Year-over-year sales totals at U.S. restaurants rose significantly in January, but foodservice operators continue to remain plagued by sky-high food, labor, and energy prices.
Sales at U.S. eateries soared 24 percent in January to USD 95.5 billion (EUR 90 billion) on a seasonally adjusted basis in January, according to preliminary data from the U.S. Census Bureau. The figure is also up over both November and December 2022, which each saw roughly USD 89 billion (EUR 84 billion) in sales, according to the National Restaurant Association.
The U.S. foodservice industry is expected to grow this year due to strong demand and consumers’ continued willingness to pay higher prices, the NRA found in its 2023 State of the Restaurant Industry
The survey found 84 percent of U.S. consumers believe going out to a restaurant with family and friends is a better use of their leisure time than cooking and cleaning up, while 44 percent said they are not dining out as often as they would like, and 36 percent are not ordering take-out as often as they would like.
NRA projects total U.S. restaurant sales hitting USD 997 billion (EUR 940 billion) in 2023, partly driven by higher menu prices. And the foodservice industry workforce is projected to grow by 500,000 jobs, accounting for around 15.5 million jobs nationwide by the end of 2023.
“Moving forward, consumers are expected to remain resilient in the coming months, even in the face of an economy that is likely to slow,” NRA Economist Bruce Grindy said. “Healthy household balance sheets, a buoyant labor market, and moderating inflation will give consumers the wherewithal to continue burning off the pent-up demand that they accumulated during the pandemic.”
However, the trifecta of higher food costs, labor costs, and energy costs are now a significant challenge for a majority of restaurant operators, according to the NRA's Business Conditions survey, released in January. A vast majority (92 percent) of restaurant operators surveyed say food costs are a significant challenge, and 89 percent said labor costs are a significant challenge. As a result, 50 percent of operators expect lower profits in 2023. And 93 percent of operators say their restaurants’ total food costs are higher than they were in 2019.
Andrew Gruel, former owner of the Slapfish restaurant chain and now owner of Huntington Beach, California, U.S.A.-based Calico House, told SeafoodSource his ingredient costs “have been crazy.”
“Even being out of the game for just six months, I came back with my costing metrics and found that 30 to 50 percent of my major ingredients have [risen in price],” Gruel said. Gruel said he tries to keep his prices reasonable, but he has found his customers have been understanding of that fact that restaurant menu prices are higher than they used to be.
“It’s not just specific to the restaurant industry. Supply-chain issues at the beginning of the pandemic hadn’t filtered down to retail yet,” Gruel said. “Now consumers go to the grocery store and pay USD 9.00 [EUR 8.49] for a dozen eggs and say, ‘OK, I get it.’”
As a result of higher costs, 87 percent of U.S. restaurant operators increased menu prices in 2022, and a majority of operators across all segments expect to keep their menus in 2023 similar in size to last year, NRA said in a news release. But 31 percent of family-dining operators plan to further streamline their menus this year, along with 22 percent of casual dining operators, 21 percent of fast-casual restaurants, 17 percent of fine-dining eateries, and 17 percent of quick-service restaurants.
A majority of restaurant operators have shopped around for other suppliers due to higher food costs, ranging from 52 percent for quick-service operators to 74 percent for casual-dining operators.
In an adaptation to changing consumers preferences, restaurant operators have gotten better at offering take-out and delivery options, and many restaurant operators plan to offer more dishes tailored to take-out this year, the NRA found.
In a potential boon for seafood suppliers, restaurant operators plan to add more healthy and nutritious meal options to their menus this year, along with eco-friendly items, the NRA found.
“Eco-friendly business practices continue to draw consumers, especially millennials,” the report said.
U.S. restaurant operators are also focusing on opportunities arising from the blurring of traditional meal times due to the expansion of remote work nationwide. The NRA found restaurants were expanding their hours and offering more slow-day value deals, as well as flexible pricing, multi-course meal bundles, meal kits, and subscription services.
The NRA survey found 57 percent of consumers, including 69 percent of Gen Z adults and 65 percent of millennials, said they’re more likely to incorporate restaurant-prepared items – such as a main dish, side, or dessert – into their home-prepared meals than they were prior to the pandemic.
“Restaurants can take advantage of this by packaging popular items for easy customer pickup,” the NRA said.
Photo courtesy of Monkey Business Images
