Hearty 2011 seen for restaurateurs

June 1, 2011

This year the restaurant industry is poised to put up its best numbers in four years, buoyed by an increase of roughly 2 million jobs since the depths of the recession and improved household income.

Sales are seen rising 3.6 percent to $604 billion in 2011, according to forecasts from the National Restaurant Association, the industry’s trade group.

“When employment moves up it creates additional demand for convenience such as pizza,” said Hudson Riehle, the association’s senior vice president of research and information services. “Barring any unforeseen shocks, the future for the industry will continue to improve.”

The NRA said its predictive restaurant performance index – a monthly composite that tracks the health and outlook of the industry – stood at 100.9 for the month of April, roughly unchanged from March. It was the fifth consecutive month the number was above 100.

Restaurant operators continued to report net positive same-store sales in the month. Meanwhile, capital spending was also trending up, with 48 percent of operators indicating they had spent on equipment, expansion or remodeling in the last three months, the highest level in nearly three years.

Riehle pointed out that optimism among operators was highest among those establishments with the lowest check prices such as quick-service outlets, cautioning that “consumer confidence remains fragile” among a budget-strapped public.

In fact, one of the factors helping to drive improvement in restaurant figures may be rising inflation in grocery stores, which Riehle said is nearly double that of inflation on menu prices in restaurants.

“That wasn’t true a couple of years ago,” he said. “It’s true now and the consumer is aware of the value proposition – in essence of outsourcing a meal versus at-home preparation.”

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