Restaurant sales will hit an all-time high of $1.1 trillion in the U.S. this year, though profitability will continue to be eroded by soaring food and labor costs, according to a just-released forecast from the National Restaurant Association.
The 10.3% expected increase over the group’s original sales forecast for 2023 would push total industry revenues past the trillion-dollar milestone for the first time.
The group’s State of the Industry Report, a snapshot of the business as it enters 2024, asserts that operators are viewing the new year with tempered optimism. A third (33%) expect sales to outstrip last year’s total, but 45% anticipate sales will be flat.
With food costs running about 20% above the year-ago level, and wages hovering about 30% higher, the challenge will be protecting margins, the data suggests.
It shows restaurant customers are also contending with the impact of inflation. Seven of 10 often hunt for menu specials or discounts and are willing to go farther if it’ll stretch their dollars, according to the association. The group found that 84% of consumers would dine at off-peak times if a discount was offered, and 75% said they’d opt for smaller portions if the prices were reduced accordingly.
The nation’s labor situation will likely be both cursed and blessed by restaurants, the association suggests.
A majority (55%) of Americans view local employment levels and economic conditions in general as good or excellent, the group found, noting that “jobs drive consumer spending.” The State of the Industry Report was issued days after the federal government pegged unemployment at the extraordinarily low rate of 3.7%.
But restaurants are still struggling to capture enough of the working population to meet the heightened dining-out demand of a nation nearing full employment. Forty-five percent of operators don’t have sufficient workers to meet the heightened volume, and 70% have open positions they lament as difficult to fill, the association found.
Operators will continue to eye technology as a potential source of relief, according to the report. Nearly half (48%) the nation’s restaurateurs invested in tech last year, the NRA says. It projects that 60% will make an expenditure in 2024.i
One in four intend to increase their use this year of gig workers, or part-time workers summoned on short notice to fill staffing gaps.
All in all, “this is an historic and exciting year for the restaurant industry,” Hudson Riehle, SVP of the NRA’s research and knowledge group, said in a prepared statement. “While challenges remain—including inflation, recruitment, higher operating costs and profitability—restaurant operators will continue to innovate and evolve to meet customer demands.”
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.