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Despite tough times, restaurant industry sees growth

  • Article by: TIFFANY HSU
  • Los Angeles Times
  • December 14, 2012 - 12:40 PM

The American restaurant industry is headed into a year full of obstacles, including health coverage costs related to health care reform, employee turnover, rising food costs and weak consumer spending.

Still, the National Restaurant Association predicts that the country's 980,000 eateries will pull in more than $660 billion in sales in 2013 -- or 3.8 percent more than this year's revenue stream. If the forecast is accurate, restaurants will enjoy four consecutive years of real sales growth.

The industry will employ 13.1 million people in 2013, according to the industry report. That's a 2.4 percent rate of employment growth, which is slower than the 3 percent pace set by restaurants this year, but much higher than the overall 1.4 percent rate among all employers.

In the next decade, the association expects restaurants to hire 1.3 million new employees, bringing the total food-service workforce to 14.4 million by 2023.

But the surge in workers means a shallower labor pool. Long-running restaurant industry problems, such as the difficulty in recruiting and retaining employees, are likely to be exacerbated, according to the association's forecast.

And many restaurant owners worry that once President Obama's health care law goes into effect in 2014, their slim margins will be even more squeezed. Such major eatery businesses as Papa John's and Olive Garden parent Darden have started fretting about the requirement to provide access to coverage for all full-time employees.

And the aftershocks of a severe summer drought will continue inflating wholesale food and beverage costs, already high after several years of increases and responsible for sucking up a third of restaurants' sales, according to the restaurant group.

The tepid economy and continuing high unemployment still give consumers second thoughts about their discretionary spending. Nearly half of Americans say they don't patronize restaurants as often as they'd like.

Eateries also will have to struggle with evolving diner preferences in 2013.

More consumers say they want table-side electronic payment options, mobile ordering systems, self-order kiosks, tablet menus and smartphone apps for reservations. Fewer than 1 in 10 restaurants has such capabilities now, but more than half told the restaurant association that they're investing in new technologies next year.

And more than seven in 10 consumers say they're looking for more healthful and locally sourced menu items at restaurants -- a trend that even such industry giants as McDonald's have been hustling to follow.

© 2014 Star Tribune