Restaurant Business is On Fire

Discussion
May 23, 2005
George Anderson

By George Anderson


Government numbers show that Americans are going out to restaurants in growing numbers. According to the U.S. Census Bureau, Americans spent $33.7 billion in restaurants last month, eight percent more than the same period in 2004.


The National Restaurant Association (NRA) is forecasting industry sales will reach $476 billion this year. The group’s research shows sales and customer traffic has grown steadily for two years.


Hudson Riehle, the NRA’s senior vice president for research and information services, told the Chicago Sun-Times that the industry is a reflection of changing American lifestyles where less time and desire to prepare food is combined with family member schedules that make sitting down together to dine the exception rather than the rule in many U.S. households.


According to NRA, 47 percent of food expenses now go to dining out.


Rich Melman, chairman of Lettuce Entertain You Enterprises, which operates more than 60 restaurants, said that while general trends point to a restaurant’s success, it is not a guarantee. “It’s a trickier time,” he said. “I think there’s more competition than ever before.”


Moderator’s Comment: What changes/innovations do you expect to see taking place in the restaurant business in the future? What does the trend in consumers
eating out mean for those in the retailing end of the food business?

George Anderson – Moderator

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10 Comments on "Restaurant Business is On Fire"


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Ben Ball
Guest
15 years 9 months ago

To the many applicable trends and reasons for restaurant patronage cited above I would add this –“Do it for me.”

In a recent study done for a service-intensive technology sector, we identified three key consumer types: “Do it myself,” “Help me do it,” and “Do it for me.” This segmentation is applicable to many other areas. Consumers eating at restaurants want a soup to nut “Do it for me” experience. Supermarkets (ex dine-in options) can never get beyond “Help me do it.” To counter this preference, supermarket operators are going to have to fuel a resurgence of “Do it myself.” This should be fun to watch.

David Livingston
Guest
15 years 9 months ago

The changes and innovations I see are that the line drawn between food retailers and restaurants is being erased. For example, Eatzies, Boston Market, Foodies, etc…. Are they restaurants or food retailers? Whole Foods and HEB Central Market are often popular lunch spots. Ukrop’s fried chicken is a Richmond picnic staple.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 9 months ago
Stephan Kouzomis is on to something: The percent of food dollars spent [on] out of home [meals] is the same today as it was seven years ago. The point is, the restaurant business is not growing, it’s recovering; returning to previous levels following a national crisis. What chaps me are analysts who are so eager to pounce on this bit of non-information and rationalize it into un-based, pop-culture conclusions like these from the Chicago Sun-Times story: “Americans are eating out more because their busy lives force them to. The most profound thing is that families no longer eat together with the kind of frequency that was true a generation ago, and that is because they’re leading independent lives. Instead of the family gathering around the dinner table for the 1950s-style home-cooked meal, you have many lives, with multiple workers.” So, where was the impact of these “independent busy lives” when restaurant business was actually falling a few years ago? The truth is that restaurant business is simply recovering, and drawing popular-wisdom conclusions from this so-called… Read more »
Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 9 months ago

Consumer demographics and lifestyles are dictating these sales, as the younger generations are making take out, and restaurant eating a major component of their eating schedules.

Importantly, the menus and quality of the meals are improving and very consistent with consumers requirements!!!

Interestingly, the 47% of food dollars spent out of home is the same as 7 years ago. Total dollars are up!!!!!!!!!!!!!

Len Lewis
Guest
Len Lewis
15 years 9 months ago

If Americans are going out to restaurants in record numbers, maybe it’s time for the supermarket industry to find out why. Let’s boil it down to three words; better, quicker, easier.

There are certainly some exceptions, but by and large supermarkets have yet to revisit the concept of meal solutions. It’s time. We have an aging population which seems less inclined to spend time in the kitchen preparing meals and a younger generation–again there are exceptions–who don’t know where the kitchen is or what to do when they get there.

But for the most part, supermarkets remain ingredients stores–with items all over the place. We talk a lot about lifestyle stores these days. But shouldn’t stores be bringing items together to simplify the shopping process and to facilitate meal preparation?

Recipe cards are nice. But stores have been using them for decades. How about creating recipe sections throughout the store that bring disparate ingredients for different, simple meals together?

Tom Zatina
Guest
Tom Zatina
15 years 9 months ago

Obviously, as more people opt for restaurants over retail food stores, all sorts of bad things happen to supermarket sales. Food retailers will continue to be challenged to provide an easy, tasty and appetizing take-out or dine-in alternative to the restaurant. It starts with building a reputation for quality and value, and requires the development of some interesting offerings (beyond just the ubiquitous roasted chickens) that are presented with some style. In fact, every supermarket operator should strive to establish at least one outstanding “best-of-class” signature food item in their prepared foods area.

Art Williams
Guest
Art Williams
15 years 9 months ago

As fewer and fewer young mothers have the time or interest in learning to cook, the number of meals eaten out continues to increase. With so many two income families and working wives, it is easy to see why they do not want to slave in the kitchen after putting in a hard day at work. All of this is working in the restaurants’ favor. And I don’t see this trend changing any time soon, but rather increasing. It should be a great time to be in the restaurant business.

Rick Moss
Guest
15 years 9 months ago

Referencing Mr. Melman’s quote in the story about the intensity of competition, I would say that the economic incentives for take-out are there for consumers as well. Thanks to the glut of local restaurants, I find that we can get a very nice take out meal for $25 that will feed our family of four. And we can choose from Italian, Middle Eastern, Indian, Thai, Chinese, Mexican and vegetarian versions of most of the above. Assuming we would spend close to $200 per week at the supermarket if we cooked every night, there’s no real “splurge” involved in making the decision to order-in after a long, stressful day at work.

Carol Spieckerman
Guest
15 years 9 months ago

The restaurant business appears to be mirroring retail right now… on one end is the proliferation of 99 cent value meals, on the other is the spate of over-the-top expensive eateries (Daniel, Per Se, Matsuhisa) thriving by featuring meals at $200 or more per person. I would think that the J.C. Penney’s of the restaurant business have a retail opportunity to create winning concepts for the middle (and to place them strategically in the heart of lifestyle centers)!

Marilyn Raymond
Guest
Marilyn Raymond
15 years 9 months ago

More fresh – more nutritious – more portion control – more layering of flavors – more source of origin/varietal references, less sodium, less preservatives, less fat….

The more we spend outside the home, the more imperative it will be to offer restaurant goers ‘homemade goodness’ that deals with the health and well being of the individual — especially the all important aging baby boomer who is obsessed with eating better!

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