Annika Stensson Director Research Communications National Restaurant Association Washington, D.C. @WeRRestaurants /RestaurantDotOrg /NationalRestaurantAssociation Restaurant.org/Research 1
Agenda Overview Economic Backdrop Consumer Trends Food Trends Wrap-Up 2
Industry Overview 3
DEFINITION: Restaurant Industry Food Away from Home All meals/snacks prepared away from home, including all takeout meals and beverages. 4
Restaurant Industry 2015 Source: National Restaurant Association, 2015 Restaurant Industry Forecast 5
45 Years of Restaurant Industry Sales (1971-2015) Source: National Restaurant Association, 2015 Restaurant Industry Forecast 6
An Economic Powerhouse Annual sales are larger than 90% of the world s economies. Sales will grow by $26 billion in 2015 more than double Hollywood s annual domestic box office sales. 7
Foodservice Sales by Segment Tableservice $220 billion $213 billion 2.9% Quickservice & Fast Casual $201 billion $193 billion 4.3% 2014 2015 Snack & Nonalcoholic Beverage Bars $33 billion $31 billion 2014 2015 Retail Hosts $41 billion $38 billion 5.2% 5.7% 2014 2015 2014 2015 Source: National Restaurant Association, 2015 Restaurant Industry Forecast 8 8
Restaurant Sales Growth in 2015 (Projected) Source: National Restaurant Association, 2015 Restaurant Industry Forecast 9
Restaurant Employment Growth 2015 to 2025 (Projected) Source: National Restaurant Association, 2015 Restaurant Industry Forecast 10
Where Do Consumers Spend? SPENDING CATEGORY PERCENT OF TOTAL Housing 34% Transportation 18% Food 13% Insurance/pensions 11% Health care 7% Entertainment 5% Apparel and services 3% Other 9% Total 100% 11 Source: Bureau of Labor Statistics, 2013 Consumer Expenditure Survey; National Restaurant Association 11
Restaurant Industry s Share of the Food Dollar 1955 Present 1955: 25% 2015: 47% Source: National Restaurant Association, 2015 Restaurant Industry Forecast 12
Economic Backdrop 13
2015 U.S Economic Outlook Continued moderate growth INDICATOR 2014 2015 Real Gross Domestic Product 2.4% 2.6% Real Disposable Personal Income 2.7% 3.4% Consumer Price Index 1.6% 0.0% Total U.S. Employment 1.9% 2.2% 2016 3%+ 3%+ 2%+ 2%+ Source: National Restaurant Association projections as of October 2015 14
15 Economy 4M Jobs Above Pre-Recession Peak 37 states have more jobs than before losses started in Feb. 2008 National average: 2.8% more jobs Source: Bureau of Labor Statistics 15
Restaurants Added 349K+ Jobs in the Last 12 Months Eating-and-drinking-place employment change from previous month Source: Bureau of Labor Statistic; figures are seasonally-adjusted 16
Consumer Confidence Near Post-Recession Highs 150 U.S. Consumer Confidence Index 125 100 75 50 25 0 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Source: The Conference Board 17
Gas Prices Trending Lower in Recent Weeks $4.50 Average price per gallon for regular gasoline $4.00 Price per gallon $3.50 $3.00 $2.50 $2.00 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Source: U.S. Department of Energy, Energy Information Administration 18
Disposable Income on Pace for Strongest Gain Since 2006 Real disposable personal income historical and projected growth Source: Bureau of Economic Analysis; *National Restaurant Association projections 19
Top Challenges Facing Operators SEPTEMBER 2013 The Economy 27% SEPTEMBER 2014 Food Costs 30% SEPTEMBER 2015 Government 23% Government 23% The Economy 18% Recruiting Employees 21% Sales Volume 13% Government 17% Food Costs 10% Food Costs 11% Sales Volume 11% Labor Costs 10% Recruiting Employees 8% Recruiting Employees 10% Sales Volume 7% Source: National Restaurant Association, Restaurant Industry Tracking Survey 20
Wholesale Food Prices Trending Slightly Lower Annual growth in Producer Price Index All foods Source: Bureau of Labor Statistics *Year-to-date growth through July 21
Menu Price Growth Remains Moderate Annual growth in Consumer Price Index Food away from home Source: Bureau of Labor Statistics *Year to date growth through July 22
Consumer Trends 23
Quality Time Consumers who say dining out is a better use of time than cooking and cleaning up. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 24
Unique Experiences Consumers who say restaurants provide tastes and flavors that aren t easily duplicated at home. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 25
Top Attributes for Choosing a Restaurant Good service Food quality Good value Favorite items on the menu Convenient location to home or work Healthy menu items Source: National Restaurant Association, 2015 Restaurant Industry Forecast 26
Noticing Healthful Options Consumers who say there are more healthful options on restaurant menus now than two years ago. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 27
Choosing Healthy Options Consumers who say they are more likely to choose a restaurant that offers healthy menu options. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 28
