5 Reasons The Restaurant Industry Is In Good Shape

The restaurant industry started the year off weak, at least based on sales indices. Black Box Intelligence said same-store sales fell 0.8 percent for the month. According to MillerPulse, same-store sales increased 1 percent. Both were the weakest figures in years.

But both numbers mask what was, in reality, a good month for the industry and what could be the start of a profitable year. Here’s why:

The two-year trend is still strong. Both MillerPulse and Black Box were comparing themselves to a January 2015 that was the strongest month in recent years thanks to a run of stupid good weather. So sure, January’s sales weren’t quite as good as the previous year, they were still quite good on a two-year basis. MillerPulse’s two-year same-store sales trend of 6.3 percent was the strongest for that index in two years. For Black Box, the two-year trend is 5.3 percent. Two-year trend numbers factor out one-time events like weather that can influence a single year’s same-store sales.

Overall sales were stronger. According to recent federal data, sales at food services and drinking places increased 6.1 percent in January, to $53.5 billion. Federal data tracks all sales, rather than same-store sales, and so it can account for increases in sales from new units as well as independents. Overall retail sales excluding auto sales, by comparison, increased just 2.5 percent. Sales at grocery stores, 2.3 percent.

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Restaurant owners are hiring. This is the best indication of an industry still in expansion mode. Restaurateurs hired 46,700 workers in January, or close to one out of every three jobs the economy created in the month. Over the past year, the industry has added more than 380,000 jobs. What’s the point of adding workers if you don’t think your business will need the added labor?

Gas prices are still ridiculously low. Gas prices averaged $1.70 per gallon as of Tuesday, according to AAA. While that’s a bit higher than it was a week ago, it’s still 60 cents per gallon cheaper than a year ago. Gas prices are expected to be low for some time, as long as there remains a glut in oil, putting money in the pockets of more consumers. When consumers get more money, they really want to spend it on dining out.

Food costs are coming down. These additional sales are coming as beef costs finally join other commodities in deflating. Lower prices for beef, pork and chicken should make for a more profitable industry in 2016. Indeed, Texas Roadhouse executives said on the company’s earnings call Monday that they expect higher margins this year thanks to more sales and lower food costs.

None of this is to say that there aren’t challenges in the industry. But barring some major calamity, it appears this could be the best year for restaurants since the start of the Great Recession.

(via Nation's Restaurant News)

Small Plates Will Continue to Rise in Popularity, Replacing Traditional Mealparts

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CHICAGO, Oct. 8, 2015 /PRNewswire/ -- Though some foodservice consumers still view the left side of the menu (LSM)—particularly starters, small plates and sides—as "extras," the LSM is uniquely positioned to serve consumers' shifting dining needs. According to Technomic's Starters, Small Plates & Sides Consumer Trend Report, the LSM offers incomparable opportunities for personalization, socialization and flavor experimentation, providing fun, unique and memorable experiences both during and between traditional mealtimes.

Find more starters, small plates and sides insights here.

"As diners become increasingly adventurous, the LSM is a place for operators to stand out by featuring unique, signature and bold flavors that cater to demands for customization," explains Kelly Weikel, Technomic director of consumer insights. "Allowing consumers to express themselves through low-risk experimentation creates a 'connection' with a restaurant. Modular pick-and-choose menus are an area of opportunity: both consumption and menu presence of small plates, for example, has increased since 2013, and interest in these versatile offerings shows no signs of waning."

Compiling findings from more than 1,500 U.S. consumers, as well as Technomic's MenuMonitor, Digital Resource Library and Top 500 Chain Restaurant Report, the Starters, Small Plates & Sides Consumer Trend Report also reveals:

  • 53 percent of consumers order sides, 39 percent order appetizers and 30 percent order small plates on all or most of their restaurant visits;
  • Nearly half of consumers (47 percent) say that happy hour deals would encourage them to order appetizers more frequently;
  • The fastest growing sides include non-breaded vegetables, deli salads, fruit and beans at limited-service restaurants and pasta/noodles, other potato (au gratin, hash browns, home fries, tater tots, etc.), fruit and rice at full-service restaurants.

The Technomic Starters, Small Plates & Sides Consumer Trend Report is one of 12 topics in our 2015 Consumer Trend Report series, offering the most current analysis, insight and opportunities to help grow your business. Our best-in-class intelligence combines 50 years of foodservice expertise with critical findings from over 7,000 menus per year and nearly 30,000 annual consumer interviews.

Technomic publishes a complete library of Consumer Trend Reports. To learn more, please visit Technomic.com or contact one of the individuals listed below. For Technomic updates, please follow us on Twitter, LinkedIn or our blog.

(via PR Newswire)