2012 Restaurant Industry Forecast

FEATURED 2012 CONSUMER RESEARCH SECTION

in a

ChallengingeCOnOMY

DeCODingCOnsuMers

OpTIMISTIC

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CAUTIOUS

HUNkERED-DOwN

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MISSIONWe exist to help our members — the cornerstone of their communities — build customer loyalty, rewarding careers and financial success.

MISSIONAs the philanthropic foundation of the National Restaurant Association, we exist to enhance the restaurant industry’s service to the public through education, community engagement and the promotion of career opportunities.

Shared VISION of the National Restaurant Association, National Restaurant Association Educational Foundation and State Restaurant Associations:

We will lead America’s restaurant industry into a new era of prosperity, prominence and participation, enhancing the quality of life for all we serve.

We create Value for our members in five ways:• Advocacyandrepresentation Building and sustaining positive public opinion and a favorable political

environment.

•Toolsandsolutions Helping grow revenues, increase profitability and develop employees.

•Educationandnetworking Providing opportunities to connect and learn from each other.

•Researchandinsights Anticipating and preparing for emerging trends that could impact

restaurants.

•Responsiblestewardship Providing thought leadership to inspire community involvement and

impact.

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www.restaurant.org | National Restaurant Association 1

The National Restaurant Association is pleased to provide the 2012 Restaurant Industry Forecast, our 43rd annual profile of restaurant-industry opportunities and challenges for the year ahead. The research and insights are based on analysis of the latest economic data, as well as extensive surveys of restaurateurs and consumers.

The National Restaurant Association will closely monitor incoming industry and economic data in the months ahead and provide updates to this Forecast at www.restaurant.org/research.

The 2012 Restaurant Industry Forecast was prepared by the National Restaurant Association Research and Knowledge Group:

Hudson RiehleSenior Vice President, Research and Knowledge

Bruce GrindyChief Economist

Tim Smith Art Director

Annika Stensson Public Relations

Jennifer Batty Editor

1200 17th St., NW, Washington, DC 20036(800) 424-5156 | www.restaurant.org

© 2012 National Restaurant Association

ISBN 978-1-931400-74-9

Thank you to our National Restaurant Association 2012 Restaurant Industry Forecast sponsor:

Inside

2012 Sales Projections ...................................................................................................2

Decoding Consumers in a Challenging Economy ........................................................9

Economic Outlook .........................................................................................................15

Fullservice Outlook ........................................................................................................21

Limited-Service Outlook ...............................................................................................27

Other Foodservice Segments ........................................................................................33

Food and Menu Trends .................................................................................................35

Workforce Outlook .......................................................................................................41

Supply-Chain Outlook ...................................................................................................47

Appendix .......................................................................................................................50

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2012 Restaurant Industry Forecast

National Restaurant Association | www.restaurant.org2

Sales Outlook

Driven by the continued national economic recovery and consumers’ pent-up demand for the food,

service and social outlet that restaurants provide, the U.S. restaurant industry is projected to expand in 2012. According to the National Restaurant Association’s 2012 Restaurant Industry Forecast, total restaurant-industry sales are projected to reach a record high of $631.8 billion in 2012, a 3.5 percent increase over 2011 and the second consecutive year that industry sales topped the $600 billion level.

In inflation-adjusted terms, total restaurant sales are projected to grow 0.8 percent in 2012, down slightly from a 1.3 percent gain in 2011. Although both the nominal and real growth rates will be somewhat below the 2011 gains, industry growth will remain in positive territory for the third consecutive year. This follows the unprecedented two straight years of real sales declines in 2008 and 2009.

Anticipating Consumers’ NeedsIn addition to revealing the Association’s sales and economic projections on the national and state levels, the 2012 Forecast also takes a detailed look at the mindset and spending patterns of consumers.

To be successful in today’s challenging business environment, restaurant opera-tors need to understand what makes customers tick and what motivates them to

choose one restaurant over another. To help operators better attract and retain customers, the 2012 Forecast analyzes consumers by creating two segments.

One segment looks at consumers by their financial situation and spending patterns. The result is the creation of three distinct consumer categories: Optimistic Consumers, Cautious Consumers and Hunkered-Down Consumers. Each group has a different mindset about the econo-my, and a different way of using restau-

rants in the current environment.The second segment looks at frequent

restaurant customers. These consumers are critical to the restaurant industry in good economic times, and are even more important in the current environment. The three categories analyzed are: Frequent Fullservice Customers, Frequent Quickser-vice Customers and Frequent Off-Premises Dinner Customers. Each frequent customer uses his or her respective segment more than once a week, on average.

2012:Achieving Growth in a Challenging Environment2012 REsTAuRANT INdusTRy FORECAsT

Adding It All up: $631.8 billionProjected restaurant-industry sales in 2012

*Eating places include fullservice restaurants and limited-service (quickservice) restaurants, cafeterias and buffets, social caterers, and snack and nonalcoholic beverage bars.

$575.1 billion

Eatingplaces*: $419.2 billion

Barsandtaverns: $18.9 billion

Managedservices: $44.4 billion

Lodgingplaces: $31.4 billion

Retail,vending,recreation,mobile: $61.2 billion

$54.2 billion

$2.5 billion

Commercial Restaurant Services

Noncommercial Restaurant Services

Military Restaurant Services



Sales Outlook

7.7%

8.4%

12.8%

11.6%

11.8%

11.5%

10.8%

12.4%

12.3%

9.2%

9.9%

6.9%

8.0% 8.3%

5.8%

6.6%

7.9%

7.2%

6.1%5.3%

3.4%

4.2%

4.4%

4.7% 5.0%

4.2%

4.6%

5.8%

5.3%

5.5%

4.6%

5.3%

4.5%

6.2%

5.3%

4.7%

4.8%

3.5%

–0.6%

3.1%

4.0%

3.5%3.0%

0.8%1.3%

0.6%

–2.8%

–0.9%

1.0%1.6%

2.2%

3.0%

2.1%

1.2%0.8%

3.0%2.9%3.0%

2.0%1.5%

2.7%2.9%

2.3%2.1%

–0.2%

0.5%

1.2%

2.8%

4.0%

2.5%2.1%

3.8%3.8%

1.6%1.2%

–0.1%

1.6%

3.2%

4.2%

5.0%

3.0%

–0.2%

5.1%

4.4%

Current dollar growth Real (inflation-adjusted) growth

Growth rates are estimated for 2008 to 2010 and projected for 2011 and 2012. Providing final estimates for restaurant-industry sales from previous years is an ongoing process. The National Restaurant Association’s Restaurant TrendMapper offers updated sales estimates as they become available.

Visit www.restaurant.org/trendmapper to learn more.

Source: National Restaurant Association

42 Years of Restaurant-Industry SalesThis chart shows sales growth for the restaurant industry since 1971, when the National Restaurant Association began issuing its annual

forecast. The chart shows growth in the number of dollars spent each year in restaurants as well as real (inflation-adjusted) sales growth.

Current dollar growth: 3.5%

Real (inflation-adjusted) growth: 0.8%2012

1971 201220102005200019951990198519801975

Restaurant-Industry Share of the Food Dollar

Restaurant-Industry Sales

Restaurant-Industry Employment

1955 Present 1970 1980 1990 2000 2012*

*Projected *Projected

2002 2012* 2022*

11.4 million12.9 million

14.3 million

$42.8$119.6

$239.3

$379.0

$631.8(Billions of Current Dollars)

$ $48%25%

http://www.restaurant.org/trendmapper



Sales Outlook

what’s in Store forRestaurant-Industry SalesRestaurant-industry food-and-drink sales: Projections for 2012

‘11–’12 % 2011 Projected 2012 Projected ‘11–’12 % Real Growth F&D Sales ($000) F&D Sales ($000) Change Change

Footnotes:

1 Data are given only for establishments with payroll.

2 Waiter/waitress service is provided, and the order is taken while the patron is seated. Patrons pay after they eat.

3 Patrons generally order at a cash register or select items from a food bar and pay before they eat.

4 Formerly commercial cafeterias.

5 Food-and-drink sales for non-payroll establishments are projected to total $12,615,226,000.

6 Also referred to as onsite food-service and food contractors.

7 Includes drug- and proprietary-store restaurants, general- merchandise-store restaurants, variety- store restaurants, food-store restaurants and grocery-store restaurants (including a portion of delis and all salad bars), gasoline-service-station restaurants and miscellaneous retailers.

8 Includes movies, bowling lanes, recreation and sport centers.

9 Includes sales of hot food, sandwiches, pastries, coffee and other hot beverages.

10 Business, educational, governmental or institutional organizations that operate their own restaurant services.

11 Includes industrial and commercial organizations, seagoing and inland-waterway vessels.

12 Includes voluntary and proprietary hospitals; long-term general, TB, nervous and mental hospitals; and sales or commercial equivalent to employees in state and local short-term hospitals and federal hospitals.

13 Sales (commercial equivalent) calculated for nursing homes and homes for the aged only. All others in this grouping make no charge for food served either in cash or in kind.

14 Continental United States only.

GrOuP I — cOMMercIal reStauraNt SerVIceS1

EATING PLACES Fullservice restaurants2 $195,711,168 $201,386,792 2.9% 0.2% Limited-service (quickservice) restaurants3 168,527,095 173,751,435 3.1% 0.4% Cafeterias, grill-buffets and buffets4 8,249,697 8,472,439 2.7% 0.0% Snack and nonalcoholic beverage bars 26,580,519 27,670,321 4.1% 1.4% Social caterers 7,513,666 7,934,432 5.6% 2.9% TOTAL EATING PLACES $406,582,145 $419,215,419 3.1% 0.4%Bars and taverns 18,359,387 18,910,169 3.0% 0.4% TOTAL EATING-AND-DRINKING PLACES $424,941,532 $438,125,588 5 3.1% 0.4%MANAGED SERVICES6

Manufacturing and industrial plants $7,007,302 $7,340,408 4.8% 2.1% Commercial and office buildings 2,611,070 2,684,180 2.8% 0.1% Hospitals and nursing homes 5,170,569 5,460,121 5.6% 2.7% Colleges and universities 13,889,332 14,418,786 3.8% 0.6% Primary and secondary schools 6,041,190 6,294,920 4.2% 1.4% In-transit restaurant services (airlines) 2,263,753 2,342,985 3.5% 0.8% Recreation and sports centers 5,611,996 5,875,760 4.7% 2.0% TOTAL MANAGED SERVICES $42,595,212 $44,417,160 4.3% 1.4%LODGING PLACES Hotel restaurants $29,602,800 $30,994,132 4.7% 2.0% Other accommodation restaurants 397,166 419,805 5.7% 3.0% TOTAL LODGING PLACES $29,999,966 $31,413,937 4.7% 2.0%Retail-host restaurants7 33,152,723 35,111,790 5.9% 3.2%Recreation and sports8 12,922,544 13,496,710 4.4% 1.7%Mobile caterers 628,422 653,685 4.0% 1.3%Vending and nonstore retailers9 11,537,834 11,883,970 3.0% 0.7%TOTAL — GROUP I $555,778,233 $575,102,840 3.5% 0.8%

GrOuP II — NONcOMMercIal reStauraNt SerVIceS10

Employee restaurant services11 $424,157 $440,942 4.0% 0.9%Public and parochial elementary, secondary schools 6,617,656 6,844,963 3.4% 0.6%Colleges and universities 7,206,760 7,478,958 3.8% 0.6%Transportation 2,069,914 2,175,955 5.1% 2.3%Hospitals12 15,755,054 16,375,645 3.9% 1.2%Nursing homes, homes for the aged, blind, orphans, and the mentally and physically disabled13 7,908,212 8,192,908 3.6% 0.8%Clubs, sporting and recreational camps 9,404,611 9,711,534 3.3% 0.6%Community centers 2,901,663 3,006,123 3.6% 0.8%TOTAL — GROUP II $52,288,027 $54,227,028 3.7% 0.9%TOTAL — GROUPS I AND II $608,066,260 $629,329,868 3.5% 0.8%

GrOuP III — MIlItarY reStauraNt SerVIceS14 Officers’ and NCO clubs (Open mess) $1,626,203 $1,722,149 5.9% 3.2%Military exchanges 719,946 764,583 6.2% 3.5%TOTAL — GROUP III $2,346,149 $2,486,732 6.0% 3.3%

GRANDTOTAL $610,412,409 $631,816,600 3.5% 0.8%



Sales Outlook

Major Markets: projected Sales, 2012The chart on pages 5–6 provides more detail on the National Restaurant Association’s projections for sales in markets outside the “eating-

and-drinking places” category in 2012, including foodservice sales at schools, worksites, health-care facilities, lodging places and the military.

