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National Restaurant Association - Restaurant industry to navigate continued challenges in 2016

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Restaurant industry to navigate continued challenges in 2016

The National Restaurant Association projects that restaurants in 2016 will post sales of $782.7 billion and employ 14.4 million people in more than 1 million locations. Released today, the 2016 Restaurant Industry Forecast reveals that the U.S. restaurant industry will remain the nation’s second-largest private sector employer, providing career opportunities for 1in 10 working Americans.

“Though the overall economy is trending in the right direction, the operating environment isn’t without challenges going into 2016,” said Hudson Riehle, Senior Vice President of Research for the National Restaurant Association. “With overall tightening in some labor markets, we’re seeing recruitment and retention making a comeback as a top challenge for restaurant operators.”

Top restaurant industry trends for 2016 include:

Not all smooth sailing. Restaurant operators will face a number of headwinds in the 2016 business environment. From legislative and regulatory pressures and moderate economic growth, to labor cost increases and cybersecurity, both new and old issues will challenge profit margins and muddle operating procedures.

Labor pool is getting shallower. Recruitment and retention of employees will re-emerge as a top challenge for restaurant operators, as a tighter national labor market means greater competition with other industries for employees. Workforce demographics are shifting to include a greater proportion of older workers while the younger labor pool is shrinking.

Everybody’s business. The restaurant industry has always been one where people from all backgrounds have the opportunity to achieve the American dream of owning one’s own business. The restaurant industry is home to a growing number of women-owned and minority-owned businesses, where many current owners started their restaurant careers at entry level. Eating-and-drinking-place firms owned by women and minorities continue to grow at a faster rate than the overall industry.

Moderate sales growth. The restaurant industry will see its seventh consecutive year of real sales growth in 2016. Substantial regional variations will continue, reflecting local business conditions. The long-term trend of quickservice sales growth outpacing tableservice sales growth will also maintain its momentum, along with strong growth of snack and nonalcoholic beverage bars.

Technology growing pains. The availability of technology options is starting to move from novelty to expectation among many consumers. In the race to be tech-forward, new systems are popping up in more places as guests say they want to use them. However, two in five consumers say that technology makes restaurant visits and ordering more complicated, indicating that perhaps not all these new systems are as user-friendly as they could be. Restaurants will be focusing on closing that divide in the year ahead.

Mobile payment gaining acceptance. Few technologies are advancing faster than payment platforms. Security and convenience are converging in mobile payment systems, with a number of wallet apps and devices entering the market. Although a majority of consumers remain on the fence about paying for meals via smartphone, a growing number say they would use – or are already using – that option when available, and the trend is expected to keep its trajectory through 2016.

American foodie 2.0. The typical restaurant guest today is not the same as the typical restaurant guest 20 years ago. Having essentially grown up in restaurants, younger generations have a very sophisticated world-view when it comes to food. Restaurant operators say guests have higher expectations of their dining experience and pay more attention to everything from diet-specific food, to sustainability, to food sourcing and production than even just two years ago. Operators will carefully balance how to cater to these precise tastes without becoming too niche or alienating more mature guests. 

For more information on the 2016 Restaurant Industry Forecast, including graphics and video, visit Restaurant.org/Forecast.

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