Martin O’Dowd runs Hurricane Grill & Wings, an emerging casual-dining brand of 47 stores across eight states. Since early 2009, O’Dowd’s witnessed consumers increasingly let loose. In that time, Hurricane has embraced a 40 percent jump in revenue, much of it driven by a surge in 2011 business.
“Americans aren’t good about being depressed. They want to go out and pamper themselves, and that includes dining out,” says O’Dowd, an industry veteran who’s held executive positions for a half-dozen restaurant brands.
For 2012, however, O’Dowd foresees consumers putting on the brakes and a slowdown from 2011’s rising tide.
“Unfortunately, I think people will get conservative again. There’s so much economic turmoil around and so much we don’t understand,” he says.
O’Dowd is no pessimist; his grounded outlook for the coming year is shared by many restaurant industry operators and analysts.
A still-sluggish economy breeds a stagnant consumer
In 2009 and 2010, restaurants experienced eight consecutive quarters of declining traffic, a trend unseen in a generation. While the numbers turned positive in early 2011, few industry veterans foresee a 2012 rush.
Chicago-based research firm Technomic, in its latest industry forecast for full-service restaurants, predicts 2.5 percent nominal growth and zero real growth in 2012. The NPD Group shares a similarly brooding forecast: Restaurant industry traffic will be positive, but still weak. NPD puts 2012 check growth at 1.4 percent and traffic growth at 0.7 percent.
Many point to the nation’s lingering 9 percent unemployment rate and the election as two primary reasons restaurant numbers will remain flat. Few see unemployment rates declining or U.S. legislators enacting a major fiscal stimulus to jumpstart growth.
With continued residential real estate woes, high oil prices, and a volatile stock market added in, consumer confidence is expected to remain stagnant throughout 2012. Furthermore, many analysts expect GDP growth in 2012 to hover near 2–3 percent. The modest gains, though perhaps enough to ward off another recessionary dip, aren’t expected to turn the nation’s economic tide or inspire consumer confidence in 2012.