Actually Choosing Healthy Options Consumers who say they are ordering more healthful options in restaurants now than two years ago. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 29
Opting for Local Sourcing Consumers who say they are more likely to visit a restaurant that offers locally sourced food items. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 30
Eco-Friendly Matters Consumers who say they are more likely to visit a restaurant that offers organic or environmentally friendly food. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 31
Adventurous Palates Consumers who say they are more adventurous in their restaurant food choices now than two years ago. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 32
Breakfast for Dinner Consumers who wish restaurants served breakfast items all day Source: National Restaurant Association, 2015 Restaurant Industry Forecast 33 33
Tech Influences Consumers who factor in technology when choosing a restaurant. Source: National Restaurant Association, 2015 Restaurant Industry Forecast 34
Food Trends 35
What s Hot in 2015 TABLESERVICE RESTAURANTS 1) Local meat/seafood 6) New cuts of meat 2) Local produce 7) Hyper-local 3) Sustainability 8) Sustainable seafood 4) Healthy kids meals 9) Food waste reduction 5) Natural ingredients 10) Farm-branding Source: National Restaurant Association, What s Hot in 2015 chef survey 36
What s Hot in 2015 LIMITED-SERVICE RESTAURANTS 1) Gluten-free items 6) Gourmet grilled cheese 2) Sustainability 7) Build-your-own 3) Local produce 8) Healthy kids meals 4) Kids veggie sides 9) Local meat/seafood 5) Mini-desserts 10) Milk/juice in kids meals Source: National Restaurant Association, 2015 Restaurant Industry Forecast 37
Perennial Favorites in 2015 TABLESERVICE RESTAURANTS 1) Barbecue 6) Oatmeal 2) Italian cuisine 7) Comfort foods 3) Fried chicken 8) Fruit desserts 4) French toast 9) Pulled pork 5) Frying 10) Chicken wings Source: National Restaurant Association, What s Hot in 2015 chef survey 38
Perennial Favorites in 2015 LIMITED-SERVICE RESTAURANTS 1) French fries 6) Hamburgers 2) Poultry items 7) Side salads 3) Bacon 8) Onion rings 4) Bottled water 9) Soft drinks 5) Beef items 10) Pizza Source: National Restaurant Association, 2015 Restaurant Industry Forecast 39
Top 3 Cuisines In terms of familiarity, trial and frequency of eating Italian Mexican Chinese Source: Global Palates: Ethnic Cuisines and Flavors in America, National Restaurant Association, 2015 40
Least Known Cuisines In terms of familiarity, trial and frequency of eating Ethiopian Brazilian/ Argentinian Korean Source: Global Palates: Ethnic Cuisines and Flavors in America, National Restaurant Association, 2015 41
Global Palates 80% of consumers eat at least one ethnic cuisine per month. 17% of consumers eat seven or more cuisines per month. Restaurants are the primary point of access for trying new cuisines, and the source where frequent eaters typically get their ethnic food. Source: Global Palates: Ethnic Cuisines and Flavors in America, National Restaurant Association, 2015 42
Global Palates 66% eat a wider variety of ethnic cuisines now than five years ago. 29% tried a new ethnic cuisine in the last year. 25% like trying unconventional ingredients, like insects, brains and snails. Source: Global Palates: Ethnic Cuisines and Flavors in America, National Restaurant Association, 2015 43
Global Palates 85% of consumers say they prefer to eat ethnic cuisine in a restaurant focused on that cuisine 75% say they like it when restaurants with mainstream menus also serve ethnic cuisine. Source: Global Palates: Ethnic Cuisines and Flavors in America, National Restaurant Association, 2015 44
UMBRELLA TRENDS What s Hot in 2015 Local sourcing Environmental sustainability Nutrition/Kids nutrition Ethnic cuisines and flavors Source: National Restaurant Association 45
Wrap-Up 46
Americans Love Restaurants Consumers who say they enjoy going to: 90% 66% Restaurants Grocery stores Source: National Restaurant Association, 2015 Restaurant Industry Forecast 47
Pent-Up Demand for Restaurants Remains High Percentage of adults NOT eating on-premises at restaurants as often as they would like October 2007 September 2013 September 2015 Percentage Point Change 2007 vs 2015 All Adults 31% 47% 48% +17 Source: National Restaurant Association 48
Restaurant Performance Index Source: National Restaurant Association 49
Restaurant Operators Sales Outlook at 2-Year Low Operators outlook for sales in 6 months vs. same period previous year Source: National Restaurant Association, Restaurant Industry Tracking Survey 50
Key Takeaways Real sales growth for sixth consecutive year. Recruitment and retention reemerging as top challenge. Operators sales outlook dampened amid challenges. Local sourcing, environmental sustainability, nutrition and ethnic cuisine are key menu trends. 51
Annika Stensson Director Research Communications National Restaurant Association Washington, D.C. astensson@restaurant.org @WeRRestaurants /RestaurantDotOrg /NationalRestaurantAssociation Restaurant.org/Research 52