2011 Projected 2012 Projected ‘11–’12 % ‘11–’12 % Real F&D Sales ($000) F&D Sales ($000) Change Growth Change

Colleges and universities Managed services $13,889,332 $14,418,786 3.8% 0.6% Noncommercial 7,206,760 7,478,958 3.8% 0.6% Subtotal 21,096,092 21,897,744 3.8% 0.6%Primary and secondary schools Managed services 6,041,190 6,294,920 4.2% 1.4% Noncommercial 6,617,656 6,844,963 3.4% 0.6% Subtotal 12,658,846 13,139,883 3.8% 1.0%TOTAL EDUCATIONAL $33,754,938 $35,037,627 3.8% 0.8%

$35.0 billion

Educational SalesWhatthiscategoryincludes: Food-and-drink sales by foodservice companies that manage restaurant services in colleges, universities, primary and secondary schools, as well as food-and-drink sales by schools that operate their own restaurant services.


Managed services Manufacturing and industrial plants $7,007,302 $7,340,408 4.8% 2.1% Commercial and office buildings 2,611,070 2,684,180 2.8% 0.1%Noncommercial employee restaurant services* 424,157 440,942 4.0% 0.9%TOTAL EMPLOYEE $10,042,529 $10,465,530 4.2% 1.5%

*Includes sales for industrial plants and office buildings, seagoing ships, and inland-waterway vessels

$10.5 billion

Employee SalesWhatthiscategoryincludes: Food-and-drink sales by for-profit companies that manage restaurant services for employees at manufacturing and industrial plants and in commercial office buildings, as well as food-and-drink sales by plants and companies that run their own noncommercial employee restaurant services.


Managed services in hospitals and nursing homes $5,170,569 $5,460,121 5.6% 2.7%Hospitals* 15,755,054 16,375,645 3.9% 1.2%Nursing homes** 7,908,212 8,192,908 3.6% 0.8%TOTAL HEALTH CARE $28,833,835 $30,028,674 4.1% 1.4%

*Includes voluntary and proprietary hospitals; long-term general, TB, mental hospitals; and sales or commercial equivalent to employees in state and local short-term hospitals and federal hospitals.**Includes homes for the aged, blind, orphans, mentally and physically disabled; sales (commercial equivalent) calculated for nursing homes and homes for the aged only. All others in this group make no charge — either in cash or in kind for food served.

$30.0 billion

Health-Care SalesWhatthiscategoryincludes: Food-and-drink sales by foodservice companies that manage restaurant services in hospitals and nursing homes, as well as food-and-drink sales by hospitals and nursing homes that operate their own restaurant services.


Hotel restaurants $29,602,800 $30,994,132 4.7% 2.0%Other accommodation restaurants 397,166 419,805 5.7% 3.0%TOTAL LODGING PLACES $29,999,966 $31,413,937 4.7% 2.0%

$31.4 billion

Lodging-place SalesWhatthiscategoryincludes: Food-and-drink sales at hotel restaurants and other accommodation restaurants.

2012 projected food-and-drink sales






Sales Outlook


Officers’ and NCO clubs (Open mess) $1,626,203 $1,722,149 5.9% 3.2%Military exchanges 719,946 764,583 6.2% 3.5%TOTAL MILITARY* $2,346,149 $2,486,732 6.0% 3.3%

*Continental United States only.

$2.5 billion

Military SalesWhatthiscategoryincludes: Food-and-drink sales at military clubs and exchanges.


Recreation and sports centers Managed services $5,611,996 $5,875,760 4.7% 2.0% Noncontractors* 12,922,544 13,496,710 4.4% 1.7% Subtotal 18,534,540 19,372,470 4.5% 1.8%Clubs, sporting and recreational camps** 9,404,611 9,711,534 3.3% 0.6%TOTAL RECREATIONAL $27,939,151 $29,084,004 4.1% 1.4%

*Includes sales at movies, bowling lanes, and recreation and sports centers.**A portion of food-and-beverage sales in clubs is business-related.

$29.1 billion

Recreational SalesWhatthiscategoryincludes: Food-and-drink sales at recreation and sports centers, such as movie theaters, sports arenas and bowling lanes.


Managed services, in-transit commercial airlines $2,263,753 $2,342,985 3.5% 0.8%Noncommercial transportation 2,069,914 2,175,955 5.1% 2.3%TOTAL TRANSPORTATION $4,333,667 $4,518,940 4.3% 1.5%

$4.5 billion

Transportation SalesWhatthiscategoryincludes: Food-and-drink sales on airlines, passenger/cargo liners and railroads.


Retail hosts* $33,152,723 $35,111,790 5.9% 3.2%Mobile caterers 628,422 653,685 4.0% 1.3%Vending and non-store retailers** 11,537,834 11,883,970 3.0% 0.7%Community centers 2,901,663 3,006,123 3.6% 0.8%

*Includes drug- and proprietary-store, general-merchandise store, variety-store, food-store and grocery-store restaurants (including a portion of delis and all salad bars); gasoline/service-station restaurants; and miscellaneous retailers.**Includes sales of hot food, sandwiches, pastries, coffee and other hot beverages.

$50.7 billion

Other Sales

Major Markets Continued







Sales Outlook

COMMERCIAL RESTAURANT SERVICES $523,459,092 $519,554,791 –0.7% $535,106,004 3.0% $555,778,233 3.9% $575,102,840 3.5% Eating Places 388,478,808 384,111,349 –1.1% 393,028,164 2.3% 406,582,145 3.4% 419,215,419 3.1% Fullservice restaurants 191,470,223 186,109,057 –2.8% 189,459,020 1.8% 195,711,168 3.3% 201,386,792 2.9% Limited-service restaurants 157,591,999 159,010,327 0.9% 162,985,585 2.5% 168,527,095 3.4% 173,751,435 3.1% Cafeterias, grill-buffets and buffets 7,691,686 7,768,603 1.0% 8,017,198 3.2% 8,249,697 2.9% 8,472,439 2.7% Snack and nonalcoholic beverage bars 24,652,412 24,504,498 –0.6% 25,484,678 4.0% 26,580,519 4.3% 27,670,321 4.1% Social caterers 7,072,488 6,718,864 –5.0% 7,081,683 5.4% 7,513,666 6.1% 7,934,432 5.6% Bars and taverns 17,117,259 17,305,549 1.1% 17,790,104 2.8% 18,359,387 3.2% 18,910,169 3.0% TOTAL EATING-AND-DRINKING PLACES $405,596,067 $401,416,898 –1.0% $410,818,268 2.3% $424,941,532 3.4% $438,125,588 3.1%NONCOMMERCIAL RESTAURANT SERVICES $47,509,488 $47,881,491 0.8% $49,823,416 4.1% $52,288,027 4.9% $54,227,028 3.7%MILITARY RESTAURANT SERVICES $2,046,800 $2,149,353 5.0% $2,235,735 4.0% $2,346,149 4.9% $2,486,732 6.0%TOTAL INDUSTRY SALES $573,015,380 $569,585,635 –0.6% $587,165,155 3.1% $610,412,409 4.0% $631,816,600 3.5%


Restaurant-Industry sales Over Five years: 2008-2012

East south Central2012 projected growth:

Regional National

• Jobs 1.3% 1.3%

• Income 1.7% 2.0%

• Population 0.8% 1.0%

Restaurant Sales 3.0% 3.2%

West North Central2012 projected growth:

Regional National

• Jobs 1.1% 1.3%

• Income 2.2% 2.0%



New England2012 projected growth:

Regional National

• Jobs 0.7% 1.3%

• Income 1.4% 2.0%



East North Central2012 projected growth:

Regional National

• Jobs 0.6% 1.3%

• Income 0.9% 2.0%



Mountain2012 projected growth:

Regional National

• Jobs 1.5% 1.3%

• Income 2.5% 2.0%



West south Central2012 projected growth:

Regional National

• Jobs 2.1% 1.3%

• Income 2.4% 2.0%



south Atlantic2012 projected growth:

Regional National

• Jobs 1.1% 1.3%

• Income 2.2% 2.0%



Pacific2012 projected growth:

Regional National

• Jobs 1.1% 1.3%

• Income 1.7% 2.0%



Middle Atlantic2012 projected growth:

Regional National

• Jobs 1.0% 1.3%

• Income 1.6% 2.0%



1 Regional restaurant-sales-growth figures are based on current dollars and not adjusted for menu price inflation. For definition of restaurant sales included in this grouping see page 50 footnote.

2 Economic indicators show growth in region’s total employment, real disposable personal income and total population.

Regionalsnapshots

Restaurant sales1 and economic2

growth projected for 2012 in the

nine u.s. Census regions

Growth in the restaurant industry typically varies significantly by region of the country, and is most heavily influenced by gains in employment,

disposable income and population. (Note: The appendix on page 50 offers details on restaurant-sales growth in each state.)

Restaurant sales by U.S. Census Region

2008 2009 ‘08–’09 2010 ‘09–’10 2011 ‘10–’11 2012 ‘11–’12 Sales Sales Change Sales Change Sales Change Sales Change



Sales Outlook

Restaurant sales Growth in 2012 (projected)

See state information appendix on page 50 for full sales projections for all states.

*State restaurant-sales figures are in current dollars and not adjusted for menu price inflation. For definition of restaurant sales included in this grouping see page 50 footnote. National sales for this group are projected to increase at a 3.2 percent rate in 2012.


OR3.1%

CA3.0%

AK3.5%

AZ3.3% NM

3.3%

UT3.6%

NV3.4%

ID3.2%

MT3.2%

WY3.7%

CO3.5%

TX4.1%

OK3.4%

NE3.0%

SD3.0%

ND4.1%

KS2.7%

HI2.9%

WA3.3%

MN3.1%

IA2.3%

MO2.5%

AR3.1%

LA3.3%

WI2.8%

IL3.2%

MS2.8% AL

3.2%

MI2.7%

IN2.6%

OH3.0%

FL3.9%

GA3.1%

SC3.6%

TN2.8%

KY3.3%

NC3.3%

VA3.3%

PA3.2%

WV2.2%

NY3.4%

ME2.7%

VT2.2%

NH2.7%

MA2.4%

RI2.3%

CT2.9%

DC3.3%

MD3.7%

DE3.1%

NJ3.3%

3.5% or higher

3.2% to 3.4%

2.8% to 3.1%

2.7% or less

Projected increase in restaurant sales in 2012

North Dakota 4.1%Texas 4.1%Florida 3.9%Wyoming 3.7%Maryland 3.7%South Carolina 3.6%Utah 3.6%Alaska 3.5%Colorado 3.5%New York 3.4%Oklahoma 3.4%Nevada 3.4%

2012 Restaurantsales Growth

Projected restaurant sales volume in 2012 ($000)

1 California $63,837,084 2 Texas $38,421,874 3 New York $31,927,145 4 Florida $31,463,913 5 Illinois $20,677,633 6 Pennsylvania $17,084,489 7 Ohio $16,619,422 8 Georgia $15,224,418 9 North Carolina $14,685,881 10 NewJersey $13,567,704 11 Virginia $13,263,834 12 Massachusetts $12,632,894

2012 Restaurantsales VolumeTop 12 States Top 12 States


w ith the official end of the Great Recession now more than two years in the past, most households expected things would be getting better. Sluggish job growth, persistent high unemployment, stagnant incomes and falling home

prices were supposed to be in the rear view mirror by now. The good times should have returned, giving consumer sentiment a much-needed boost.

Unfortunately, the reality is quite different from those expectations, accord-ing to new National Restaurant Association research. In fact, from the perspective of many consumers, the economy didn’t improve at all in 2011. According to the Association’s National Household Survey fielded in December 2011, 92 percent of adults described the current state of the

economy as either “fair” or “poor.” When asked the same question in December 2010, an identical 92 percent of adults gave the same assessment of the economy.

It can even be argued that consumers’ view of the economy worsened over the last year, as 65 percent gave the economy a “poor” rating in December 2011, an increase from 58 percent just a year ago.

HuNkEREd-dOWN

OPTIMIsTIC

CAuTIOus

in a

ChallengingeCOnOMY

DeCODingCOnsuMers

FEATURED 2012 CONSUMER RESEARCH SECTION

COntinueD …



Although the general assessment of the national economy remains negative, consumers are somewhat more positive about their personal financial situation. Forty-three percent of adults described their personal finances as “excellent” (10 percent) or “good” (33 percent), while 56 percent gave a rating of “fair” (38 percent) or “poor” (18 percent).

