Transcript - Restaurant Association of Maryland Blog

Mid-Atlantic Food, Beverage and Lodging EXPO
Baltimore, Maryland
October 7, 2009
Thriving in the Mid-Atlantic Region:
Challenging Times Create Innovative
New Strategies
Paul Hartgen
President
Restaurant Association of Maryland
This program is sponsored by:
AdvantEdge Services
Herb Heiserman
Principal, Heiserman Group
Visit us at Booth #513
Restaurant Industry
2009 and Beyond
Hudson Riehle
Senior Vice President
Research and Knowledge Group
Mid-Atlantic Food, Beverage and Lodging EXPO
Baltimore, Maryland
October 7, 2009
Agenda
•
•
•
•
Overview
Economic Backdrop
Industry Segments
Industry Imperatives
– Jobs and Careers
– Food and Healthy Living
– Sustainability and Social Responsibility
– Profitability and Entrepreneurship
• Regional Outlook
• Wrap-Up
DEFINITION:
“Restaurant Industry”
All meals/snacks prepared away
from home, including all takeout meals and
beverages
Restaurant Industry
Commercial
Restaurant
Services
Non-Commercial
Restaurant
Services
Military
Restaurant
Services
Overview:
The Industry in 2009
2008 + 2009 =
Most Challenging Period for
Restaurant Industry in Decades
39 Years of Restaurant-Industry Sales
Source: National Restaurant Association
Annual Sales:
+
$560
billion
Employees:
13 million
Locations:
945,000
Restaurant Industry’s Share
of the Food Dollar
1955: 25%
Source: National Restaurant Association
Present: 48%
The Industry Mosaic
•
•
•
•
•
•
Fullservice
Quickservice
Cafeterias and buffets
Caterers
Snack and nonalcoholic
beverage bars
Managed services/
contractors at
• Industrial plants
• Hospital nursing homes
• Schools and universities
• Airlines
• Recreation and sports centers
•
•
Lodging places
Retail hosts
• Book stores
• Service stations
• Convenience stores
•
•
Self-operated
services
Military restaurant services
Economic
Backdrop
National Economy Expected to Improve
in 2010
U.S. Real Gross Domestic Product – Historical and Projected Growth Rates
5%
Projected
4.1%
4%
3.6%
3.1%
3%
2.7%
2.5%
2.1%
1.8%
2.1%
2%
1.1%
1%
0.4%
0%
-1%
-2%
-3%
-2.6%
-4%
2000
2001
2002
2003
2004
2005
Source: Bureau of Economic Analysis; National Restaurant Association
2006
2007
2008
2009
2010
Recovery Expected to Be Slow and Modest
U.S. Real Gross Domestic Product – Quarterly Annualized Growth Rates
4%
3.2% 3.6%
3.0%
2.2% 2.0% 2.2%
2.1%
2%
3.0%
2.5%
1.5%
1.2%
0%
-0.7%
-0.7%
-2%
-2.7%
-4%
-6%
-5.4%
Projected
-6.4%
-8%
07:Q1
07:Q2
07:Q3
07:Q4
08:Q1 08:Q2
08:Q3
08:Q4
Source: Bureau of Economic Analysis; National Restaurant Association
09:Q1
09:Q2
09:Q3
09:Q4 10:Q1
10:Q2
10:Q3
10:Q4
Income Growth Expected to Remain
Modest in 2010
Real Disposable Personal Income – Historical and Projected Growth Rates
6%
Projected
5.1%
5%
4.0%
4%
3.4%
3.3%
3%
2.5%
2.4%
2.2%
2%
1.3%
1%
0.8%
0.5%
0.1%
0%
2000
2001
2002
2003
2004
2005
Source: Bureau of Economic Analysis; National Restaurant Association
2006
2007
2008
2009
2010
Home Equity Cashed Out Through
Refinancing Each Quarter
Includes refinancing of prime, first-lien conventional mortgages
$90
$80
$70
Billions
$60
$50
$40
$30
$20
$10
$0
00:Q1
01:Q1
Source: Freddie Mac
02:Q1
03:Q1
04:Q1
05:Q1
06:Q1
07:Q1
08:Q1
09:Q1
Personal Saving Rate Trending Upward
Personal Saving as a Percentage of Disposable Personal Income
14%
12%
10%
8%
6%
4%
2%
0%
Jan-81
Jan-85
Source: Bureau of Economic Analysis
Jan-89
Jan-93
Jan-97
Jan-01
Jan-05
Jan-09
Gas Prices Remain Below 2008 Levels
Average price per gallon for regular gasoline
$4.50
$4.00
Price per gallon
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Source: U.S. Department of Energy, Energy Information Administration
Tourism Drives Restaurant Sales
Median proportion of restaurant sales represented by travelers and visitors
40%
25%
25%
15%
Family
Dining
Source: National Restaurant Association
Casual
Dining
Fine
Dining
Quickservice
International Arrivals to the U.S. Down 10%
in First Half of 2009
Percent change in number of international arrivals to the U.S.
