadily edging downward over the last few years as consumers have changed their spending habits. Restaurant operators are going to need to look for more creative ways to nudge patrons through the door––a task made no easier by an increasingly robust competitive environment.  

With consumers delegating more of their funds to other spending categories, restaurant operators are also going to have to broaden their viewpoint of competition to include a more holistic perspective. To be truly competitive, operators should take a note from the grocery store playbook and be proactive about offering discounts relevant to other consumer spending needs––such as discounts on gas, apparel or entertainment. Offering these kinds of discounts can often open a gateway of mutually beneficial networking with other businesses in your area as well; you scratch their backs, they scratch yours, and the competition in spending is turned into a cooperative effort that helps everybody.  

2014 Sees a Growing Appetite for Better-For-You, Luxury and Specialty Dining

In spite of a somewhat sluggish economy, there are a few restaurant sectors that are rolling into the mainstream with full steam. Better-for-you dining is a big one. From salad restaurants, to the addition of pricey vegetables, to upscale tasting menus, better-for-you dining is a trend that is only going to get bigger in 2014 and beyond. People increasingly want to eat local, healthy fare and what’s more, they want evidence that what they are eating is good for them. 

Restaurants that specialize in luxury or specialty items and/or experiences are the other niche that is growing rapidly. While the public at large still doesn’t have a lot of money to throw around, there is a certain segment that is increasingly spending wads of cash on upscale food halls, spare-no-expense tabletops, costly tasting menus and chicken priced like steak. There is even an increasing demand for what is termed ‘eatertainment’, where luxury is expanded into the neurosensory area and diners come more for the sensory experience than the food itself.

Whichever route you plan to take your restaurant this year, take to heart these two main messages: things are looking up, and the restaurants that come out on top in the coming years will be those who take a creative and savvy approach to cost management and growth.

Experts Feel the Outlook for the Restaurant Industry in 2013 is Positive

Despite the fact that the restaurant industry has had to deal with numerous negative pressures and uncertainties over the course of the last several years, many experts feel that 2013 will actually usher in a record high in restaurant industry sales. The projection is that sales will reach around $660 billion this year; representing a 3.8% increase from 2012 (adjusted 0.8% for inflation.) Although growth isn’t expected to be explosive, this remains positive news for those involved in the restaurant business.

The Fact that People want to Eat Out Is a Major Contribution to Growth in the Sector

One of the biggest factors that protects the restaurant industry no matter how bad the economy gets is the fact that it offers a service that customers actively seek out. We see again and again that people continue to spend their hard earned dollars eating out, no matter what the state of the economy is.

Now, obviously people who are feeling strapped for cash may perhaps make different choices in regards to how they eat out – doing so less frequently or down-trading to establishments with cheaper menus – and restaurant owners have had to shift their practices accordingly. But this doesn’t change the fact that people want to have nice meals outside their homes. In fact, one of the biggest factors contributing to the expected growth of this upcoming year is actually the pent up desire many people have to eat out on a regular basis again.

Why Restaurants are Flourishing Again, Despite Rising Costs

This is the sixth consecutive year of economic weakness. By this point in the game, most restaurants have either rose to the challenge of finding innovative ways to cut costs and control productivity or they have had to close their doors. Those restaurateurs who have been able to stay the course and solve their operating dilemmas are now able to shift their focus from simply keeping their heads afloat to growing their sales base instead.

Grow Your Sales Base with Strategic, Focused Marketing Plans

Given the fact that success this year is so dependent on attracting and retaining new customers, it only makes sense to have a marketing plan that is extremely targeted and efficient in place. Follow your metrics closely, make a point of understanding what is working and what isn’t, and shift your technique accordingly. Social media is going to play a big part in the success of your marketing campaigns as well, so if you haven’t already developed a strong social network, spending a little extra effort in this arena can have big payoffs – especially if you get creative with your campaigns and utilize marketing gimmicks that engage users and encourage them to help you spread the word.

Pre-tax profit margins will continue to be slim, so it’s also important to keep an eye on every aspect of your operations, monitoring for areas which could use some adjustment.

All in all, things are looking up for the restaurant industry this year. The people are there, and they want to eat out. Your job is to keep up with reforms that increase productivity and efficiency while finding creative new ways to attract them to your establishment.

Restaurant and Service Industry Trends for 2012

No one can predict the future–but when you spend every day measuring the pulse of our industry, certain trends come to make themselves known.

 

Here are three trends that have been on the upswing in the past couple of years, that will really make themselves known in 2012.

 

Service Will Become Even More Important in 2012

 

In fact, it already has been. Consumers are more thrifty with their money and they’re not so willing to “trade up” like they always used to want to do. In fact, many are willing and even desirous to “trade down”.

 

Since the recession began, consumers have been shifting more towards relationship centered interactions than product centered interactions. This ties into the economy in ways too complex to go into here.

 

What it means for restaurant operators is that unique experiences and friendly service will be rewarded more than ever before.

