Restaurant Industry Restaurant Industry 2008 and Beyond 2008 and Beyond Rhode Island Hospitality Rhode Island Hospitality & & Tourism Tourism Association Association Economic Outlook Breakfast Economic Outlook Breakfast Providence, RI Providence, RI October 21, 2008 October 21, 2008 Hudson Riehle Hudson Riehle Senior Vice President Research and Information Senior Vice President Research and Information Services Services National Restaurant Association National Restaurant Association
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Restaurant Industry 2008 and Beyond Rhode Island Hospitality & Tourism Association Economic Outlook Breakfast Providence, RI October 21, 2008 Hudson Riehle.
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Restaurant Industry Restaurant Industry 2008 and Beyond2008 and Beyond
Rhode Island Hospitality Rhode Island Hospitality & & Tourism AssociationTourism AssociationEconomic Outlook BreakfastEconomic Outlook Breakfast
Hudson RiehleHudson RiehleSenior Vice President Research and Information Services Senior Vice President Research and Information Services National Restaurant AssociationNational Restaurant Association
Agenda
• Overview• Economic Backdrop• Industry Segments• What’s Hot• Workforce• 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
Annual Sales:
$558 billion
Employees:
13.1 million
Locations:
945,000
38 Years of Restaurant-Industry Sales 1971-2008
Source: National Restaurant Association
2008 Restaurant IndustrySales Gain:
$24 billion
Source: National Restaurant Association
1955: 25% Present: 48.0%
Restaurant Industry’s Share of the Food Dollar
• 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 restaurant services
• Military restaurant services
The Industry Mosaic
Economic Backdrop
3.7%
0.8%
1.6%
2.5%
3.6%
2.9%2.8%
2.0%
1.6%
1.2%
0%
1%
2%
3%
4%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Economy Expected to Post Modest Growth into 2009Real Growth in U.S. Gross Domestic Product
Source: Bureau of Economic Analysis, National Restaurant Association
Projected
4.8%
1.9%
3.1%
2.2%
3.6%
1.4%
3.5%
2.8%
1.6%
1.0%
0%
1%
2%
3%
4%
5%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Disposable Income Growth Projected to SlowReal Growth in Disposable Personal Income
Source: Bureau of Economic Analysis, National Restaurant Association
Projected
2.2%
0.0%
-1.1%
-0.3%
1.1%
1.7% 1.8%
1.1%
0.0%
-0.5%
-2%
-1%
0%
1%
2%
3%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
National Job Losses Expected to Continue in 2009U.S. Total Employment Growth
Source: Bureau of Economic Analysis, National Restaurant Association
Projected
National Economy Posting Job LossesU.S. economy shed 760,000 jobs in the last nine months
U.S. Total Job Growth
Source: Bureau of Labor Statistics; figures are seasonally-adjusted
…but Total Sales Remain Above 2007 LevelsSeasonally-adjusted monthly sales at eating and drinking places
Source: U.S. Census Bureau
$25
$27
$29
$31
$33
$35
$37
$39
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
Mo
nth
ly S
ales
(in
bill
ion
s)
2008
2007
2006
2004
2002
2001
2003
2005
Restaurant Industry Outperforming Retail Sector in 2008Year-to-date growth through September 2008
Source: U.S. Census Bureau, Bureau of Labor Statistics, National Restaurant Association
4.2% 4.3%
-0.1%
6.1% 6.2%
-0.1%
2.3%
4.6%
-2.3%
-4%
-2%
0%
2%
4%
6%
8%
NominalSales
Menu Prices
Real Sales
NominalSales
GroceryStore Prices
Real Sales
NominalSales
ConsumerPrices
Real Sales
Eating & Drinking Places Grocery Stores Total Retail (excluding food)
Operators Are Uncertain about Sales GrowthRestaurant operators’ outlook for sales volume in six months compared to the same period in the previous year
Source: National Restaurant Association, Restaurant Industry Tracking Survey
Higher Sales in Six Months Lower Sales in Six Months
Quickservice Operators Are Most OptimisticRestaurant operators’ outlook for sales volume in six months compared to the same period in the previous year
Source: National Restaurant Association, Restaurant Industry Tracking Survey
26%
36%
28%32% 32% 31%
40%
26%
28%33%
0%
10%
20%
30%
40%
50%
Family Dining Casual Dining Fine Dining Quickservice Quick-Casual
Higher Sales in 6 Months Lower Sales in 6 Months
Operators Are Pessimistic about the EconomyRestaurant operators’ outlook for the economy in six months
Source: National Restaurant Association, Restaurant Industry Tracking Survey
• Real Disposable Personal Income 2.8Real Disposable Personal Income 2.8 1.6 1.0 1.6 1.0
• Total EmploymentTotal Employment 1.1 1.1 0.0 -0.5 0.0 -0.5
Growth in Key IndicatorsGrowth in Key Indicators
Source: National Restaurant Association, 2008
20082008 U.S.U.S. Rhode IslandRhode Island
PopulationPopulation +0.9% -0.1% +0.9% -0.1%
Real Disposable Personal Income (DPI) Real Disposable Personal Income (DPI) +1.6% -0.1% +1.6% -0.1%
Construction EmploymentConstruction Employment -5.1% -5.9% -5.1% -5.9%
2008 and Beyond
• Restaurant-industry sales will reach a record high• Record levels also for employees and locations• Weak economic fundamentals• Energy and food cost challenges will remain• Menu — small is big, alternative sourcing, ethnic
ingredients• Workforce — higher productivity• Technology more critical• Modest industry growth expected
Restaurant Industry Restaurant Industry 2008 and Beyond2008 and Beyond
Rhode Island Hospitality Rhode Island Hospitality & & Tourism AssociationTourism AssociationEconomic Outlook BreakfastEconomic Outlook Breakfast
Hudson RiehleHudson RiehleSenior Vice President Research and Information Services Senior Vice President Research and Information Services National Restaurant AssociationNational Restaurant Association