15%
11%
11%
10%
8%
6%
6%
4%
5%
0%
-5%
-4%
-10%
-8%
-10%
-12%
-15%
2000
2001
2002
2003
Source: U.S. Department of Commerce; *Year-to-Date growth through June 2009
2004
2005
2006
2007
2008
2009:YTD
Job Losses Likely to Continue into 2010
Total U.S. Employment – Historical and Projected Growth Rates
3%
2.2%
1.7%
Projected
1.8%
2%
1.1%
1.1%
1%
0.0%
0%
-0.3%
-0.4%
-1%
-1.0%
-1.1%
-2%
-3%
-4%
-3.7%
-5%
2000
2001
2002
2003
2004
Source: Bureau of Labor Statistics; National Restaurant Association
2005
2006
2007
2008
2009
2010
Consumer Confidence Edging Back Up
from Record Lows
U.S. Consumer Confidence Index
150
125
100
75
50
25
0
Jan-93
Jan-95
Source: The Conference Board
Jan-97
Jan-99
Jan-01
Jan-03
Jan-05
Jan-07
Jan-09
Wholesale Food Prices Down for First
Time in Seven Years
Wholesale Food Prices – Historical and Projected Growth Rates
10%
Projected
7.6%
5.5%
7.7%
5.6%
5%
3.2%
1.8%
0.7%
0.6%
0%
-1.2%
-3.9%
-5%
2000
2001
2002
2003
2004
2005
Source: Bureau of Labor Statistics; National Restaurant Association
2006
2007
2008
2009
Menu Prices Expected to Post Moderate Growth
in 2009
Menu Prices – Historical and Projected Growth Rates
Projected
5%
4.4%
4%
3.6%
2.9%
3.0%
3.1%
3.6%
3.1%
3%
2.5%
2.4%
2.1%
2%
1%
0%
2000
2001
2002
2003
2004
Source: Bureau of Labor Statistics; National Restaurant Association
2005
2006
2007
2008
2009
Economy Remains the Top Challenge Facing Operators
Top Challenges Facing Restaurant Operators: Sep. 2007, Sep. 2008, Sep. 2009
SEPTEMBER 2007
SEPTEMBER 2008
SEPTEMBER 2009
Recruiting Employees 34%
The Economy
31%
The Economy
34%
Sales Volume
16
Food Costs
22
Sales Volume
29
Food Costs
11
Sales Volume
15
Labor Costs
6
6
The Economy
9
Recruiting Employees
8
Government
Competition
7
Gas/Energy Prices
6
Recruiting Employees 5
Labor Costs
3
Labor Costs
1
Food Costs
Source: National Restaurant Association, Restaurant Industry Tracking Survey
3
Total Monthly Sales Just Slightly Above
2008 Levels
Seasonally-adjusted Monthly Sales at Eating and Drinking Places (in billions)
$40
2009
2008
2007
2006
$38
Monthly Sales (in billions)
$36
$34
2005
$32
2004
$30
2003
$28
2002
$26
2001
$24
Jan
Feb
Mar
Source: U.S. Census Bureau
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
Restaurant Performance Index Below 100 for 22nd Consecutive Month
Values Above
100 = Expansion, Values Below
100 = Contraction
Jul-03
Jul-06
104
103
102
101
100
99
98
97
96
Jul-02
Jan-03
Source: National Restaurant Association
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Expectations Index Rising as Operators Grow More
Optimistic
Values Above
100 = Expansion, Values Below
100 = Contraction
105
104
103
102
101
100
99
98
97
96
95
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Current Situation Index
Source: National Restaurant Association
Jul-06
Jan-07
Jul-07
Expectations Index
Jan-08
Jul-08
Jan-09
Jul-09
Restaurant Operators Continue to Plan for Capital
Expenditures
Proportion of operators that made a capital expenditure for equipment, expansion or
remodeling in last 3 months and plan to in the next 6 months
70%
60%
59%
60%
46%
46%
50%
40%
41%
39%
40%
38%
35%
40%
30%
20%
10%
0%
Family Dining
Casual Dining
Fine Dining
Made Capital Expenditure in Last 3 Months
Source: National Restaurant Association
Quickservice
Quick-Casual
Plan to Make Capital Expenditure in Next 6 Months
Industry
Segments
Fullservice Restaurant Sales
$183 billion
$181 billion
-2.5%
Real
Decrease
2008
Source: National Restaurant Association
2009
Pent-Up Demand for Restaurants
Percent of adults NOT eating on-premises at restaurants as often as they
would like
Percentage
Point Change
2007
2008
All Adults
31%
33%
+2
Household Income:
$50,000 - $74,999
$75,000 or more
23%
17%
29%
24%
+6
+7
Source: National Restaurant Association
Pent-Up Demand for Restaurants Continues
to Grow
Percent of adults NOT eating on-premises at restaurants as often as they would like
October
2007
September
2009
Percentage
Point Change
31%
36%
+5
$50,000 - $74,999
