Restaurants will vie this year for a 3.6 percent increase in total industry sales, which should hit an all-time high of $683.4 billion, according to the just-released business forecast of the National Restaurant Association.
The association also foresees continued moderation in food costs, and an increased opportunity to draw more traffic by adjusting menu prices several times during the course of the day.
The NRA’s sales figures indicate a nominal increase in total industry intake of roughly $23.75 billion. Adjusted for inflation, the projected growth would amount to a 1.2 percent gain.
Hudson Riehle, senior vice president of the NRA’s research & knowledge group, characterized 2014 as “another year of moderate growth,” and added that it will likely pose challenges both sales and profits-wise.
Not all segments will share equally in the sales increase, according to the NRA. It foresees a 4.4 percent nominal and 2 percent inflation-adjusted or “real” rise for limited-service restaurants, but softer gains for full-service places. Tableservice restaurants are forecast to increase their collective sales by 2.6 percent, which translates into an rise of less than 1 percent when price hikes are factored out.
Those numbers peg the expected average increase in menu prices at 2.4 percent for 2014. “The food cost situation is definitely better than it was a couple of years ago,” Riehle commented. The margin pressures “will remain manageable,” with cost increases “pretty similar to what occurred in 2013.”
Riehle cited two sales dynamics that could affect 2014 sales with considerable force.
One is the ability afforded by new technology to change menu prices several times a day. Riehle termed it a growth opportunity that will increasingly be exploited in the New Year. “Whether through video menu boards or through using tablets the capabilities now exist,” he said.
A negative factor is the decline in households with total annual income exceeding $70,000, which collectively generate $57 of every $100 that are spent in restaurants, according to the NRA’s statistics. “The number of those households is not what it used to be,” said Riehle, noting that the absolute count has been declining.
He also noted that “consumer confidence remains fragile.”
Still, he stressed, two of every five consumers say they are not eating in restaurants or ordering takeout as frequently as they would like, which illustrates the pent-up demand that smart operators can tap.
“2014 is definitely a positive year for the industry, despite some significant challenges,” Riehle concluded.