Page 13 - OhioRA 2012SpringFlipBook

www.ohiorestaurant.org 11 Spring 2012 Issue

factors in the effects of infation on restaurant sales, they are projected to grow 0.8%, a fgure slightly lower than the 1.3% experienced in 2011.

Despite these improvements, restaurateurs are still expected to face challenges in 2012, according to the NRA. As the economy underwent restructuring over the past several years, consumers became savvier about how they want to invest their food dollars. Today’s consumer expects a greater level of service and more intimacy than consumers did 10 years ago. They also expect to have more options when they sit down to dinner in a full-service restaurant. The NRA’s data suggest that the days of offering one item made very well are over. Restaurants must now be expected to meet their guests’ constantly shifting palettes.

Another challenge that foodservice operators will continue to encounter is the ongoing increase in food prices. Food costs currently represent approximately 33 cents out of every dollar in food sales. These hikes do not present new challenges to restaurant operators, as they marched higher in 2011 than they had in the past 30 years.

According to the NRA, average wholesale food prices grew by 8.0% in 2011 alone. Not since 1981, when food prices rose 8.1%, were restaurant operators faced with such high costs for food. This year, the prices for beef and broiler chicken are predicted to rise even more. However, the U.S. Department of Agriculture projects declines in the primary market for butter, cheddar and milk. Prices for both pork and turkey are also expected to remain steady, if not decline slightly.

With many consumers remaining on the sidelines and other options for economic growth limited, the NRA predicts that the economic recovery will be one that experiences moderate growth. Threats to improvement still exist, but the association predicts steady improvement throughout the year as job growth continues to improve. Total employment is projected to increase at a 1.3% rate in 2012, the strongest gain since 2006. It’s important to note, however, that the national unemployment rate will likely remain elevated as more people reenter the labor market.

Consumers’ Attitudes

In addition to consumers being more interested in the local food movement, more consumers than ever before are looking for variety when they dine out. Gone are the days when a steakhouse only served fne cuts of red meat. Today’s savvy restaurant operator must be willing to incorporate a wide variety of offerings into their fare or face the wrath of consumers who vote with their checkbooks and their feet.

Additionally, consumer sentiment about the future of the U.S. economy remains troubled. The NRA’s industry forecast found that 30% of adults believe the U.S. economy will improve in 2012 while 24% expect it get worse and 44% expect it to stay the same as it was in 2011.

When examining their own fnances, however, consumers appear more hopeful with 33% indicating that they expect their household fnancial situation will improve this year. Only 9% expect their fnancial situation to worsen this year.

In addition to this, younger consumers, an important sector of guests in both the casual dining and quick-service segments, are extremely optimistic about their personal fnances improving this year. Among adults aged 18 to 34, 48% indicated that their household fnancial situation will improve in 2012 while only 2% believe it will worsen.

This optimism stands in stark contrast to consumers aged 65 and older, who often fuel sales in the fne dining segment of the restaurant industry. According to the NRA’s data, only 13% expect their personal fnances to improve while a higher percentage, 16%, predict their fnances will worsen.

When consumers were asked what caused them the greatest worry about their fnancial situations in 2012, most responded that their pessimism was fueled by the lack of signifcant job growth. While the private sector added 1.9 million jobs during 2011, this fgure only represents a one-third recovery of the more than 8.8 million jobs lost during the height of the recent economic downturn.

Additionally, consumers noted that while the private sector experienced growth, public sector employment fell dramatically on state and local levels. Economics are just like politics – they are local – and until more signifcant recoveries are made in local communities, consumers’ attitudes about spending and fnancial stability are expected to remain in fux.

What’s in Store for the Workforce in 2012

For the 13 th consecutive year, job growth in the restaurant industry is expected to outpace the nation’s overall economy. Based on this fact, it’s impossible to ignore the powerful role that foodservice plays in driving the economic engine of the United States and within the state of Ohio, as well.

As the majority of industries suffered signifcant losses during the past 10 years, the restaurant industry provided much-needed job growth. This reality isn’t expected to change as the industry pushes forward, either. According to the NRA’s forecast for 2012, America’s eating-and-drinking places will add jobs at a 2.3% rate, an entire percentage point higher than the nation’s 1.3% gain in 2011.

Restaurant Job Growth is Projected to Outpace Labor Force in Next 10 Years

Projected growth in labor indicators for 2012 to 2022

Source: National Restaurant Association

Total Restaurant-and-Foodservice Employment

Total U.S. Labor Force

16-to-24 Year-old Labor Force

8%

6%

11%