This is generally on par with consumers’ sentiment a year ago, when four out of 10 assessed their personal financial situation as “excellent” or “good,” and six out of 10 said it was “fair” or “poor.”

Outlook Remains MixedConsumers’ assessment of current economic conditions is generally bleak, but their outlook for the year ahead remains mixed. In fact, when compared to December 2010, consumers are actually somewhat less optimistic about an improving economic environment in the year ahead.

Three out of 10 adults (30 percent) said they think the nation’s economy will get better in 2012, while a solid majority expect conditions to worsen (24 percent) or stay the same (44 percent). This outlook is similar to the view consumers held a year ago, when 29 percent thought economic conditions would improve in 2011 and 17 percent thought the economy would get worse.

On an individual level, consumers are somewhat more bullish about the prospects for their personal finances in the year ahead. Thirty-three percent of adults expect their household financial situation to be better in 2012 than it was in 2011. Meanwhile, just 9 percent said they think their financial situation will get worse in 2012.

Younger adults are much more optimis-tic about their personal economics in 2012. Forty-eight percent of adults between the ages of 18 and 34 said their household financial situation will improve in 2012; 2 percent expect it to worsen. In contrast, only 13 percent of adults age 65 and older expect their household financial situation to get better in 2012, while a higher 16 percent predicted it will get worse.

Loss of TrustContributing to the general malaise in the country is the overall lack of confidence in many of the entities and institutions that are expected to be working toward improving the common good. From the financial meltdown to the nation’s AAA

credit downgrade to Congress’s inability to reach a compromise on legislation, many consumers have lost trust in the pillars of American society.

Moreover, research shows that the situation is getting worse. In the Associa-tion’s 2010 and 2011 National Household

Consumers Still Not Confident in the EconomyConsumers’ assessment of the economy, December 2011 versus December 2010

december 2011

december 2010

Decoding Consumers

Source: National Restaurant Association, National Household Survey, 2010 and 2011

Stay About the Same

54%

Same Old, Same Old

Consumers More Optimistic About Their Own piggy BanksConsumers’ assessment of their personal finances, December 2011 versus December 2010

december 2011

december 2010

Poor Fair Good Excellent

Source: National Restaurant Association, National Household Survey, 2010 and 2011

8%34%58%

7%34%41%18%

10%33%38%18%

27% 7%65% 1%

Get Better

29%

Get Worse 17%

All Adults

33%

Glass Half Full or Half Empty?Consumers’ outlook for their household financial situation in 2012, by age group

Better Than 2011 About the Same as 2011 Worse Than 2011

Source: National Restaurant Association, National Household Survey, 2011

18 to 34 35 to 44 45 to 54 55 to 64 65 or Older

58%

9%

48% 49%

2%

34%

57%

8%

34%

53%

11%

25%

61%

13% 13%

70%

16%

56%percent of adults

who described their personal finances as “fair” or “good”

Outlook for 2011(in December 2010)

Outlook for 2012(in December 2011)

Stay About the Same

44%Get Better

30%

Get Worse 24%

Don’t Know

2%



Surveys, consumers were asked how much confidence they had in various American institutions and entities. Without fail, their responses showed that confidence in most of the main institutions and entities is eroding across the board.

In December 2011, 69 percent of adults said they had little or no confidence in Congress, up from 60 percent in December 2010. Similarly, 55 percent of adults said they had little or no confidence in the federal government or national news media, up from less than half of adults in 2010. Roughly one-half of adults said they had little or no confidence in large corpora-tions or the financial industry, which also represented an increase from a year ago.

There is one exception to consumers’ declining confidence — they still have faith in their communities’ businesses. Forty-three percent of adults said they have “a great deal” or “quite a bit” of confidence in businesses in their community, matching the proportion that reported similarly in 2010.

Taken as a whole, the result is a shortage in confidence in the overall economy — a trend that is worsening. Only 12 percent of adults said they had “a great deal” or “quite a bit” of confidence in the national economy, while 51 percent said they had

“very little” or “none at all.” In December 2010, 14 percent of adults said they had “a great deal” or “quite a bit” of confidence in the national economy, while 41 percent said they had “very little” or “none at all.”

Searching for problem SolversWith all the challenges facing the country, where are consumers looking for solutions? They are turning to their local businesses. Nearly two-thirds of adults (63 percent) said they think businesses in their community are doing the most to get the economy moving again. Fourteen percent said they think large corporations are doing the

most, while just 10 percent picked Congress as the biggest economic problem solver.

A Head’s Up on Consumer ThinkingEven during good economic times, one size does not fit all for consumers. Restaurant operators are well aware that they have to tailor their food, service and marketing to the kind of consumer they want to reach. In today’s challenging economic environment, it is even more important for operators to know their customers and how to appeal to them.

The Association’s 2012 Forecast takes a detailed look at the mindset, motivations and spending patterns of today’s consumers to help restaurant operators create a forward-thinking business plan that will enable them to effectively compete for consumers’ limited dollars.

Based on the Association’s 2011 National Household Survey, consumers are divided into the following three segments based on their financial situation, current spending behavior and economic outlook:

• Optimistic Consumers: 21 percent of adults said they are confident in their financial situation and have not cut back on spending.

Local BusinessLeading the wayConsumers’ view of who is doing the most to help get the economy back on track

Decoding Consumers

Confidence in Nation’s pillars Still ChallengedThe amount of confidence consumers have in the following institutions and entities

Congress

Federal Government

National News Media

Financial Industry

Large Corporations

Businesses in Community

None at All Very Little Some Quite a Bit A Great Deal


24%36%33% 3%

32%31%24% 8%

6%31%30%25% 6%

4%37%31%20% 5%

5%36%29%20% 9%

16%42%10%4% 27%

Source: National Restaurant Association, National Household

Survey, 2010 and 2011

Consumers’ Level of Confidence in the National Economy:december 2010

december 2011

Very Little

26%

None at All

15% A Great Deal

5%Quite a Bit

9%

Some

45%

Very Little

33%

None at All

18%A Great Deal

4%Quite a Bit

8%

Some 36%percent of adults who said they had little or no confidence in Congress, up from 60 percent in December 2010.69%

LargeCorporations

14%

Congress

10%

Don’t Know 13% Businesses in Their

Community

63%


Survey, 2011



Decoding Consumers

• Cautious Consumers: 42 percent of adults said they are taking a wait-and-see approach and have cut back somewhat on spending until the economy improves.

• Hunkered-Down Consumers: 37 percent of adults said they are very concerned about the economy and have cut back significantly on spending.

The Inside Scoop on Today’s ConsumerThe demographic profiles of the three consumer groups are quite diverse. Nearly two-thirds of Optimistic Consumers (63 percent) are men, while 57 percent of Hunkered-Down Consumers are women. The Cautious group is almost evenly split between men and women.

Optimistic Consumers have the highest representation of younger and older adults. Fifty-three percent of Optimistic Consumers are between the ages of 18 and 44, compared with 48 percent of Cautious Consumers and 40 percent of Hunkered-Down Consumers. Twenty-one percent of

Optimistic Consumers are age 65 or older, higher than the other two groups. Conversely, 43 percent of Hunkered-Down Consumers are between the ages of 45 and 64, compared with 33 percent of Cautious Consumers and 25 percent of Optimistic Consumers.

A majority of individuals in each of the three consumer groups are employed, led by 56 percent of Cautious Consumers. Seven-teen percent of Hunkered-Down Consumers are currently not employed, compared with 8 percent of individuals in the Optimistic and Cautious groups. Optimistic Consumers are slightly more likely to be retired than those in the other two groups.

Not surprisingly, Optimistic Consumers have the highest average household income out of the three groups. Sixty-three percent of Optimistic Consumers have an annual household income of $50,000 or more, and the average income for the group is $72,600. Cautious Consumers have an average household income of $63,800, while Hunkered-Down Consumers have an average income of $49,800.

On the national level, Cautious Consumers are the largest category, with 42 percent of adults identifying themselves with this group. The same holds true regionally—the Cautious group represents the largest number of consumers in each of the four U.S. regions.

The Midwest region is home to the highest proportion of Optimistic Consumers (27 percent), well above this group’s share in the South (20 percent), West (20 percent) and Northeast (18 percent). The West (39 percent) and South (38 percent) regions have the highest proportion of Hunkered-Down Consumers.

Consumers who describe themselves as …

Percent of all consumers 21% 42% 37%

deMOGraPhIc characterIStIcS

Gender Male ..................... 63% Male .....................49% Male......................43% Female ................. 37% Female ..................51% Female ..................57%

Age 18 to 44 ................ 53% 18 to 44 ................48% 18 to 44 ................40% 45 to 64 ................ 25% 45 to 64 ...............33% 45 to 64 ................43% 65 and Older........ 21% 65 and Older ........16% 65 and Older ........15%

Employment status Employed ............. 53% Employed .............56% Employed .............51% Not Employed........ 8% Not Employed ........8% Not Employed ......17% Retired ................. 24% Retired .................20% Retired ..................21%

Household income Less Than $50k .... 29% Less Than $50k .....39% Less Than $50k .....56% $50k or More ....... 63% $50k or More .......53% $50k or More .......37% Avg. Income ....$72,600 Avg. Income ....$63,800 Avg. Income ... $49,800


ConsumerConsumption

A Closer Look atToday’s Consumers

21% 42% 37%

OptimisticConsumers

Hunkered-downConsumers

CautiousConsumers


Survey, 2011

OPTIMIsTIC CAuTIOus HuNkEREd-dOWN



An Economic profile of Today’s ConsumerAll three consumer groups share the same cloudy current assessment of the nation’s economy, but Optimistic Consumers and Cautious Consumers have a more optimis-tic outlook for 2012. Forty-four percent of Optimistic Consumers and 32 percent of Cautious Consumers expect the economy to get better in 2012, while less than one out of five think the economy will get worse. Among Hunkered-Down Consumers, only 20 percent expect the economy to get better in 2012, while 36 percent expect economic conditions to worsen.

Optimistic Consumers also are much more upbeat and optimistic than the other two groups about their personal financial situation. Seventy-three percent of Optimis-tic Consumers describe their current personal finances as “excellent” or “good,” compared with 48 percent of Cautious Consumers and just 20 percent of Hunkered- Down Consumers. All three groups are generally optimistic that their personal

financial situation will improve in 2012.The most striking economic difference

between the three consumer categories is their discretionary spending levels com-pared with before the recession began.

Seventy-two percent of Optimistic Consum-ers said their current spending levels on things like restaurants, entertainment, clothing and travel are about the same as they were before the recession began. Only

Mapping Consumers’ MindsetRegional breakdown of the three consumer categories

Decoding Consumers



ecONOMIc characterIStIcS

Current state of the nation’s economy Excellent/Good .... 13% Excellent/Good ......8% Excellent/Good .......4% Fair/Poor .............. 87% Fair/Poor ...............92% Fair/Poor ...............96%

Outlook for economy in 2012 Get Better ............ 44% Get Better ............32% Get Better.............20% Get Worse ............ 19% Get Worse ............18% Get Worse ............36%

Current state of personal finances Excellent/Good .... 73% Excellent/Good ....48% Excellent/Good .....20% Fair/Poor .............. 26% Fair/Poor ...............52% Fair/Poor ...............80%

Outlook for personal financial situation in 2012 Get Better ............ 41% Get Better ............30% Get Better.............31% Get Worse .............. 1% Get Worse ..............5% Get Worse ............17%

Current spending levels on things like restaurants, Higher .................. 12% Higher ....................8% Higher...................11% entertainment, clothing and travel compared Lower ................... 16% Lower ...................51% Lower....................67% with before the recession About the Same ... 72% About the Same ...40% About the Same ...20%


who’s Seeing Green:An Economic profile of Today’s Consumers


Optimistic ............ 20% Cautious ............... 41% Hunkered-Down .. 39%








Decoding Consumers


reStauraNt BehaVIOr

Average quickservice occasions per month 7.9 7.8 4.3

Average fullservice occasions per month 6.2 5.0 2.8

Average off-premises dinner occasions per month 5.2 4.6 2.8

Not eating on premises as often as they would like 28% 35% 56%

Not ordering takeout/delivery as often as they would like 29% 34% 54%

Would eat out more often if they were financially able 38% 53% 68%

Enjoy going to restaurants 97% 93% 89%


Most Consumers StillEnjoy Going to Restaurants

16 percent of Optimistic Consumers said their current spending levels are lower than they were before the recession began.

