Restaurant sales improve, but food, gas prices on the rise - The Packer

Restaurant sales improve, but food, gas prices on the rise

05/23/2011 08:58:00 PM
Chris Koger

Bruce BlytheMike Boggiatto, president and general manager of Boggiatto Produce, Inc., Salinas, Calif., talks with visitors to his company’s booth at the National Restaurant Association’s annual show in Chicago May 23.CHICAGO The U.S. restaurant business is poised for its first inflation-adjusted sales growth in four years as more people go back to work, though expensive gasoline and soaring foods costs have become increasing concerns, industry representatives said.

People are eating out more often, boosting demand at quick-service locations in particular, as employment recovers from the 2008-09 recession, Hudson Riehle, research director for the National Restaurant Association, said May 23.

The addition of about 2 million jobs over the past couple years, combined with rising personal incomes, bodes well for the fresh produce industry and other food providers, according to Riehle, who spoke during the association’s annual trade show in Chicago.

“There’s a very strong correlation between restaurant sales and real personal incomes,” Riehle said. “It’s definitely shaping up to be the best year of the past four” in terms of restaurant sales, he said.

“There is substantial pent-up demand for restaurants.”

Riehle’s remarks came during a busy day for the association’s show, May 21-24 at McCormick Place near downtown Chicago. An official attendance estimate won’t be available until the end of this week, but association officials said numbers appear to be comparable, or possibly up slightly, from 2010.

In 2010, the NRA show drew more than 58,000 registrants, up 7.4% from 2009, and about 1,700 exhibitors.

Mike La Rocco, vice president of sales and marketing for Fresh Connect, LLC, an NRA exhibitor, said the show seemed to be heavily-attended, indicating the economy is bouncing back from the 2008-09 recession that hurt the restaurant business.

“Things are on the way to being normal again,” said La Rocco, whose Chicago-based company markets produce for several U.S. growers. “Hotels are full. It’s hard to get a cab.”

Restaurant operators have grown more optimistic over their prospects this year, Riehle said. In current dollar terms, industrywide sales are projected to reach a record $604.2 billion in 2011, up 3.6%, he said, repeating a previous NRA forecast.

When accounting for inflation, restaurant sales are expected to rise 1.1% this year, the first increase since 2007, according to the NRA outlook. Sales fell an average of 1.3% the previous three years.

Still, the industry’s outlook grew cloudier recently as gasoline climbed near or above $4 a gallon. Rising fuel costs leave consumers with less to spend after they fill their tanks, Riehle said.

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