 

Use of Automation and Ordering Technology Will Increase

 

You may have read past articles on this blog about iPad ordering, mobile app ordering, and new tabletop restaurant devices created specifically for guests to place their orders. You also no doubt felt the strain last year when important commodities like flour, beef, pork, and butter shot up in price.

 

For most of us, food costs and labor are our two biggest operating expenses. Automated ordering doesn’t just cut down on the number of servers you need on the floor. It streamlines the action in the back of the house as well.

 

Automated ordering may help a few restaurants run with a small kitchen crew during peak hours. For most others, however, it may just mean more streamlined operations, quicker server time, and less clean-up time in the back of the house. Even an hour or two every day in saved kitchen labor costs can add up significantly over a month.

 

Beer Will Stay a Big Seller

 

As I mentioned in a previous article, beer sales have been on the rise in the past couple of years, with restaurants accounting for nearly a quarter of sales. And craft beer sales were up 15% in the first part of 2011!

 

If you don’t offer beer at your establishment, you might want to start. The expense of a license is usually minimal.

 

And if you’re already offering a basic line-up of beers, ask your distributor how you can diversify. Your bottom line will thank you!

5 Restaurant Trends for 2012

Consumer research firm Mintel recently noted five trends it believes will influence U.S. restaurant menus in 2012. Some of them are relatively new, while some are constants. I’ve briefly outlined these five factors below. Read them and let me know what you think.

 

Consumer Control

 

Let’s face it: everybody likes to take control now and then, even if it’s just over what they eat. In fact, anyone who’s worked the floor for even a single shift knows that guests like to have as much control and say-so as possible while they are in your establishment!

 

This is something that most smart operators try to cater to more and more every year. It can mean offering more options for each dish. In the past couple of years, it may also mean offering mobile ordering apps or even iPads at your dining tables.

Whatever the case, the trend towards patrons’ control over their dining experience is likely to only increase – which is probably good for everybody.

 

“Slow Food”

 

“Home style” and similarly-themed menu items have been popping up on menus across the country in the past few years – including fast food menus! Mintel puts this down to customers who have finally decided they need more than just efficiency from their fast food restaurants. The company expects this trend to further affect the food service landscape in 2012.

 

“Double-Sided” Menus

 

Restaurants of all types are paying more attention to customers’ wishes for healthier menus. For the foreseeable future, most chains, franchises, and even mom & pop operations will likely offer lower-calorie or other “healthy” food items, while still offering more “traditional” dining-out choices.

 

Global Consciousness

 

Many large chains and franchises test out ideas in other national markets before they bring them back to the U.S. One example would be the McBite, which McDonald’s tested in Australia before releasing the idea in America.

 

This same kind of global reach also means that ideas from across the globe are working their way into U.S. franchise menus. It is likely that this trend will only increase.

 

Appreciation of American Regional Cooking

 

Finally, Americans are becoming more conscious of cuisine from all over the U.S. One example would be the Philly cheesesteak sandwich, which has gained popularity all over the United States in the past decade. You can find Cajun-themed restaurants hundreds of miles from New Orleans, and Southwestern-themed chains all over the country.

10 Up-and-Coming Restaurant Trends in 2012

With 2012 coming right around the corner, let’s take a moment to reflect on some of the possible restaurant trends in 2012. Whether you are a small food cart or a large chain restaurant, keeping up with restaurant trends is a sensible business strategy. Here are 10 of the food trends that RMG considers avant-garde and economical.

1. 1.      Menu-labeling laws

Expect all current administration for food labeling and food safety to go into full effect. By 2012, all chain restaurants with over 20 locations will be required to provide nutritional information on their menu.

1. 2.      Anything artisan

Expect to see this word everywhere in 2012. As chain restaurants start to feature artisan foods, expect to see the term used and abused.

1. 3.      Authentic foods hit mainstream bill of fare

More Asian and Indian foods will be featured on fast casual menus. Fusion foods will become commonplace. Korean and Peruvian foods will receive widespread attention as more restaurants pop up in major metropolitan areas.

1. 4.      Specialty alcohol drinks

Even with alcohol sales going down, expect specialty cocktails to be highlighted more.

1. 5.      Gradual and slight increases in menu prices on a regular basis

The price of commodities will increase. Food suppliers will continue to increase their prices as gas prices rise. Prices will get passed on to the end consumer in a gradual uprise.

1. 6.      A decline in comfort food popularity

In 2007, the economic recession prompted massive popularity in comfort foods. Expect to see the demand for a new twist on these old favorites.

1. 7.      More beer gardens

Many restaurants will start to use their backyard space and offer more low-cost specialty beers and microbrews.

1. 8.      Vertical plates go horizontal again

The tower of stacked food that has been popular since the early ‘90s will go horizontal. Instead of layers of food overlapping each other, expect to see long caterpillars of foods that preserve the distinct flavor of every element on your plate.

1. 9.      Sustainable foods gain traction, but may lose some credibility

Sustainable foods are starting to become a deciding factor for many consumers, but through various marketing trends terms like “sustainable”, “organic”, and “green” will become a little fuzzy.

1. 10.   Social networking becomes a necessity

This is the new form of word of mouth. It’s not so much an option as a necessity at this point.