In contrast, 51 percent of Cautious Consumers and 67 percent of Hunkered-Down Consumers said their current spending levels on those discretionary items are lower than they were before the recession began.

Consumers Still Hungry to Dine OutThe good news for restaurant operators is that Optimistic Consumers are above-aver-age restaurant customers across the three major spending categories tracked in the 2012 Forecast. In a typical month, Optimis-tic Consumers average 7.9 quickservice occasions, 6.2 fullservice occasions and 5.2 off-premises dinner occasions. In compari-son, the overall adult population reported averages of 6.0 quickservice occasions, 3.9 fullservice occasions and 3.4 off-premises dinner occasions in a typical month.

Despite their partial pullback on

spending, Cautious Consumers still have restaurant patronage levels above the overall average. In a typical month, Cautious Consumers average 7.8 quickser-vice occasions, 5.0 fullservice occasions and 4.6 off-premises dinner occasions.

Although their spending levels are reduced in the current economic environ-ment, Hunkered-Down Consumers haven’t completely dropped off the restaurant radar. Hunkered-Down Consumers average 4.3 quickservice occasions, 2.8 fullservice occasions and 2.8 off-premises dinner occasions in a typical month, somewhat below the national average in each category.

Regardless of the economic challenges and their impact on restaurant behavior in the current environment, the most positive news is that the vast majority of consumers across all categories have positive feelings toward the restaurant industry. Ninety-seven percent of Optimistic Consumers, 93 percent of Cautious Consumers and 89 percent of Hunkered-Down Consumers said they enjoy going to restaurants.

This is reflected in the sizable propor-tion of consumers who said they would like to patronize the restaurant industry more frequently — particularly in the Hunkered-Down group. Fifty-six percent of Hunkered-Down Consumers said they are not eating on premises at restaurants and fast-food places as often as they would like, while 54 percent reported similarly about ordering takeout or delivery.

This pent-up demand for restaurant services also extends to the better-positioned groups, with more than one-third of Cautious Consumers and roughly three out of 10 Optimistic Consumers saying they are not using on-premises or off-premises options as often as they would like. In addition, nearly seven out of 10 Hunkered-Down Consumers (68 percent) and 53 percent of Cautious Consumers said they would eat out more often if they were financially able.

These responses indicate that once the economic environment improves, individuals in these consumer groups will eagerly resume dining on premises, ordering in and taking out.


2012EconomicOutlookWith many consumers remaining on the sidelines and other options for economic engines limited, the road ahead will be one of moderate growth.

SECTION 1



Economic Outlook

By most measures, the national economy failed to gather a full head of steam in 2011. Although

overall economic output expanded for a

second straight year, it wasn’t enough to produce jobs at a rate sufficient to put a significant dent in unemployment.

Indeed, the vast majority of U.S. consumers still have a bleak assessment of the nation’s economy. According to the Association’s 2011 National Household Survey fielded in December 2011, more than nine out of 10 adults gave the national economy a rating of “poor” (65 percent) or “fair” (27 percent). Seven percent of adults described the economy as “good,” while only 1 percent gave it an “excellent” rating.

It All Comes Down to JobsThe root cause of consumers’ pessimistic sentiment is the lack of significant job growth. The private sector added 1.9 million jobs during 2011, up from a gain of 1.2 million jobs in 2010. Despite the increase, the private sector is only about one-third of the way to replacing the more than 8.8 million jobs that were shed during the recession. Even factoring in the expected stronger growth in the next couple of years, a full recovery from the jobs lost during the recession isn’t likely until 2014.

Counteracting the private-sector gains somewhat was a steady decline in public-sector employment, particularly on the state and local levels. Local governments have cut more than a half-million jobs since the beginning of the recession, as many cash-strapped municipalities deal with the impact of falling residential property values on their revenue collec-tions.

Overall, the public sector lost nearly 300,000 jobs during 2011, which damp-ened the positive impact of the private-sector gains. The net result is that more than 13 million individuals were unem-ployed at the end of 2011, which although

2012 Economic Outlook2012 REsTAuRANT INdusTRy FORECAsT

EconomicRecovery Expected to Continue Despite Risks

Economic Growth Income GrowthJob Growth

Source: Bureau of Economic Analysis, National Restaurant Association

*Projected

Source: Bureau of Economic Analysis, National Restaurant Association

*Projected

Source: Bureau of Labor Statistics, National Restaurant Association

*Projected

More Green to Go AroundReal Gross Domestic Product growth

Dollars and SenseReal disposable personal income growth

Economy Expected to Add Jobs at Strongest Rate Since 2006Total U.S. employment growth

2.5%

3.5%3.1% 2.7%

1.9%

–0.3%

–3.5%

3.0%

1.7%2.5% 2.5%

3.4%

1.4%

4.0%

2.4% 2.4%

–2.3%

1.8%1.0%

2.0%

–0.3%

1.1%1.7% 1.8%

1.1%

–0.6%

–4.4%

–0.8%

1.0% 1.3%

2003 2003 2005 2006 2007 2008 2009 2010 2011 2012* 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*



Economic Outlook

Just like Tip O’Neill said about politics, all economics is local. Although the economic recovery has thus far been sluggish on the national level—marred by persistently

high unemployment rates—some regions of the country have experienced robust growth during the last couple years.

From the beginning of the national employment recovery in March 2010 through November 2011, total employment in North Dakota jumped 8.0 percent, which was double Utah’s gain — its closest competitor — of 4.0 percent. In total, only six states saw job growth of at least 3 percent during this period, while 12 states experienced growth of less than 1 percent.

On the flip side, several states continue to be saddled with high unemployment rates even though they are adding jobs. California added jobs at a 2.1 percent rate in the 21 months since the national employment recovery began, yet still had an unemployment rate of 11.3 percent in November 2011 — the second highest in the nation. Similarly, the total number of jobs in Texas increased 3.8 percent between March 2010 and November 2011, but its jobless rate remained relatively high at 8.1 percent.

Overall, the state-level unemployment rates spanned nearly 10 percentage points in November 2011, from a low of 3.5 percent in North Dakota to a high of 13.0 percent in Nevada. Although the recession was national, the recovery has largely been regional to this point.

3%+

2%–2.9%

1%–1.9%

0–0.9%

Source: Bureau of Labor Statistics, figures are seasonally adjusted

where the Jobs – and Jobless – Are

HelpwantedJob growth since the national employment recovery began in March 2010 through November 2011

3.6%

4.0%

8.0%

3.8%

3.5%

3.4%

<6%

6%–7.9%

8%–9.9%

10%+

Source: Bureau of Labor Statistics, figures are seasonally adjusted

JobswantedState unemployment rates in November 2011 11.3%

13.0%

3.4%

4.3%

4.1%

10.0%

down from the peak of the recession, is still persistently high. In addition, the depth of the unemployment problem is likely masked by the large number of individuals who have dropped out of the labor force.

Moderate Growth Expected in 2012With many consumers remaining on the sidelines and other options for economic engines limited, the road ahead will be one of moderate growth. There are still considerable risks moving forward, including Europe’s fiscal crisis and the negative short-term impact if the payroll tax holiday and emergency unemployment benefits are not extended through 2012.

Perhaps the most important factor in getting the economy back on track is the stabilization of the housing market. First, it gives consumers the wealth and confi-dence to bolster spending levels. Second, rising property values would increase local government tax revenues and help them add back some of the half-million jobs they were forced to cut during the last three years. Finally, many small-business owners like restaurateurs use their home as collateral for loans to expand and grow their business, so an improving housing market would open up an additional source of capital.

Overall, the economic recovery remains shaky, but is expected to post somewhat stronger growth in 2012.

Jobs: Although the economy will likely not regain all the jobs lost during the recession until 2014, job growth is expect-ed to improve in 2012. Total employment is projected to increase at a 1.3 percent rate in 2012, the strongest gain since 2006. However, the national unemployment rate will likely remain elevated throughout the year, as more people reenter the labor market.

GDP: Growth is expected to fall short of the levels needed for significant job creation, but economic output is expected to improve during 2012. Overall, the National Restaurant Association expects real Gross Domestic Product (GDP) to increase at a 2.5 percent rate in 2012, up from the 1.7 percent gain registered in 2011.

Employment



Economic Outlook

Access to Capital Remains Challenging

On top of the challenging economic environment, access to capital remains a significant issue for many restaurant operators. Rough-

ly half of restaurant operators said it was more challenging to get credit and financing in 2011 than it was in 2010, while only about one out of 10 said it was less challenging.

Quickservice and fast-casual operators were more likely to report problems getting access to capital — nearly six out of 10 said it was more challenging in 2011 than it was in 2010.

Obtaining credit and financing also was more of an issue for franchisees than it was for independent operators in 2011. Sixty-six percent of single-unit franchisees and 60 percent of multiunit franchisees said obtaining credit was more challenging in 2011 than it was in 2010. In comparison, less than half of independent operators reported similar difficulties.

Income: As a result of a somewhat stronger jobs environment, income growth is expected to improve from a sluggish 2011 performance. The Association projects real disposable personal income to increase at a 2.0 percent rate in 2012, up from a modest 1.0 percent gain in 2011.

Energy prices Still Draining Bottom LineEnergy prices are closely watched indica-tors for the restaurant industry, because they impact both consumer demand and the operational side of the business. In 2012, energy prices are generally expected to remain elevated, according to the U.S. Energy Information Administration (EIA).

On the consumer side, EIA expects gas prices to average $3.45 in 2012. That represents a slight drop from the record high of $3.53 in 2011, but still will be well

above the recent averages of $2.35 in 2009 and $2.78 in 2010. The elevated levels of pump prices will continue to put pressure on cash-strapped consumers during the year ahead.

On the operational side, EIA is projecting modest increases in both electricity and natural gas prices for the commercial sector in 2012. Electricity prices are expected to average 10.48 cents per kilowatt hour in 2012, up 1.1 percent from their 2011 level. Natural gas prices are projected to average $9.21 per thousand cubic feet in 2012, a 2.2 percent increase over 2011.

Food prices projected to Remain Elevated in 2012Representing roughly 33 cents out of every dollar in restaurant sales, fluctuations in food costs have a significant impact on a restaurant’s bottom line.

Restaurant Operators Rate the EconomyRestaurant operators’ assessment of the nation’s economy is even bleaker than that of consumers. In the Association’s Restaurant Trends Survey fielded in December 2011, more than nine out of 10 restaurant operators gave the economy a rating of “poor” (45 percent) or “fair” (51 percent). Four percent of restaurant operators described the economy as “good,” while none of the 845 survey respondents gave it an “excellent” rating.

Looking forward to 2012, restaurant operators’ outlook for the economy is mixed. Overall, roughly one out of four operators said the economy will get better in 2012, while one out of five expected economic conditions to worsen.

Fine-dining operators are the most optimistic, with 38 percent expecting the economy to improve in 2012 and only 12 percent projecting it will worsen. In contrast, only 12 percent of family-dining operators said the economy will get better in 2012, while 29 percent expected it will get worse.

Source: National Restaurant Association, Restaurant Trends Survey, 2011

Get Better in 2012

Get Worse in 2012

FastCasual

Dark Clouds on the Horizon?Restaurant operators’ outlook for the economy in 2012

More Challenging in 2011 Less Challenging in 2011


53%

Family Dining Fast CasualCasual Dining Fine Dining Quickservice

5%

46%

10%

41%

14%

58%

8%

56%

13%

Finding ways to the MeansRestaurant operators’ assessment of obtaining credit and financing in 2011

Quick-service

FineDining

CasualDining

FamilyDining

12%

29%

25%

19%

38%

12%

23%22% 21%

15%



Economic Outlook

The fallout from the Great Recession continued to be felt

long after its “official” end, as household income declined for the third consecutive year in 2010, according to U.S. Census Bureau data. Real median household income was $49,445 in 2010, down 6.4 percent from its recent cyclical high in 2007 and its lowest level since 1996.

Although the overall downward trend is a cause for concern, the sharp decline in the number of higher-income households poses additional challenges for the restaurant industry.

After jumping 74 percent between 1990 and 2007 — the strongest increase in any income category — the number of households with income of more than $100,000 declined 5 percent between 2007 and 2010. During the same three-year period, the number of households with income between $75,000 and $99,999 also fell 5 percent. In the end, there were 2 million fewer households with income of more than $75,000 in 2010 than there were in 2007.

The potential implications for the restaurant industry are significant, as higher-income households represent the majority of spending in the industry. According to analysis of data from the Bureau of Labor Statistics, households with incomes of $100,000 or more are responsible for 37 percent of the total spending on food away from home, while households with incomes between $70,000 and $99,999 account for 19 percent of industry spending.

