Sales at the nation’s eating places will rise by 3.8 percent during 2015 to a record $709.2 billion, a slight acceleration from the growth rate of last year, the National Restaurant Association said today in a detailed annual forecast of industry sales and trends.
Adjusted for inflation, the growth computes to a 1.5 percent increase.
The association noted several macro-economic trends that will likely benefit the restaurant business this year. For instance, higher employment is raising consumers’ confidence about their own financial situations, noted Hudson Riehle, the NRA’s SVP of research and knowledge. When households aren’t worried about being fired or having a steady income interrupted, they tend to spend more freely in restaurants, Riehle said.
But, in regard to that dynamic and others, the NRA stressed that the business will have its considerable challenges in 2015. Guests may be more willing to dine out, but “they are still deliberative, so they will continue to manage their check, and will need nudging through social-media mechanisms,” Riehle said. His comments suggested that frequency of visits may be easier to raise than check averages.
Similarly, the decline in gasoline prices “has to be some benefit” to restaurants, Riehle said. But it’s not a direct drive. With consumers suffering less at the pump, car sales have spiked, so “you have to look at auto financing,” he explained. Monthly auto-loan payments could erode what consumers might have otherwise diverted into dining out.
More worrisome to restaurateurs, Riehle noted, are food costs. An NRA survey found that issue to be the top concern of operators. The charges for ingredients have risen 25 percent in the last five years, and 5 percent in 2014 alone, the group said.
Riehle projected that menu prices would rise by 2.4 percent, or the average rate for the nation’s nearly 1 million restaurants in 2014, signaling continuing pressure on margins.
Although the association did not forecast labor costs, Riehle noted that payroll issues had climbed to the number-four slot on the operators’ worry list, a reflection of increased employment and upward pressure on wage rates.
The NRA forecast that the industrywide increase in sales will not be distributed equally across all segments. The association’s “snack and non-alcoholic beverages” category, a grouping that includes such performers as Starbucks and Dunkin’ Donuts, is predicted to raise its sales by 5.2 percent. The relatively small segment would split $1.6 billion in additional sales.
Quick-service restaurants were forecast to raise their collective intake by 4.3 percent, for a segment gain of $9 billion, and full-service places are heading for a 2.9 percent gain, or a market bump of $7 billion.
A year ago, the NRA forecast a 3.6 percent sales gain for 2014, and the prior year it predicted growth of 3.2 percent. It has not yet issued a final tally of the increase for last year.