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National Restaurant Association - Operators say food costs No. 1 concern; still expect sales to grow

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Operators say food costs No. 1 concern; still expect sales to grow

Fullservice operators say rising food costs is their No. 1 concern, but still expect business conditions will improve in 2012, National Restaurant Association research has found.

According to the NRA's 2012 Restaurant Industry Forecast, a majority of operators identified increasing food costs as their No.1 business challenge this year, saying they expect them to chop into profits, but also indicated they think sales will grow.

Among operators questioned, 17 percent of family dining, 22 percent of casual dining and 23 percent of fine dining restaurateurs said commodities costs are a worrisome for their businesses.

A recent report by Fairfield, N.J.-based commodities analyst John Barone supports that concern. The Market Vision founder and president cited declining cattle and poultry supplies as the primarily reason for the upward spiral in chicken and choice-beef prices, among other proteins.

Despite the rise in costs, however, restaurateurs also said they anticipate business conditions will improve during the rest of the year. In the fine-dining segment, 51 percent of operators said they expect their sales to be higher and nearly 50 percent of casual-dining restaurateurs anticipated similar results. In the family-dining category, 35 percent said they expect business to be better in 2012.

"Restaurant operators are bullish about sales growth in the months ahead even though higher food costs are a challenge," said Hudson Riehle, senior vice president of the NRA's Research & Knowledge Center. "Fifty-three percent of all operators said they expect their sales to be higher over the next six months."

Riehle added that continued moderate growth in national employment is helping build consumer incomes and confidence, which is leading to increased spending at restaurants.

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