As customer demographics vary across restaurants and segments, the recent shift in household income has potential implications for spending patterns within the industry, particularly among fullservice operations that rely more heavily on higher-income households.

2012 Commodity price OutlookProjected growth rates for primary market prices

2010 2011 2012

Beef 15% 20% 3% to 11%

Pork 34% 20% –6% to 1%

Broilers 7% –5% 1% to 8%

Turkeys 14% 12% –6% to 2%

Eggs 3% 7% –3% to –11%

Milk 27% 24% –6% to –10%

Cheddar 18% 20% –3% to –8%

Butter 41% 16% –12% to –18%

Source: U.S. Department of Agriculture, November 2011 projections

Wholesale food prices continued to march steadily higher in 2011, and finished the year posting their strongest annual increase in more than three decades. Average wholesale food prices jumped 8.0 percent in 2011, which represented the strongest gain since 1980, when prices rose 8.1 percent.

Rising food costs is nothing new for restaurant operators — 2011 marked the third time in the last five years that average wholesale food prices rose at least 7.6 percent. In total, the overall five-year increase surpassed 26 percent. The only decline was a 3.8 percent drop in 2009.

Looking ahead to 2012, commodity prices are projected to be a mixed bag. The U.S. Department of Agriculture (USDA) projects continued gains in primary market prices for beef in 2012, while broiler prices also are expected to rise. In contrast, USDA expects primary market prices for milk, cheddar and butter to decline in 2012, after their strong double-digit percent gains in 2010 and 2011.

Number of Higher-Income Households Declined Between 2007 and 2010Number of U.S. households by income bracket (in millions) adjusted for inflation in 2010 dollars

1990 to 2007 to 1990 2007 2007 to 2010 2010

Less than $25,000 24.0 14% 27.4 11% 30.5

$25,000 to $49,999 25.0 14% 28.5 3% 29.4

$50,000 to $74,999 19.0 11% 21.0 0% 21.0

$75,000 to $99,999 11.6 23% 14.2 –5% 13.5

$100,000 or more 14.7 74% 25.6 –5% 24.3

Source: National Restaurant Association analysis of U.S. Census Bureau data

Higher-incomeHouseholds Are prime Restaurant CustomersShare of total restaurant spending by household income levels

The Haves Have Less

Source: National Restaurant Association analysis of Bureau of Labor

Statistics data

37% 19% 15% 15%15%

$100kor

More

$30kto

$49k

LessThan $30k

$70kto

$99k

$50kto

$69k

The percent decline in the number of households with income of more than $100,000 between 2007 and 2010-5



Economic Outlook

Record Number of International Tourists Expected to Visit United States in 2012

An important driver of restaurant business

46.9

2001

Source: U.S. Department of Commerce, Office of Travel and Tourism Industries * Projected

United States a Destination of Choice for International VisitorsInternational arrivals to the United States in millions

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012*

43.6 41.246.1

49.2 51.056.0 57.9 55.0

59.763.2

66.5

Tourism is an important driver of business across all of the major

restaurant segments. According to the Association’s 2011 Restaurant Trends Survey, travelers and tourists represent-ed an average of 30 percent of sales for fine-dining operators, approximately 24 percent of sales for family-dining and casual-dining operators, and about 15 percent of sales for quickservice and fast-casual operators during the last 12-month period.

However, this proportion was down for many restaurant operators compared with recent years. Roughly three out of 10 restaurant operators said travelers and tourists make up a smaller propor-tion of sales than they did two years ago, while only about 15 percent said they constitute a larger share of sales.

The good news for restaurant operators is that international tourism to the United States is expected to grow in the years ahead. According to the Office of Travel and Tourism Industries (OTTI) within the U.S. Department of Commerce, a record 66.5 million international visitors are projected to come to the United States in 2012, up from 63.2 million travelers in 2011. Approximately 36.6 million of these visitors are expected to come from Canada and Mexico, while 29.9 million international travelers are projected to come from overseas.

Looking further down the road, OTTI expects 5 percent annual growth in interna-tional visitors during the next several years, which would result in more than 80 million international visitors to the United States by 2016.

In addition to passenger fares, international travelers to the United States are expected to spend well over $100 billion on tourism-related goods and services in 2012, which provides tremendous opportunities for restaurant operators.

Hungry Tourists Boost Restaurant SalesProportion of sales represented by travelers and tourists during the last 12-month period


FamilyDining

23% 24%30%

15% 14%

FastCasual

CasualDining

FineDining

Quick-service

ReapingRetailRewards

Some restaurant operators are diversi-fying into the business of offering

packaged food items for retail sale to help their business stand out from the competi-tion. In addition to food items, a majority of restaurant operators said they offer merchandise for retail sales.

Leveraging Loyalty

One way to satisfy customers’ growing appetite for value while encouraging

loyalty is through frequent-diner pro-grams. According to the Association’s 2011 Restaurant Trends Survey, 57 percent of adults said they would be more likely to patronize an establishment that offers a customer-loyalty and -reward program.

Approximately three out of 10 restau-rant operators are already taking advan-tage of this business-boosting promotion and offer a frequent-diner program.

To Market, To MarketProportion of restaurant operators that offer packaged food items for retail sale


FamilyDining

FastCasual

CasualDining

FineDining

Quick-service

54%

35%

59%

37% 41%

Time After TimeRestaurant operators’ reporting of the popularity of their frequent-diner program compared with two years ago


FamilyDining

FastCasual

CasualDining

FineDining

Quick-service

More Popular Than Two Years Ago

Less Popular Than Two Years Ago

56%

7%

45%

5%

69%

4%

67%

6% 5%

52%

Travel

2012FullserviceOutlookFullservice sales are projected to top $200 billion for the first time on record.

SECTION 2



Fullservice Outlook

The fullservice segment is expected to register annual sales in excess of $200 billion for the first time on

record in 2012. The National Restaurant

Association projects fullservice sales to total $201.4 billion in 2012, a 2.9 percent gain over 2011’s sales volume of $195.7 billion.

In inflation-adjusted terms, fullservice sales are expected to edge up 0.2 percent in 2012, down slightly from a 0.8 percent real gain in 2011.

2011 in ReviewBusiness conditions remained challenging for the fullservice segment in 2011,

according to the Association’s Restaurant Trends Survey fielded in December 2011. When asked to describe business condi-tions for the overall U.S. restaurant industry in December, none of the more than 530 fullservice operators responding to the survey rated business conditions as “excellent.” In fact, more than eight out of 10 fullservice operators said business conditions for the restaurant industry overall were either “fair” or “poor.”

Fullservice operators are somewhat more upbeat about their own restaurant business conditions, particularly among casual-dining and fine-dining operators; roughly one-half rated their own business conditions as either “excellent” or “good.” Among family-dining operators, 31 percent said business conditions for their restau-rant were either “excellent” or “good,” while seven out of 10 rated conditions as “fair” or “poor.”

The economic environment continued to hound fullservice operators in 2011. Sixty-five percent of family-dining opera-tors said the economy was more challeng-ing than it was in 2010, while roughly one-half of casual-dining and fine-dining

2012 Fullservice Outlook2012 REsTAuRANT INdusTRy FORECAsT

Fullservice Segment to post Sales Gains

The Bottom Line is BumpyFullservice operators’ reporting of their business in 2011

Better Than 2010

About the Same as 2010

Down From 2010


Family Dining

26%

Casual Dining Fine Dining

39% 35%

45%

29% 26%

50%

33%

17%

… Industry’s Business Conditions Overall

Fine dining

Casual dining

Family dining

… Their Own Business Conditions

Fine dining

Casual dining

Family dining



Fullservice Operators’ Assessment of …

20%64%16%

9%64%26%

7%43%40%10%

8%41%38%13%

13%65%22%

3%28%47%22%



operators reported similarly.As a result, it became harder for many

fullservice operators to build new business in 2011. Roughly six out of 10 family-din-ing and fine-dining operators said it was more difficult to attract new customers in 2011 than it was in 2010, while 55 percent of casual dining operators agreed.

In contrast, it was easier to keep loyal customers coming back in, with only one out of four fullservice operators saying it was more troublesome to attract repeat customers in 2011.

Although it wasn’t as hard to generate repeat business compared with attracting new customers, the competition for consumers’ dollars remains fierce. In the Association’s 2011 Restaurant Trends

Survey, seven out of 10 fullservice opera-tors agreed that their customers’ loyalty is more difficult to maintain than it was two years ago.

In addition to the difficulties of building and maintaining sales volume, fullservice operators dealt with considerable cost pressures in 2011. Roughly eight out of 10 family-dining and casual-dining operators and 71 percent of fine-dining operators said it was more difficult to control costs in 2011, while less than one out of 20 said it was easier to control costs.

Competitive pressures also intensified across the board compared with 2010, as fullservice operators in each segment said it was harder in 2011 to compete with grocery stores, quickservice and fast-casual

restaurants and other fullservice restau-rants.

In the final tally, fullservice operators reported a mixed bag of sales results in 2011. Fine-dining operators registered the strongest results in 2011, with 50 percent reporting higher sales and just 17 percent reporting a sales decline. Casual-dining operators registered positive but some-what softer results, with 45 percent reporting stronger business in 2011 and 26 percent reporting lower sales.

In contrast, only 26 percent of family-dining operators said their business was better in 2011 than it was in 2010, while 35 percent said business was down from 2010.

A Recurring ThemeAs fullservice operators reported, it was more of a struggle to attract new custom-ers in 2011, making repeat customers even more important to the bottom line. According to the Association’s 2011 Restaurant Trends Survey, repeat custom-ers represent an average of 68 percent of sales in the family-dining segment, 63 percent of sales in the casual-dining segment and 56 percent of sales in the fine-dining segment.

Fullservice operators also reported that repeat customers make up a larger share of their business than they did in recent years. Forty-seven percent of fine-dining operators and 41 percent of both family-dining and casual-dining operators said repeat customers constitute a larger share

Specialty of the House:Deja VuRepeat customers’ share of total sales compared with two years ago

Fullservice Outlook

Larger Amount of Sales

About the Same Amount of Sales

Smaller Amount of Sales


Family Dining

41%

Casual Dining Fine Dining

47%

11%

41%47%

11%

47%

38%

15%



Attracting New Customers

Family Dining Casual Dining Fine Dining

60%

4%

55%

7%

61%

4%

Bringing Back RepeatCustomers

Family Dining Casual Dining Fine Dining

24%

13%

23%19%

23% 24%

Courting Customers Remains Challenging

Diners Rate the Importance of Restaurant AttributesProportion of adults who gave the following attributes a rating of 8–10 on a scale from 0–10

Hunkered- Frequent All Optimistic Cautious Down Fullservice Restaurant Attribute Adults Consumers Consumers Consumers Customers

Food quality 92% 91% 93% 93% 91%

Quality of service 82% 78% 82% 85% 86%

Value received for price paid 79% 67% 80% 85% 79%

Atmosphere of the dining area 61% 56% 57% 68% 60%

Family- or child-friendly 57% 48% 57% 61% 47%

Length of time it takes 57% 55% 53% 62% 55%

Wide variety of menu items 47% 40% 49% 49% 50%


FullserviceOperators



Fullservice Outlook

of their total sales than they did two years ago. In comparison, only about one out of 10 operators said repeat customers make up a smaller share of their sales.

Because of the importance of repeat customers to the success of fullservice restaurants, it is imperative that restaurant operators appeal to frequent diners. Frequent fullservice customers — those who dine out at a fullservice restaurant more than once a week on average — are much more likely than the general public to be well-posi-tioned consumers and confident spenders in the current economic environment.

Forty percent of frequent fullservice customers are Optimistic Consumers compared with 21 percent of all adults. These individuals are confident in their financial situation and have not cut back on spending, which is good news for fullser-vice operators. In addition, only 18 percent of frequent fullservice customers fall under the Hunkered-Down Consumer category compared with 37 percent of the general public.

These frequent diners are ultimately the core customer base in good times and bad.

Seventy-four percent of frequent fullser-vice customers said restaurants are an essential part of their lifestyle, compared with 41 percent of the general public.

Tempting picky palatesTo attract both new and repeat customers, fullser-vice operators need to know what motivates them when picking a restaurant. In the Association’s 2011 National Household Survey, consumers were given a list of seven attributes and asked to rate each one on a scale from 0 to 10 in terms of their importance when it comes to choosing a tableservice restaurant.

