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NRA Predicts Half a Trillion in Sales in 2006



The projected annual sales would mean a 5.1% increase over 2005 and a total economic impact of more than $1.3 trillion, the NRA said. It will be the first time the industry's sales will cross the half-trillion dollar mark, the NRA pointed out at a press conference here last week.

In terms of consumption, the annual sales figure translates into $1.4 billion per day or about $1,703 for every American man, woman and child for the entire year.

"The restaurant industry's share of the consumer food dollar is nearly 48%," said Steven C. Anderson, president and ceo. "In the year ahead, the restaurant industry is poised to set a record – over one half-trillion dollars in direct sales. It will also mark the industry's 15th year of consecutive real economic growth. As one of the nation's most aggressive job creators, the industry will employ 12.5 million people in 925,000 locations."

In response to questions posed by ID Access about how foodservice distributors can take advantage of this expected business expansion, NRA officials said operators will look to their distributor-partners for help with training, labor and market intelligence.

COMPREHENSIVE DISTRIBUTOR HELP BENEFITS EVERYONE B. Hudson Riehle, senior vice president of research and information services, said distributors could provide value-added assistance to their operator-customers in the form of points that can be turned in for training.

Training sessions could include building foodservice and language skills, self-esteem, food handling, safety and security, Riehle said. He added that distributors should assure their customers that their policy is to deliver food that is safe and secure.

Ultimately, by partnering with operators as their training source, distributors will build loyalty with their customers.

As for labor issues, Riehle suggested that distributors should not hesitate to regularly offer customers value-added products. Specifically, he said distributors would improve their value to their customers when they provide insights and tactics that will increase operator efficiency without sacrificing quality.

For example, Riehle noted, distributors could address operator's need to reduce not only waste but also preparation steps in the kitchen. Assisting operators with labor-reducing issues such as pre-measured and pre-cut products will be most appreciated, he said.

Distributors should not overlook providing their customers with market intelligence and trends. They should identify consumer hot buttons that are pertinent to the market segment that is being addressed and offer those restaurateurs relevant business-building solutions, Riehle continued.

He pointed out that operators are tuned in to bolstering productivity in the back and front of the operations through technology.

OTHER TRENDS The 2006 Restaurant Industry Forecast also provided the following trends, which foodservice distributors should prepare for:

  • Heightened focus on health and nutrition. Nearly three in four adults (72%) say they are trying to eat more healthfully in restaurants than they did two years ago. More than half of all operators, in both the quickservice and tableservice segments, reported greater consumer demand for items such as entrée salads and bottled water now compared with two years ago. In addition, a majority of operators reported that items such as wraps, pitas and tortillas are more popular than two years ago.

  • Restaurants as homes away from home. With growing demand from plugged-in Americans accustomed to operating in a 24/7 society for amenities such as television and wireless Internet access, look for restaurants to bring more of these features to the table. Twenty-seven percent of adults surveyed by the National Restaurant Association said they would likely use wireless Internet access if their favorite tableservice restaurant offered it. The percentage rose to 52% for adults aged 18 to 24.

  • Table-top televisions spark interest as well. One in four adults surveyed said they would watch a small television at their table if their favorite fullservice restaurant offered it.

  • Increased attention to energy efficiency. Higher energy prices will force belt-tightening among some restaurant operators as well as consumers. A majority of operators anticipate higher energy expenses that will eat more of their bottom line next year. In addition, a majority report they have updated refrigeration, air conditioning and heating systems in the last two years, which will help contain cost pressures.

  • Demand for convenience. Thirty-four percent of adults say purchasing takeout food is essential to the way they live. Whether they're looking for a quick drive-through or a hot meal delivered to the car to take home, consumers will escalate their desire for convenience. Consumers readily embrace convenient services operators offer: curbside service, drive-through, delivery and takeout. Watch for more fullservice restaurants in 2006 to go more aggressively after the takeout and delivery markets.

  • Among the major segments, sales at fullservice restaurants are projected to reach $173.4 billion in 2006, an increase of 5.2% over 2005. Fullservice operators are optimistic about the economy, as a solid 69% of fine-dining operators, 59% of casual-dining operators and 48% of family-dining operators indicate that they expect their sales in 2006 to be higher than in 2005.

  • Quickservice restaurants are projected to register sales of $142.4 billion in 2006, a gain of 5% over 2005. Consumer demand for convenience and value will continue to drive growth, while operators continue to face stiff competition from grocery and convenience stores.

  • Economic growth is expected in all nine U.S. regions, with all regions also projecting job growth in 2006. The five top regions in terms of sales growth remain in the West and the South. These regions continue to have the fastest growth in local economies, disposable income and population. The restaurant industry in Nevada will have the highest sales growth of any state, followed by Arizona, Florida, Colorado and Texas.

    "As the industry grows, so will the number of career and employment opportunities in the foodservice industry - by 2016 there will be an additional 1.9 million jobs available in U.S. restaurants," said Riehle. "Even with the challenges of rising energy costs and major hurricanes in 2005, the nation's restaurants are entering 2006 with a solid performance and optimism about the future."

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