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RESTAURANTS

The restaurant industry is the second largest employer in the United States with approximately 12.8 million workers. In 2006, sales from restaurants totaled $127 billion showing an increase of 2.6 percent from the previous year. Currently, commercial restaurants dominate the market, as sales from these establishments are responsible for more than 70 percent of the overall industry. The restaurant industry’s margins are threatened by the rising costs of ingredients, especially core ingredients such as corn, rice and soybeans. However, the impact of these costs is offset by increased dining in restaurants. Due to the lack of time and desire to cook for themselves, consumers are spending a larger percentage of their food budgets on restaurant spending. Throughout the United States, ethnic minority consumers are forming more lucrative markets, specifically within the food industry. Restaurants are attempting to capitalize on this trend by offering ethnically diverse options within their menus. As such, volume sales will be driven by this attempt to appeal to a growing demographic.

Restaurant revenues are forecast to reach $680 billion in 2011 based on growth of 5.2 percent per year from 2006. Gains in the restaurant industry will be aided by the rising proportion of food expenditures on food away-from-home (AFH) as consumers continue paying for both premium dining experiences and convenient, ready-to-eat offerings. In 2011, expenditures on AFH food are expected to account for more than half of consumer food expenditures. Popular trends in boosting restaurants’ revenues include expanded catering, takeout and delivery services; loyalty and gift cards; and e-marketing.

The following are simply a few topics both you and your IPA consultant can discuss in order to enhance sales and improve your restaurant.

• Evolving Menus. Healthy eating is of rising significance in the United States. Restaurant owners should aim to include healthier menu options and visible nutritional information as these decrease the negative perception of fast food outlets and cater to an increasingly health conscious consumer base.
• Multi-branding. Multi-branding – the concentration in a single location of complementary brands – maximizes returns on per-unit investment and generates higher sales volumes. Recently, many restaurants have begun multi-branding to fully exploit their brand portfolios and increase their revenues.
• Technological Innovations. Technology which improves overall efficiency remains an important target for investment in the U.S. restaurant industry as companies attempt to improve margins by reducing costs. Technology which helps to create more efficiency includes speed-touch till equipment and high-speed cooking apparatus.

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"IPA has been, and will continue to be extremely helpful to me."

"With [IPA]'s help, we've corrected food costs and overhead..."