Not surprisingly, food quality is the most impor-tant fullservice attribute, with more than nine out of 10 consumers across all categories giving it a rating of 8 to 10. The quality of

service also ranks high, particularly among frequent fullservice customers. Fullservice operators seem well aware of this fact, with roughly nine out of 10 of them reporting that their customers have higher expecta-tions with regard to service than they did two years ago.

Value remains king in today’s economy, and more than nine out of 10 fullservice

Convenient Options for Time-Crunched Consumers

Today’s busy consumers are always looking for ways to save time, and one way fullservice restaurants can build business and turn tables more quickly is to allow customers to order in advance. In the Association’s 2011 National Household Survey, 53 percent of adults said that they would likely utilize the options of placing their order online in advance, scheduling a time to arrive at the restaurant and having their food come out shortly after they are seated.

Younger adults were much more likely than older adults to say they would utilize this option. Sixty-eight percent of adults between the ages of 18 and 34 and 64 percent of adults between the ages of 35 and 44 said they would use this option, compared with 28 percent of adults age 65 and older.

Frequent customers also were more likely to say they would use this op-tion—particularly those who are seeking convenience. Sixty-five percent of frequent off-premises dinner customers and 60 percent of frequent quickservice customers said they would likely use this option, while 57 percent of frequent fullservice customers reported similarly.


Consumers Crave ConvenienceProportion of adults likely to use the following off-premises options at fullservice restaurants

Delivery from a Curbside Fullservice Restaurant Takeout from a Demographic Group Directly to Home or Office Fullservice Restaurant

All adults 57% 53%

Optimistic Consumers 52% 46%

Cautious Consumers 61% 56%

Hunkered-Down Consumers 56% 54%

Frequent fullservice customers 63% 54%

Frequent quickservice customers 66% 62%

Frequent off-premises dinner customers 72% 65%


No Time’s A wastingProportion of adults who said they would likely utilize the options of placing their order online in advance, scheduling a time to arrive at the restaurant, and having their food come out shortly after they are seated

18 to 34

68% 64%51% 46%

28%

35 to 44 45 to 54 55 to 64 65 or older

Age Group

fullservice operators report that their

customers have higher expectations with

regard to service than they did two years ago.

9 10outof



Fullservice Outlook

Restaurants Take ConservationActions to Save Green

Going green can help make green — both by saving money and by attracting more customers, according to Association research.

A majority of restaurant operators are planning to invest in green equipment and fixtures in 2012 to attract the 41 percent of adults who say they are likely to make a restaurant choice based on an operation’s conservation practices.

A solid majority of restaurant operators across all five major segments are planning to purchase energy-saving light fixtures in 2012.

A majority of operators also are planning to invest in energy-saving kitchen equipment in 2012, led by 72 percent of casual-dining operators. Sixty-five percent of both quickservice and fast-casual operators said they plan to purchase energy-efficient refrigeration, air conditioning or heating systems in 2012.

operators said their customers are more value-conscious than they were two years ago. When rating fullservice restaurant attributes, 85 percent of Hunkered-Down Consumers and 80 percent of Cautious Consumers said the value received for the price paid was important to them. In comparison, a somewhat lower 67 percent of Optimistic Consumers said value was important to them.

Building Business Through Off-premises GrowthOne way fullservice operators can bolster business in a turbulent economic environ-ment is through off-premises traffic. In the Association’s 2011 National Household Survey, 57 percent of adults said they would be likely to use delivery from a fullservice restaurant, while 53 percent said they would likely use curbside takeout from a fullservice restaurant.

The interest is even higher among frequent restaurant customers. Seventy-two percent of frequent off-premises dinner customers — those who purchase

Zapping Energy Costs with Conservation EffortsProportion of restaurant operators planning to take the following actions in 2012

Family Casual Fine Quick- Fast Dining Dining Dining service Casual

Purchase energy-saving light fixtures 63% 68% 65% 76% 78%

Purchase energy-saving kitchen equipment 61% 72% 58% 67% 73%

Purchase energy-efficient refrigeration, air conditioning or heating systems 53% 53% 57% 65% 65%

Install water-saving equipment or fixtures 42% 54% 52% 47% 48%


psst, Eat Here … pass It OnProportion of adults likely to use the following to choose a restaurant they haven’t been to before

All Optimistic Cautious Hunkered-Down Adults Consumers Consumers Consumers

Recommendation from a family member or friend 93% 94% 94% 91%

Restaurant review in a newspaper or magazine 66% 69% 65% 66%

Advertisement mailed to home 65% 63% 69% 60%

Online dining guide 45% 46% 47% 43%

Advertisement or promotion received via e-mail 41% 37% 46% 39%

Special offer through programs like Groupon or LivingSocial 40% 33% 47% 35%

Information on social-media sites such as Facebook and Twitter 28% 34% 28% 25%


word of mouth is still consumers’ top source for making a restaurant choice — 93 percent of adults said they are likely to choose a restaurant they haven’t been to

before based on a recommendation from a family member or friend.Programs like Groupon and LivingSocial are growing in popularity, with 40 percent of

adults saying they are likely to try a restaurant based on a special offer through such programs. However, Optimistic Consumers (33 percent) are much less likely than Cautious Consumers (47 percent) to make restaurant choices based on those special offers.

words to Live By Optimistic Consumers are more likely than the general public to pick a restaurant based on social-media tools.Percent who said they are likely to choose a restaurant they haven’t been to before based on information from Facebook or Twitter:

34%Like

Continued on page 26



their dinner meal from a restaurant and eat it at home more than once a week on average — said they would likely use delivery from a fullservice restaurant directly to their home or office. In addition, 65 percent of off-premises dinner customers said they would use curbside takeout from a fullservice restaurant.

To meet this growing demand, many fullservice operators are taking steps to enhance their off-premises offerings. Roughly one-third of fullservice operators said they upgraded their takeout packag-ing in 2011, while another three out of 10 said they plan to do so in 2012.

Adding Technology to the MenuTechnology is finding its place at the table, although operators say the use of high-tech items such as electronic ordering or payment systems and menus/wine lists on electronic tablets isn’t commonplace in the restaurant industry at this point. A majority of fullservice operators said they think electronic payment systems will become more popular in the fullservice segment in the future, while roughly four out of 10 responded similarly about electronic ordering systems and menus/wine lists on iPads or electronic tablets.

Consumer demand is certainly on the rise for these high-tech options. Thirty-nine percent of adults said they would likely use an electronic ordering system at a fullser-vice restaurant, while 52 percent said they would use an electronic payment system. Frequent quickservice and off-premises dinner customers are more likely than the general public to say they would use these conve-nient items.

Forty-six percent of adults said they would be likely to use a fullservice restaurant’s smartphone application, and roughly one-half of operators agree that it will be more popular in the future. In addition, six out of 10 fullservice operators said the ability to order online through a website will become more popular in the fullservice segment in the future.

The Future for FullserviceFullservice operators are generally optimistic that business conditions will improve in 2012. Fine-dining operators in particular are bullish about 2012, with 51 percent expecting their sales to be higher and just 4 percent expecting lower sales. Nearly one-half of casual-dining operators

expect their sales to improve in 2012, while only 9 percent expect a decline.

Family-dining operators are somewhat more cautious, however, with 35 percent expecting business to be better in 2012 and 12 percent expecting a sales decline.

The road ahead will not be without bumps though. Food costs and building and maintaining sales volume topped the list of challenges fullservice operators expect to face in 2012. Only 3 percent of family-dining and casual-dining operators and 5 percent of fine-dining operators said recruiting and retaining employees will be the top challenge that their business faces in 2012.

Fullservice Outlook

Fullservice Operators AreMore Optimistic About 2012Fullservice operators’ business outlook for 2012

Food Costs will Continue to ChopInto profitsTop challenges expected by fullservice operators in 2012

Family Casual Fine Dining Dining Dining

Food costs 17% 22% 23%

Building and maintaining sales volume 22% 14% 26%

The economy 16% 20% 21%

Operating costs 11% 17% 8%

Government 8% 9% 7%

Competition 6% 3% 5%

Recruiting and retaining employees 3% 3% 5%


Better Than 2011


Down From 2011


35%

Fine Dining

52%

12%

47% 44%

9%

51%45%

4%

Family Dining Casual Dining

Optimism of Improving Conditions

4 out of 10

fullservice operators say they

think menus/wine lists on iPads or

electronic tablets will become

more popular in the future.

Source: National Restaurant

Association, Restaurant Trends

Survey, 2011

ALTHOuGH

2012 Business Outlook

Continued from page 25

2012Limited-ServiceOutlookLimited-service operators expect food costs to top their list of challenges in 2012.

SECTION 3



Limited-Service Outlook

1 The limited-service eating-place segment consists of three categories: limited-service restaurants, cafeterias, grill-buffets and buffets, and snack-and-nonalcoholic-beverage bars.

The limited-service eating-place segment1 is projected to register total sales of $209.9 billion in 2012,

a 3.2 percent increase over its 2011 sales of $203.4 billion. In inflation-adjusted terms, limited-service sales are expected to increase 0.5 percent in 2012, down from a 1.1 percent gain in 2011.

Within the broadly defined segment, limited-service restaurant sales are projected to total $173.8 billion in 2012, up 3.1 percent from 2011. Snack-and-nonalco-holic-beverage bars are expected to register the strongest growth at 4.1 percent, with 2012 sales totaling $27.7

billion. Cafeterias, grill-buffets and buffets are projected to post sales of $8.5 billion in 2012, a 2.7 percent gain over 2011.

2011 in ReviewLimited-service operators continued to report a difficult business environment in 2011. When asked in the Association’s 2011 Restaurant Trends Survey to rate business conditions for the overall U.S. restaurant industry, the vast majority gave ratings of “fair” or “poor.”

Among quickservice operators, 24 percent said business conditions for the restaurant industry were “poor,” while 9

percent said they were “good.” None gave a rating of “excellent.” Fast-casual operators were only slightly more upbeat, with 16 percent giving marks of “good.”

When asked about business conditions for their own restaurant, limited-service operators were somewhat more optimistic. Twelve percent of fast-casual operators said business conditions for their restau-rant were “excellent,” while 45 percent described them as “good.” Among quickservice operators, 4 percent said their business conditions were “excellent,” while 37 percent rated them as “good.”

The challenges experienced by limited-service operators were a reflection of an economy that struggled to shift into high gear. Six out of 10 limited-service operators said general economic conditions posed a greater challenge for them in 2011 than it did in 2010, while less than 5 percent said it wasn’t as challenging.

The result was continued difficulty building sales volume in 2011. Sixty-five percent of quickservice operators and 47 percent of fast-casual operators said it was harder to attract new customers in 2011 than it was in 2010. Less than one out of 10 said attracting new customers was less challenging in 2010.

Like their fullservice counterparts, limited-service operators had a compara-

2012 Limited-Service Outlook2012 REsTAuRANT INdusTRy FORECAsT


Quickservice

Fast Casual


Quickservice

Fast Casual



Limited-Service Operators’ Assessment of …

9%66%24%

16%67%16%

4%37%19% 40%

12%45%11% 32%

Fast-CasualOperators Set the pace in 2011Limited-service operators’ reporting of their sales in 2011

Better Than 2010


Down From 2010


Quickservice

34%

Fast Casual

33% 33%

48%

33%

19%




tively easier time sustaining repeat business in 2011. Thirty-eight percent of quickservice operators and 32 percent of fast-casual operators said it was more of a challenge to bring back repeat customers in 2011, while less than one out of five said it wasn’t as challenging.

In addition to building and maintaining sales volume, limited-service operators struggled with rising costs in 2011, particularly among food items. Eight out of 10 limited-service operators said they had a more difficult time controlling costs in 2011 than they did in 2010, while just 2 percent said it was less challenging.

Competitive pressures also intensified for limited-service operators in 2011. Sixty percent of quickservice operators and 51 percent of fast-casual operators said it was more challenging trying to compete with other quickservice or fast-casual restau-rants in 2011, while just 4 percent said it was less challenging.

Limited-service operators also reported an uptick in competition with grocery stores. Forty-seven percent of quickservice opera-tors and 38 percent of fast-casual operators said competition with grocery stores became stiffer in 2011, while less than one out of 10

said it was less troubling.Overall, limited-service operators

reported mixed sales results in 2011. Fast-casual operators set the pace in 2011, with 48 percent saying their business was up in 2010 and just 19 percent reporting a sales decline. In contrast, 34 percent of quickservice operators reported higher sales in 2011, while 33 percent reported lower sales.

