The United States’ National Restaurant Association is forecasting a record $1.1 trillion in sales in 2024 and the addition of 15.7 million jobs, reports Washington based PRNewswire.
The National Restaurant Association released its annual State of the Industry report on February 6 with the sales forecast as its top headline; the association expects to exceed US$1.1 trillion in 2024. Should this forecast play out, it will mark the first time sales from the nation’s second-largest private industry will tip into the trillions.
“With more than $1 trillion in sales expected this year, the state of the restaurant industry is strong thanks to the agility of its operators and employees,” announced Michelle Korsmo, President & CEO of the NRA.
“As our report shows, restaurants are finding ways to adapt to the challenges of increased food costs and supply chain disruption. Restaurants have responded well to customers’ desire to have more opportunities to enjoy restaurant meals, which continues to grow sales, create employment opportunities, and foster a strong sense of community.”
Last year, the US foodservice industry forecast was $997 billion, while the pre-pandemic forecast from 2019 was about US$863 billion, illustrating a staggering growth trajectory throughout the past four years. Many of these sales have been driven largely by price increases; US menu prices peaked at an 8.8% year-over-year increase in March 2023, but have since started to cool and were 5.3 % higher in December.
Demand for restaurants has also proven to be quite high, particularly among younger consumers. Fifty-two percent – including 67% of millennials and 63% of Gen Z adults – say ordering takeout from a restaurant is an “essential part of their lifestyle,” meaning pricing isn’t the only driver. Notably, the trillion-dollar breakthrough is a cause for optimism given that the industry remains much smaller than it was in 2019. According to Technomic Ignite data, there were just over 631,500 restaurants in 2023 versus just over 703,000 in 2019.
“Looking at the operating environment for the upcoming year, it is one where there is an overall moderation in industry growth, but the milestone of passing $1 trillion is truly astounding when you consider that is over $3 billion a day on average and $125 million an hour,” Hudson Riehle, SVP of the association’s research and knowledge group, said during a recent interview.
“As decades have passed and consumers continue to shift their food spending toward away-from-home solutions, the industry continues to not only garner consumer support but also increase in its economic size and importance.”
Riehle points to data showing that the restaurant industry comprised 25% of the family food dollar in 1955. By 2010, that rose to 49% and Kalinowski Equity Research estimates that share-of-spend for restaurants was at nearly 56% in December 2023.
In addition to hitting record-high sales this year, the association is expected to employ a record-high 15.7 million people and with more room to grow. Forty-five percent of restaurant operators report that they need more employees to meet consumer demand and a majority (70%) have job openings they say are hard to fill. The association expects the industry to add 150,000 jobs per year on average for the next eight years, with total staffing levels reaching 16.9 million by 2032.
“The industry has become an area of training and development for the national workforce. This latest research shows that over three out of five adults have worked in the restaurant industry and that is even higher for younger cohorts,” Riehle said. “As a result of that, and in tandem with the demographic changes which have occurred as the decades have progressed, younger consumers place a higher priority on spending at restaurants and deem them more essential than other generations.”
As these younger consumers prioritise restaurant experiences more, the industry’s operating model has shifted. Though off-premises became a necessity during Covid, the channel continues to grow because of how these cohorts use restaurants, whether via delivery, drive-thru, carryout or curbside. As such, technology has become critical and will be a top investment priority for operators big and small in 2024; 60% of operators plan to make technology investments this year, versus 48% in 2023.
“It is evolutionary, not revolutionary. For those younger cohorts, their expectations are higher. It doesn’t mean all restaurant concepts have to incorporate technology into their operations to remain viable. It means, looking at younger cohorts and how they use restaurants differently, operators that are seeking to grow are obviously more focused on meeting the needs of those younger consumers through technology,” Riehle said.
What they especially want is the ability to order and pay quickly and seamlessly, he said. They also like the ability to tap into a loyalty program to earn stronger value opportunities not available to non-loyalty members. Seven in 10 adults said they look for a daily special or discount, and the association’s data suggests consumers prefer using a loyalty or rewards program facilitated through a mobile app.
For operators, Riehle makes a point to note their priority isn’t to deploy technology that replaces workers, but rather to augment what those workers are doing, especially as labor shortages remain. Nearly half (47%) of operators say the use of technology and automation will help with those shortages.
“There is still a sizeable number of job vacancies,” he said. “The logical extension is that more resources are invested in how labor is onboarded and deployed. Operators have made it clear they’re augmenting the workforce versus automating. This is still the service industry.”
All told, Riehle is optimistic about this state of the industry, acknowledging a moderating year ahead but solid and consistent growth in the long term.
“Even after four years of the pandemic, (restaurant spending) is over 50% again. The typical American consumer has made it quite clear in terms of their standard of living as to how they want to spend their money. They want to prioritise restaurant spending,” he said. “The typical consumer over the upcoming decade will continue to allocate a great portion of their spending to restaurant meal, snack, and beverage solutions.”