23%
34%
+11
$75,000 or more
17%
26%
+9
All Adults
Household Income:
Source: National Restaurant Association
Limited-Service Restaurant Sales
$164 billion
$157 billion
0.4%
Real
Increase
2008
Source: National Restaurant Association
2009
Managed Services Sales
$40.1 billion
$38.3 billion
1.2%
Real
Increase
2008
Source: National Restaurant Association
2009
Jobs and Careers
Over two out of five American adults
have worked in the restaurant
industry.
Source: National Restaurant Association
Total Restaurant-Industry Employment
10.9
million
1999
14.8
million
13.0
million
2009*
Source: Bureau of Labor Statistics; National Restaurant Association projections
2019*
* Projected
Restaurants Down 119,500 Jobs from PreRecession Peak (-1.2%)
Net Change in Eating and Drinking Place Employment (seasonally-adjusted)
25,000
21,500
20,000
15,000
10,000
4,100
5,000
2,900
0
-5,000
-4,500
-10,000
-15,000
-6,900
-10,300
-5,700
-6,800
-10,500
-16,300
-20,000
-25,000
-30,000
-25,300
-27,300
-35,000
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09
Source: Bureau of Labor Statistics
National Economy Down 7.2 Million Jobs (5.2%
of Workforce)
Net Change in Total U.S. Employment (seasonally-adjusted)
0
-200,000
-201,000
-263,000
-303,000
-400,000
-304,000
-380,000
-463,000
-519,000
-600,000
-597,000
-681,000
-681,000-652,000
-741,000
-800,000
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09
Source: Bureau of Labor Statistics
Food and Healthy
Living
Hot/Trendy Food Offerings
Fullservice Restaurants
1
2
3
4
5
Locally grown produce
Bite size desserts
Organic produce
Nutritionally-balanced children’s dishes
New/fabricated cuts of meat (e.g. Denver steak,
pork flat iron, bone-in Tuscan veal chop)
Source: National Restaurant Association; American Culinary Federation, 2008
Hot/Trendy Food Offerings
Quickservice Restaurants
1
2
3
4
5
Healthy options in kids meals
Organic items
Locally-sourced items
Spicy items
Wraps/pitas/tortillas
Source: National Restaurant Association, Quickservice Restaurant Survey 2008
Hot/Trendy Alcoholic Beverage Offerings
Fullservice Restaurants
1
2
3
4
5
Micro-distilled/artisan liquor
Culinary cocktails (e.g. savory, customized to specific
dishes)
Organic wine
Craft beer/microbrews
Specialty beer (e.g. seasonal, fruit)
Source: National Restaurant Association; American Culinary Federation, 2008
Hot/Trendy Non-Alcoholic Beverage Offerings
Fullservice Restaurants
1
2
3
4
5
Specialty iced tea (e.g. Thai-style, Southern/
sweet, flavored)
Organic coffee
Flavored/enhanced water
Green tea
Espresso/specialty coffee
Source: National Restaurant Association; American Culinary Federation, 2008
Hot/Trendy Non-Alcoholic Beverage Offerings
Quickservice Restaurants
1
2
3
4
5
Energy drinks
Flavored/enhanced water
Espresso/specialty coffees
Sports drinks
Iced tea
Source: National Restaurant Association, Quickservice Restaurant Survey 2008
Three out of four adults (76 percent) said
they are trying to eat healthier now at
restaurants than they did two years ago.
Source: National Restaurant Association
Nearly three out of ten adults (27
percent) said they have gone online to
search for nutrition information about
restaurant food.
Source: National Restaurant Association
Sustainability and
Social Responsibility
Going Green
Percent of operators, by type of operation, who plan to devote more of
their resources to green initiatives in 2009
Family dining
43%
Casual dining
45%
Source: National Restaurant Association, 2008
Fine dining
50%
Quickservice
27%
Forty-four percent of adults said they
are likely to make a restaurant choice
based on a restaurant’s practices in the
areas of energy and water
conservation.
Source: National Restaurant Association
Conservation Initiatives
Percent of restaurant operators who took the following actions in 2008
Family
Dining
Casual
Dining
Fine
Dining
Purchase Energy-Saving Lighting Fixtures
64%
52%
63%
41%
Purchase Energy-Saving Kitchen Equipment
44
40
36
36