A Symbiotic RelationshipRepeat customers are the backbone of business for the limited-service segment. According to the Association’s 2011 Restaurant Trends Survey, repeat custom-ers represent an average of 74 percent of sales for quickservice operators and 71 percent of sales for fast-casual operators.

Although it is becoming more challeng-ing to keep them coming in — three out of four limited-service operators said customer loyalty is more difficult to maintain than it was two years ago — these customers make up a growing share of the limited-service segment’s customer base. Roughly one-half of limited-service operators said repeat customers constitute a larger proportion of their total sales than they did two years ago, while about one out of 10 said they make up a smaller share of sales.

The good news for limited-service

operators is that frequent customers in their segment are in a financially better position in the current economic environment versus the general public. Twenty-eight percent of frequent quickservice customers (those who purchase a meal or snack from a fast-food restaurant or carry-out place more than once a week on average) are Optimistic Consumers, compared with 21 percent of the general public. Similarly, Optimistic Consumers make up 29 percent of frequent off-premises dinner customers — those who purchase their dinner meal from a restau-rant and eat it at home more than once a week on average.

Repeat customers have become accustomed to the convenience limited-service operations provide — in fact, 50 percent of frequent off-premises dinner customers and 48 percent of frequent quickservice customers said purchasing takeout food is essential to the way they live. In comparison, 28 percent of the general public responded similarly.

what Carrot works Best?Understanding what makes consumers chose one restaurant over another can give limited-service operators an important edge in today’s hyper-competitive market. The Association’s 2011 National Household Survey sought to discover what motivates consumers by asking them to rate a list of seven attributes on a scale from 0 to 10 in terms of each attribute’s importance when choosing a limited-service restaurant or carry-out operation.

Food quality topped the list of limited-service restaurant attributes, with eight out of 10 consumers giving it a rating of 8 to 10, including both frequent quickservice customers and frequent off-premises dinner customers.

Value received for the price paid is an important attribute for 74 percent of adults. Optimistic Consumers (62 percent) were less likely to rate value as an impor-tant attribute, while Hunkered-Down Consumers (84 percent) gave it a higher priority.

Seventy-one percent of adults said the length of time it takes is an important attribute when it comes to choosing a limited-service restaurant. Among frequent

Cooking Up New BusinessAttracting New Customers

Bringing Back Repeat Customers

More Challenging in 2011

Less Challenging in 2011


Quickservice

65%

Fast Casual Quickservice Fast Casual

2%

47%

6%

38%

13%

32%

17%

we’ve Grown Accustomed to Your FaceRepeat customers’ share of total sales compared with two years ago

Larger Amount of Sales

About the Same Amount of Sales

Smaller Amount of Sales

Quickservice

52%

Fast Casual

39%

9%

48%39%

13%





customers, 75 percent said this was an important.

Time-Saving OfferingsA hallmark of the limited-service segment is fast and convenient service, and many consumers are interested in options that will make their experience even more convenient. Fifty-three percent of adults said they would likely use delivery directly to their home or office if it was offered by a limited-service restaurant. The option is even more popular among frequent customers, with 64 percent of frequent off-premises dinner customers and 60 percent of frequent quickservice customers saying they would likely use this option.

Convenient ordering options also are popular among consumers, with four out of 10 adults saying they would be likely to order online through a website or via a smartphone application. Once again, frequent customers are much more likely to prefer these options at limited-service restaurants than the general public. Limited-service operators confirm this growing trend, as more than eight out of 10 operators said these ordering options will become more popular in the future.

If a high-tech ordering option isn’t available, consumers are interested in more efficient options within the restau-rant. Four out of 10 adults said they would likely use a self-service customer-activated ordering terminal if it was offered by a limited-service restaurant. Sixty percent of fast-casual operators and 53 percent of

Recipe for a Successful Limited-Service RestaurantProportion of adults who gave the following attributes a rating of 8 to 10 on a scale from 0 to 10

Frequent Frequent All Optimistic Cautious Hunkered-Down Quickservice Off-Premises Dinner Adults Consumers Consumers Consumers Customers Customers

Food quality 80% 74% 78% 85% 82% 78%

Value received for price paid 74% 62% 72% 84% 74% 72%

Length of time it takes 71% 68% 71% 72% 75% 75%

Quality of Service 69% 62% 66% 76% 69% 70%

Family- or child-friendly 51% 43% 50% 55% 49% 50%

Wide variety of menu items 45% 37% 44% 50% 42% 43%

Atmosphere of dining area 41% 35% 34% 50% 37% 39%


working — and Eating — 9 to 5

T ime-pressed workers who rely on restaurants for a quick bite between meetings and project deadlines have been a boon to

the industry. Even though the economy has slowed, full-time workers still remain prime restaurant customers, according to the Association’s 2011 National Household Survey.

When asked if they utilize restaurant services during a typical five-day workweek, 59 percent of full-time workers said they purchase carry-out lunch from a restaurant or fast-food place at least once a week. Fifty percent of full-time workers eat lunch on premises at least once a week, while 19 percent said they have their lunch delivered at least once a week.

Forty-one percent of full-time employees said they purchase a breakfast meal, snack or beverage on the way into work at least once a week, while 41 percent purchase a morning or afternoon beverage or snack during their workday.

And who wants to cook after a long day at work? According to the National Household Survey, 46 percent of full-time workers opt to purchase dinner from a restaurant, fast-food place or other foodservice location on the way home from work at least once a week, rather than deal with the hassle of cooking a meal and cleaning up.

Desk-Top DiningProportion of full-time workers who purchase the following meals during a typical 5-day workweek

All 18- 35- 45- 55- Adults Male Female 34 44 54 64

Breakfast meal/snack/beverage on the way to work 41% 48% 31% 55% 37% 35% 32%

Carry-out lunch 59% 64% 52% 66% 60% 54% 55%

On-premises lunch 50% 52% 46% 59% 42% 49% 49%

Delivery lunch 19% 20% 17% 24% 19% 17% 13%

Morning/afternoon beverage/snack 41% 46% 34% 44% 42% 40% 38%

Dinner on way home from work 46% 46% 46% 49% 48% 46% 41%






Convenience-minded consumers are turning to the Internet to enhance

their restaurant experience. Six out of 10 adults say they have used the Internet to visit a restaurant website, view a menu or

learn more about a restaurant they haven’t been to before.

Frequent customers are more likely than the general public to go online to check out an eatery or place a food order.

Forty-six percent of frequent off-premises dinner customers said they have used the Internet to place an order for dine-in, carry-out or delivery — 10 percentage points higher than the general public.

Restaurants are increasingly using social media to connect with tech-

savvy customers. According to the Associa-tion’s 2011 Restaurant Trends Survey, nine out of 10 restaurant operators think social-media tools such as Facebook and Twitter will become more important marketing tools in the future. The use of smartphone applications also is expected to grow in popularity, as is the use of Twitter and text messaging.

Increasing Use of the web to Enhance Restaurant ExperienceAround the Web

CUOL(See You Online)

Netting Restaurant InformationProportion of adults who have used the Internet for the following activities

Frequent Frequent Frequent Off- All Optimistic Cautious Hunkered-down Fullservice Quickservice Premises Dinner Adults Consumers Consumers Consumers Customers Customers Customers

Visit restaurant website 61% 64% 68% 53% 71% 74% 69%

View restaurant menu 59% 61% 64% 53% 65% 66% 66%

Get information about restaurant before visiting 57% 55% 65% 50% 61% 67% 61%

Place dine-in, carry-out or delivery order 36% 37% 39% 33% 38% 43% 46%

Search for nutritional information 36% 35% 40% 33% 41% 45% 44%

Make reservations 27% 29% 34% 19% 35% 34% 35%

Post or read restaurant reviews on consumer-driven websites such as Yelp 27% 28% 31% 24% 32% 35% 30%

View restaurant fan sites and pages on Facebook, MySpace or YouTube 19% 22% 20% 17% 24% 23% 27%

Purchase merchandise from restaurant website 13% 14% 14% 13% 16% 14% 15%

Follow restaurant on Twitter 5% 9% 4% 3% 8% 6% 8%


Facebook Flickr or other photo-sharing

site

Restaurant blog

YouTube or other video- sharing site

Text messaging

TwitterOnline review sites such as Yelp

Smartphone applications

Quickservice Fast Casual


Connecting with Customers in 140 CharactersProportion of restaurant operators likely to use the following social-media tools in the next two years

Google It

91%96%

75%

91%83%

90%80%

87%

73%

86%77% 77%

65%71%

51%

65%




Limited-Service Operators Upbeat About 2012Limited-service operators’ outlook for their business in 2012

Clouds in My CoffeeTop challenges expected by limited-service operators in 2012

Quick- Fast service Casual

Food costs 30% 26%

Building and maintaining sales volume 17% 18%

The economy 17% 18%

Operating costs 13% 9%

Access to capital 4% 9%

Government 6% 6%

Recruiting and retaining employees 2% 5%


Better Than 2011


Down From 2011


45%

Quickservice Fast Casual

Optimism for Improving Conditions

quickservice operators said the use of self-service ordering terminals will become more popular within their respective segments in the future.

Taking a Look AheadLimited-service operators are generally optimistic that business conditions will improve in 2012. Fifty-two percent of fast-casual operators expect their business to be better in 2012 than it was in 2011, while just 3 percent think business will be down in 2012. Among quickservice

operators, 45 percent expect their sales to be higher in 2012; 9 percent think business will be down in 2012.

Despite the optimistic outlook, there will be obstacles to overcome in 2012. Food costs lead the list of concerns, with 30 percent of quickservice operators and 26 percent of

fast-casual operators saying it will be the number-one challenge they face in 2012. A less troublesome challenge is expected to be recruiting and retaining employees; only 5 percent of fast-casual operators and 2 percent of quickservice operators named it as the top challenge in 2012.

Convenience Is king at Limited-Service RestaurantsProportion of adults likely to use the following options at limited-service restaurants

Smartphone Application Place With Features Place Order Delivery Order Online Such as Viewing Via a Self-service Directly to Through a Menu and Ordering Customer-activated Home or Office a Website Takeout or Delivery Ordering Terminal

All Adults 53% 40% 38% 41%

Optimistic Consumers 51% 41% 35% 44%

Cautious Consumers 53% 45% 43% 44%

Hunkered-Down Consumers 53% 36% 33% 36%

Frequent fullservice customers 57% 49% 45% 44%

Frequent quickservice customers 60% 54% 51% 48%

Frequent off-premises dinner customers 64% 58% 46% 47%


46%

9%

52%45%

3%

ALTHOuGH

2012 Business Outlook

More than nine out of 10 operators across all segments said their restaurant

will likely be using Facebook in the next year or two.Source: National Restaurant Association, Restaurant Trends Survey, 2011


2012OtherFoodservice SegmentsNon-restaurant foodservice operators are upbeat about business conditions.

SECTION 4



“Other” Outlook

Foodservice segments outside of traditional restaurant operations are expected to enjoy positive

sales gains in 2012. Social caterers are projected to post sales of $7.9 billion in 2012 — a robust 5.6 percent increase over 2011 levels. In inflation-adjusted terms, sales in the social caterer segment are expected to rise 2.9 percent in 2012.

The managed-services segment — also referred to as onsite foodservice and foodservice contractors — is expected to register sales of $44.4 billion in 2012, a 4.3 percent gain above 2011 levels. After adjusting for inflation, sales are projected to rise 1.4 percent in 2012.

The noncommercial foodservice segment, which includes businesses,

educational, governmental or institutional organizations that operate their own foodservice, is projected to post sales of $54.2 billion in 2012, a 3.7 percent increase over 2011. In real terms, sales are expected to gain 0.9 percent in 2012.

Similar to the rest of the industry, foodservice operators in non-restaurant segments are feeling the pinch from a bumpy economy. Roughly two-thirds of caterers, noncommercial foodservice operators and managed-services

operators described current industry business conditions as “fair” or “poor,” while none gave conditions a rating of “excellent.”

Operators in these segments are somewhat more upbeat about their own business conditions. One out of four noncommercial operators (24 percent) said their own business conditions are “excellent,” while another 38 percent describe them as “good.” Nearly two-thirds of managed-services operators said their business conditions are either “good” or “excellent,” while 43 percent of caterers assessed their own business as “good.”

Managed-service operators are the most optimistic looking ahead to 2012, with 35 percent expecting business to be better than 2011 and only 4 percent expecting business to drop. Similarly, 29 percent of noncommercial foodservice operators think their business will rise in 2012, while 5 percent expect a downturn.

