Monday, February 2, 2015

Positive outlook for 2015 for U.S., Louisiana restaurant industry

The restaurant industry will reach some landmark numbers in 2015 – more than $709 billion in sales, one million locations and 14 million employees - according to the National Restaurant Association's (NRA) 2015 Restaurant Industry Forecast released today.

The good news: sales growth is expected to accelerate and represent the sixth consecutive year of real (inflation-adjusted) sales growth for the industry.

The bad news: growth rates are still modest in historical terms, as the economy continues its struggle to reach normalcy after the Great Recession, begging the question “Is this the new normal?”

It might just be. America’s restaurants are expected to post record sales and continue to be a leading job creator in 2015, but the operating environment will remain challenging due to the slower-than-normal economic recovery after a recession, as well as rising costs.

“Population growth and Americans’ continued desire for convenience and dining out continues to fuel industry growth,” said Hudson Riehle, senior vice president of research for the NRA. “Certain components of the business climate remain a challenge, however, as regional variability in employment levels and disposable income gains still put a damper on the overall environment.”

“Total restaurant industry sales are expected to advance at a 3.8 percent rate this year. That’s lower than the compound, pre-recession annual sales growth rate the industry experienced, but still a positive sign that the industry is in a better place now than six years ago,” Riehle said.

Sales in the tableservice segment are expected to reach $220 billion in 2015, a 2.9 percent gain over 2014 sales, while sales in the quickservice/fast casual segment are projected to grow by 4.3 percent and reach $201 billion.

Looking at the state level, the top five states for restaurant sales growth in 2015 are Arizona, Florida, North Dakota, Texas, and Colorado. Louisiana's projected sales revenue for 2015 is up to $7.3 billion, 3.6 percent over 2014 with $7 billion. 

Job gains expected in 2015 and over next decade
As sales growth improves in 2015, restaurant industry employment will perform even better. In fact, this will be the 16th straight year in which restaurant industry employment growth will outpace overall employment growth.

Restaurants will employ 14 million individuals this year as the nation’s second-largest private sector employer, representing one in 10 working Americans. In Louisiana this year, total restaurant industry employment is projected to exceed 203,000 and reach nearly 220,000 by 2025, an additional 16,600 new positions. 

Eating and drinking places – the largest subcategory of the foodservice industry – are projected to add jobs at a 3.2 percent rate in 2015, a full percentage point above the projected 2.2 percent gain in total U.S. employment.

In addition, the NRA projects that restaurant industry employment will reach 15.7 million by 2025, an increase of 1.7 million positions during the 10-year period. Over that decade, the top five states for restaurant employment growth are Arizona, Florida, Texas, Georgia, and Utah. 

Challenges include food costs, increased labor competition
While the restaurant industry is expected to grow this year, operators will continue to face a range of challenges, according to the NRA’s forecast. The top challenges cited by restaurateurs include food costs, building and maintaining sales volume, the economy, and recruiting and retaining employees.

Food costs continue to put pressure on many restaurateurs’ bottom lines.  Average wholesale food prices jumped more than 5 percent in 2014, which represented the fifth consecutive annual increase. During the last five years, average wholesale food prices rose roughly 25 percent.  Operators can expect to get pricing relief on several of the major commodities in 2015, including dairy and pork.

Restaurants are expected to spend $253.6 billion on food-and-drink purchases this year.

“The wholesale food cost levels of many key commodities are putting significant pressure on many restaurateurs’ bottom lines. While price inflation is expected to ease for some items, the increases that have occurred over the past several years have pushed prices to an overall elevated level. Slowing price growth is obviously good news, but it doesn’t mean that food costs will be back down to what they were before those increases started,” Riehle said.

Competition for employees is also on the rise. “With the economy slowly improving and the jobless rate trending downward, restaurant operators are finding that the competition for employees is intensifying. While not quite at pre-recession levels, the challenge of recruiting and retaining employees is making its way back onto the top-challenges list for restaurant operators, who have benefited from a deeper labor pool for the past several years,” Riehle added.

The National Restaurant Association’s comprehensive, annual outlook for and overview of the U.S. restaurant industry, covering national and state-by-state sales and employment forecasts, as well as workforce, segment, consumer, technology and menu trends. For details, visit

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