In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy breaks down state restaurant sales projections for 2013 from the 2013 Restaurant Industry Forecast. Although the economic backdrop varies significantly across the country, the NRA expects restaurant sales to grow in all 50 states and the District of Columbia in 2013.
Driven by an improving economic environment and elevated levels of pent-up demand among consumers, the U.S. restaurant industry is projected to register sales growth of 3.8 percent in 2013. On the state level, restaurant sales are highly dependent on local employment trends, as jobs provide both the disposable income necessary to support additional spending and the need for convenience that the restaurant industry provides.
Although the national economy is still down roughly 4 million jobs from its pre-recession peak, the jobs picture varies significantly on the state level. As of October 2012, only seven states and the District of Columbia had more jobs than they did before the recession started. This group is led by North Dakota, where employment stands a whopping 16 percent above the pre-recession peak. In contrast, Nevada’s employment level remains 12 percent below its pre-recession level.
That’s not to say that several states haven’t registered sizable job growth post-recession. From the beginning of the national employment recovery in March 2010 through October 2012, 25 states and the District of Columbia have seen their employment base grow by at least 3 percent. North Dakota once again leads the pack with a 14.2 percent increase, followed distantly by Utah (6.5 percent) and Texas (6.2 percent).
At the same time, several states continue to be burdened with high unemployment rates even though they are adding jobs. California added jobs at a solid 4.2 percent rate since the national employment recovery began (compared to 3.5 percent on the national level), yet still had an unemployment rate of 10.1 percent in October 2012—the third highest in the nation. Similarly, Michigan had job growth above the national average between March 2010 and October 2012, but its jobless rate remained relatively high at 9.1 percent.
Overall, the state-level unemployment rate spread remains large—from an October 2012 low of 3.1 percent in North Dakota to a high of 11.5 percent in Nevada. However, employment trends are generally moving in the right direction across the states, albeit some faster than others.
Although the economic backdrop varies significantly across the country, the National Restaurant Association expects restaurant sales to grow in all 50 states and the District of Columbia in 2013. As restaurant sales are most heavily influenced by growth in employment, disposable income and population, the states with the strongest projected sales gains are those that will enjoy the most favorable economic and demographic climates in 2013.
Texas (5.0 percent), North Dakota (4.8 percent) and Florida (4.7 percent) are projected to lead the nation in restaurant sales growth in 2013. California and Utah are also expected to register sales growth in excess of 4 percent next year.
On a regional basis, the Association projects that restaurant sales growth will range from a 4.6 percent increase in the West South Central region to a 2.9 percent gain in New England.
2013 State Restaurant Sales Projections ($000)
Source: National Restaurant Association
For additional analysis of restaurant industry trends, log on to Restaurant TrendMapper (subscription required) or downlad the full 2013 Restaurant Industry Forecast (free to NRA members).