Purchase Energy-Efficient Refrigeration, Air
Conditioning or Heating Systems
40
40
41
30
Install Water-Saving Equipment and/or Fixtures
34
28
37
26
Source: National Restaurant Association
Quick
Service
Fifty-two percent of adults said they are likely to
make a restaurant choice based on how much a
restaurant supports charitable activities and the
local community.
Source: National Restaurant Association
Profitability and
Entrepreneurship
The Restaurant Industry Dollar
Fullservice
Limited Service
Wages and benefits
33%
30%
Food and beverages
33%
29%
6%
9%
24%
23%
4%
9%
100%
100%
Occupancy costs
Other
Income before taxes
TOTAL
Source: Deloitte; National Restaurant Association
Same-Store Sales and Customer Traffic Remain Soft
Proportion of Restaurant Operators Reporting Higher/Lower Same-Store Sales
75%
68%
66%
60%
63%
60%
60%
59%
56%
55%
60%
61%
58%
50%
29%
26%
31%
26%
29%
23%
24%
26%
26%
26%
22%
25%
17%
0%
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Higher Same-Store Sales
Source: National Restaurant Association
Mar-09
Apr-09
May-09
Jun-09
Lower Same-Store Sales
Jul-09
Aug-09
A New Generation
Proportion of fullservice customers who said they would utilize the option of a touch-screen TV
monitor at the table, which gave the options to view the menu, place the order, pay the bill, browse
the Internet, watch TV and play video games, if it was offered by a fullservice restaurant
70%
65%
56%
60%
53%
50%
38%
40%
30%
21%
20%
13%
10%
0%
18 - 24
25 - 34
35 - 44
45 - 54
Age Group
Source: National Restaurant Association
55 - 64
65 & over
A New Generation
Proportion of fullservice customers who said they would utilize the option of receiving cell
phone text message notifications of daily specials, if it was offered by a fullservice restaurant
25%
24%
19%
20%
19%
14%
15%
10%
6%
6%
5%
0%
18 - 24
25 - 34
35 - 44
45 - 54
Age Group
Source: National Restaurant Association
55 - 64
65 & over
A New Perspective
Seventy-five percent of adults would patronize
fullservice restaurants more if they were offered
discounts for dining on less busy days of the week.
Source: National Restaurant Association
Regional Outlook
U.S. Jobless Rate Stood at 9.8% in September
Seasonally-adjusted Unemployment Rates in August 2009
< 7%
7 to 8.9%
9 to 10.9%
11% +
Source: Bureau of Labor Statistics
Dramatic Consumer Confidence Variations By Region
Present Situation: September 2009
REGION
Source: The Conference Board
INDEX
West South Central
75.2
West North Central
40.0
East South Central
32.3
South Atlantic
22.8
Middle Atlantic
21.5
New England
19.0
Mountain
18.0
Pacific
12.3
Growth in Key Indicators
2010
D.C.
Population
+0.5%
+1.2%
Real Disposable Personal Income (DPI)
+2.5%
+1.5%
Construction Employment
-1.3%
+1.8%
Source: National Restaurant Association
Maryland
Wrap Up
Unfulfilled Demand for Restaurant
Services Remains High
Over one-third of adults are NOT dining
on-premises or using take-out as often as they
would like
Source: National Restaurant Association
Americans Love Restaurants
Percent of adults who said they enjoy going to:
Restaurants
90%
Grocery Stores
55%
Source: National Restaurant Association
Wrap-Up

Modest real GDP growth resumes

Patchy and prolonged recovery

Job market remains weak

With soft economic backdrop, value emphasis continues

However, 2010 environment will be better than prior two years

Menu — healthy kids’ meals, local produce, mini- desserts, artisan spirits

Workforce — higher productivity through greater focus on technology

Growing role of green initiatives

Pent-up demand for restaurants + nudging / incenting consumer = positive
future despite challenges
Restaurant Industry
2009 and Beyond
Hudson Riehle
Senior Vice President
Research and Knowledge Group
Mid-Atlantic Food, Beverage and Lodging EXPO
Baltimore, Maryland
October 7, 2009
Our Panelists:
• Michael Sternberg, Enovo Restaurant Ventures
• Bob Barry, The Greene Sports Bar & Grille
• Jim Wordsworth, J.R.’s Stockyards Inn
Thank You