The restaurant industry is heading in the right direction. In its annual State of the Restaurant Industry Report, the National Restaurant Association outlined how the business is faring and what operators can expect over the next decade.
After analyzing surveys from restaurant owners, chefs, operators, and consumers, the Association found that the overall feel of the industry is positive, despite some recent headwinds. By the end of 2019, restaurant sales are expected to reach $863 billion and operators state their businesses are stronger than they were two years ago. Three in four operators gave ratings of “excellent” or “good” when asked to assess business conditions in the industry, according to the Association.
“The restaurant industry is on a continued growth trajectory, driven by an expanding U.S. economy and positive consumer sentiment,” Dawn Sweeney, president and chief executive officer, National Restaurant Association, said in a statement. “2019 marks the Association’s centennial anniversary, and the comprehensive analysis contained in this report provides a firm foundation for restaurant owners and operators to make decisions about the future of their businesses.”
New technology and changing consumer demands toward more off-premises options are driving job growth in the industry.
Using data from the U.S. Census Bureau’s American Community Survey, the Association concluded the restaurant industry has added jobs with annual incomes between $45,000 and $74,999 at a rate more than three times stronger than the overall U.S. economy.
The number of jobs in this income range had a 71 percent increase between 2010 and 2017 and it looks like those numbers will continue to grow in the future. In 2009, 12.3 million people were employed in the industry, per the Association. In 2019, about 15.3 million people currently work in the restaurant industry. Over the next decade, the Association predicts the industry will continue to grow and add 1.6 million new restaurant jobs.
It’s no secret consumers are demanding more options for the way they dine, and a major part of those demands include off-premises. Building out the segment can give restaurants a competitive edge.
“Although on-premises traffic still represents the majority of business in the table-service segment, the growing demand among consumers will make off-premises options important drivers across the industry in 2019. Successful operators will focus on the daypart that works best for their segment,” the report stated.
The Association found that 38 percent of adults in the U.S.—and 50 percent of millennials—are more likely to have restaurant food delivered to them than they were just two years ago. This means that owners and operators need to have a strategy to deal with these growing demands, as they are not going away anytime soon.
The casual- and fast-casual dining both benefitted from off-premises, seeing higher takeout and delivery sales than where they were two years ago. Fewer than one in 10 say their delivery sales have declined, according to the report.
The quick-service segment already has a hold on off-premises. “More than 70 percent of customer traffic in the quick service, coffee, and snack segments is off-premises accord-ing to data from The NPD Group CREST,” the report stated.
In the full-service arena, there is room for improvement. The report shows that there is still a lot of potential to transition guests from strictly dine-in experiences to off-premises opportunities.
Percent of customer traffic that is off-premises:
- Family Dining: 20 percent
- Casual Dining: 17 percent
- Fine Dining: 6 percent
- Quick Service: 72 percent
- Fast Casual: 50 percent
- Coffee & Snack: 73 Percent
By the end of 2019, four in 10 operators plan on investing more capital in expanding off-premises in their restaurants.
Percent of restaurant operators who plan to devote more resources to expanding the off-premises side of the business in 2019:
- Family Dining: 41 percent
- Casual Dining: 35 percent
- Fine Dining: 35 percent
- Quick Service: 36 percent
- Fast Casual: 39 percent
- Coffee & Snack: 43 percent
Investing in Technology
From point-of-sales systems and online ordering to employee training programs, technology is integrated into almost every aspect of a restaurant. And more than eight in 10 operators agree restaurants should continue to invest in new technology if they want to stay competitive.
These new investments will touch both front-of-house and back-of-house operations in order to streamline operations and processes while improving the consumer’s experience.
“Consumer demand for greater convenience and speed will continue to accelerate, and restaurants are responding by adopting and incorporating more sophisticated layers of technology into day-to-day operations,” Hudson Riehle, senior vice president, research and knowledge group, National Restaurant Association, said in a statement. “Operators across all restaurant segments will focus on building their business among millennials and younger consumers in the years ahead. To attract these digital natives, we can expect the majority of operators to get creative in offering personalized incentives, deals, loyalty programs and rewards through various digital channels.”
Customer servicing technologies like app ordering, mobile payment, and reservations are at the forefront of what restaurants should think about when they are investing. In the quick-service segment, 70 percent of operators plan on investing in this type of technology.
To help improve back-of-house operations in both full-service and quick-service restaurants, operators should look to invest in inventory and table management technology. Customer-facing tech, like tablets, iPads, and tableside ordering can help streamline the ordering/payment process when full-service restaurants are operating at peak hours.
Restaurants are also transitioning marketing to social media channels and using the digital space to reach more people.