Caterers are somewhat more cautious in their expectations, with 29 percent projecting business will be better in 2012 and 21 percent predicting business will be down in 2012.

2012 Other Foodservice Segments Outlook2012 REsTAuRANT INdusTRy FORECAsT

Getting a Read On 2012Foodservice operators’ outlook for business in 2012

Better Than 2011


Down From 2011


Managed services

Noncommercial Foodservice

Caterers


Managed services

Noncommercial Foodservice

Caterers


Source: National Restaurant Association, Restaurant Trends Survey, 2011Source: National Restaurant Association, Restaurant Trends Survey, 2011

Managed Services

35%

NoncommercialFoodservice

Caterers

61%

4%

29%

67%

5%

29%

50%

21%

Foodservice Operators’ Assessment of …

4% 61% 35%

5% 67% 29%

14% 50% 36%

4% 30% 4%61%

38% 24%38%

21% 36% 43%

2012Food and Menu TrendsFor the third consecutive year, healthful kids’ meals topped the list of hot trends on limited-service menus, according to the Association’s 2011 Restaurant Trends Survey.

SECTION 5



Food and Menu Trends

Today’s restaurant customers are hungry for the latest trends and eager to test their knowledge of

food and beverages. Restaurateurs who update their menus to reflect the latest taste sensations — while keeping their regulars happy — will have an edge over their competitors.

Nine out of 10 operators in both fullservice and limited-service segments said their customers are more knowledge-able and sophisticated about food and beverages than ever, prompting restaura-teurs to incorporate new items. A majority of fullservice operators (nine out of 10) said they added new food items in 2011

and a similar proportion plan to do so in 2012. Eighty-three percent of quickservice operators and 77 percent of fast-casual operators said they plan to expand their food offerings in 2012.

Fine-dining operators are the most likely to expand the beverage menu, with more than nine out of 10 adding libations in 2011 and planning to add more in 2012. Roughly one-half of quickservice operators added beverages in 2011 and plan to do so again in 2012.

Hot platesThe National Restaurant Association’s “What’s Hot in 2012” survey of nearly 1,800 professional chef members of the American Culinary Federation found that children’s nutrition and local sourcing will be the hottest trends on restaurant menus in 2012.

The top-10 menu trends for 2012 are locally sourced meats and seafood, locally

2012 Food and MenuTrends2012 REsTAuRANT INdusTRy FORECAsT

Locally Sourced Food will Remain Hot in 2012

Tasteful AdditionsProportion of operators who added new food/beverage items in 2011 or plan to add new items in 2012


Added new food item in 2011 92% 90% 98% 86% 79%

Added new beverage item in 2011 72% 81% 94% 51% 74%

Plan to add new food item in 2012 92% 92% 99% 83% 77%

Plan to add new beverage item in 2012 73% 84% 97% 47% 55%


Fullservice Restaurant Trends for 2012

Source: National Restaurant Association, “What’s Hot in 2012” Chef Survey, 2011

1 Locally sourced meats and seafood

2 Locally grown produce

3 Healthful kids’ meals

4 Hyper-local sourcing (e.g., restaurant gardens)

5 Sustainability

6 Children’s nutrition

7 Gluten-free/food allergy conscious

8 Locally-produced wine and beer

9 Sustainable seafood

10 Whole grain items in kids’ meals

11 Newly fabricated cuts of meat (e.g., Denver steak, pork flat iron, Petite Tender)

12 Farm/estate-branded ingredients

13 Food trucks/street food

14 Micro-distilled/artisan spirits

15 Artisan/house-made ice cream

16 Health/nutrition

17 Non-traditional fish (e.g., branzino, Arctic char, barramundi)

18 Fruit/vegetable children’s side items

19 “Mini meals” (e.g., smaller versions of adult menu items)

20 Culinary cocktails (e.g., savory, fresh ingredients, herb-infused)



grown produce, healthful kids’ meals, hyper-local items, sustainability as a culinary theme, children’s nutrition as a culinary theme, gluten-free/food-allergy-conscious items, locally produced wine and beer, sustainable seafood, and whole-grain items in kids’ meals.

Rounding out the top-20 hot menu trends are newly fabricated cuts of meat, farm/estate-branded items, food trucks/street food, artisan spirits, house-made/artisan ice cream, health/nutrition as a culinary theme, nontraditional fish, fruit/vegetable kids’ side dishes, children’s mini meals (smaller versions of adult menu items), and culinary cocktails.

The “What’s Hot in 2012” survey also scouted out technology trends impacting the industry. About one-quarter of the chefs (26 percent) ranked smartphone apps (applications) as the hottest technology trend in restaurants in 2012; another 25 percent said tablet computers — such as using iPads for menus and wine lists — will be the top technology trend. Sixteen percent said social media would be the top trend, while the same percentage said mobile/wireless/pay-at-the-table payment options would be the most popular and 4 percent picked QR codes.

The Association surveyed 1,791 Ameri-can Culinary Federation member chefs from October to November 2011 and asked them to rate 223 individual food items, beverages, cuisines and culinary themes as a “hot trend,” “yesterday’s news” or “perennial favorite” on restaurant menus in 2012.

For complete What’s Hot in 2012” survey results, video and downloadable images, go to www.restaurant.org/foodtrends.

Healthful kids Meals Still Lead Limited-Service Menu TrendsFor the third consecutive year, healthful kids’ meals topped the list of hot trends on limited-service menus, according to the Association’s 2011 Restaurant Trends Survey. Limited-service operators were asked to rate a list of 68 food and beverage menu items as a “hot trend,” “yesterday’s news” or “perennial favorite” for 2012.

Healthy fare for kids dominated the limited-service list, with fruit/vegetable sides in kids’ meals ranking second, and low-fat/nonfat milk or 100 percent juice options in kids’ meals coming in fourth.

The limited-service segment also is on the quest for local items — locally sourced

produce ranked fifth and locally sourced meat/seafood ranked 11th on the list of hot limited-service menu items. Other dishes making the top 10 were gluten-free items, lower-sodium items, spicy items, lower-calorie items, mini desserts/dessert bites, and lower-fat items.

A Hankering for Home-Grown Food

Consumer demand for locally sourced food items continues to grow, with 72

percent of adults saying they are more likely to visit a restaurant that offers locally produced food items. Operators confirm this trend, as 83 percent of fine-dining operators and 71 percent of casual-dining operators said their customers are more interested in locally sourced menu items than they were two years ago. Demand for locally sourced items is not as strong in the family-dining and limited-service segments.

To meet the growing consumer demand, many operators are adding locally sourced food items to their menus, particularly in the fullservice segment. Eighty-seven percent of fine-dining operators offer locally sourced produce, while 73 percent offer locally sourced meat or seafood. In

addition, one out of four fine-dining operators said they offer food items from an on-site garden at their restaurant.

Seeds of ChangeProportion of operators who said their customers are more interested in locally sourced menu items in 2011 than two years ago


Quick-service

picked FreshProportion of restaurant operators offering the following food items


Locally sourced produce 56% 63% 87% 28% 45%

Locally sourced meat or seafood 38% 54% 73% 10% 15%

Food items from an on-site garden 9% 8% 25% 2% 2%



47%

71%83%

42%

54%

FastCasual

FineDining

CasualDining

FamilyDining

http://www.restaurant.org/foodtrends





Making Room at the Table for Mother Nature

Limited service perennial Favorites

1 Soft drinks

2 French fries

3 Iced tea

4 Beef items

5 Poultry items

6 Hamburgers/cheeseburgers

7 Chicken sandwiches

8 Side salads

9 Bottled water

10 Milk


Inventive new dishes help keep limited-service menus fresh and exciting, but perennial favorites still have their loyal fans. Soft drinks and French fries topped the list of perennial favorites at limited-service restaurants, followed by iced tea, beef items, poultry items, hamburgers and cheeseburgers, chicken sandwiches, side salads, bottled water, and milk.

Menu Trends

Limited-service Restaurant Trends for 2012

1 Healthful kids’ meals

2 Fruit/vegetable sides in kids’ meals

3 Gluten-free items

4 Low-fat/non-fat milk or 100% juice options in kids’ meals

5 Locally-sourced produce

6 Lower-sodium items

7 Spicy items

8 Lower-calorie items

9 Mini-desserts/dessert bites

10 Lower-fat items

11 Locally-sourced meat or seafood

12 Sustainable food items

13 Whole grain bread

14 Artisan/house-made items

15 Snack-sized items

16 Energy drinks

17 Flavored/enhanced water

18 Organic items

19 “Build-your-own” items

20 Sweet potato fries


Consumers LeanTowards Healthful Foods


Healthful ChoicesProportion of adults trying to eat healthier now at restaurants than they did two years ago

Although the rocky economy may make customers crave comfort food, a solid

majority of consumers said they are leaning toward healthier items when dining out. According to the Association’s 2011 National Household Survey, 72 percent of adults said they are trying to eat healthier now at restaurants than they did two years ago. Women (78 percent) were more likely than men (65 percent) to agree with that statement, while younger adults are more likely than older adults to make that claim. A majority of restaurant operators across all segments concur that customers are paying more attention to the nutritional content of their food than they did two years ago.

More Consumers Relish Green CuisineProportion of operators who said their customers are more interested in environmentally sustainable menu items in 2011 than two years ago

The interest in environmentally friendly dining continues to grow, particularly

in higher-check fullservice restaurants, according to the Association’s 2011 Restaurant Trends Survey. Fifty-eight percent of fast-casual operators said their customers are more interested in environ-mentally friendly menu items, while roughly one-half of quickservice and family-dining operators reported similarly.

From the consumer perspective, 55 percent of adults said they are more likely to visit a restaurant that offers food that was grown or raised in an organic or environmentally friendly way.


FamilyDining

47%

FastCasual

Quick-service

FineDining

CasualDining

67%78%

50%58%

More information on healthful kids’ meals …The National Restaurant Association launched the Kids LiveWell program in 2011 in collabora-tion with Healthy Dining to help parents and children select healthful menu options when dining out. Restaurants that participate in the voluntary program commit to offering healthful meal items for children, with a particular focus on increasing consumption of fruit and vegetables, lean protein, whole grains and low-fat dairy, and limiting unhealthy fats, sugars and sodium.

Visit www.restaurant.org/kidslivewell.

18 to 34 35 to 44 45 to 54 55 to 64 65 or Older

Age Group

74% 73% 76% 72%65%

Limited-service

http://www.restaurant.org/kidslivewell




2012 Top Trends by Category

Source: National Restaurant Association, “What’s Hot in 2012” Chef Survey, 2011

Appetizers1 Vegetables/vegetarian appetizers

2 Ethnic/street food-inspired appetizers (e.g., tempura, taquitos, kabobs)

3 Charcuterie plates/samples

4 Amuse-bouche/bite-size hors d’oeuvre

5 Warm appetizer salads

Sides/Starches1 Non-wheat noodles/pasta

(e.g., quinoa, rice, buckwheat)

2 Black/forbidden rice

3 Quinoa

4 Red rice

5 Vegetable pickles

Desserts1 Artisan/house-made ice cream

2 Bite-size/mini-desserts

3 Savory desserts

4 Deconstructed classic desserts

5 Dessert flights/combos

Main Dishes/ Center of the plate1 Locally sourced meats and seafood

2 Sustainable seafood

3 Newly fabricated cuts of meat (e.g., Denver steak, pork flat iron, Petite Tender)

4 Non-traditional fish (e.g., branzino, Arctic char, barramundi)

5 Half-portions/smaller portion sizes

preparation Methods1 Pickling

2 Fermenting

3 Sous Vide

4 Liquid nitrogen chilling/freezing

5 Oil-poaching

Breakfast/Brunch1 Ethnic-inspired breakfast items

(e.g., Asian-flavored syrups, chorizo scrambled eggs, coconut milk pancakes)

2 Traditional ethnic breakfast items (e.g., huevos rancheros, shakshuka, ashta, Japanese)

3 Fresh fruit breakfast items

4 Prix fixe brunches

5 French toast/stuffed French toast

kids’ Meals1 Healthful kids’ meals

2 Whole grain items in kids’ meals

3 Fruit/vegetable children’s side items

4 “Mini meals” (e.g., smaller versions of adult menu items)

5 Oven-baked items in kids’ meals (e.g., baked chicken fingers, oven-baked fries)

produce1 Locally grown produce

2 Organic produce

3 Superfruits (e.g., acai, goji berry, mangosteen)

4 Exotic fruits (e.g., rambutan, dragon fruit, paw paw, guava)

5 Heirloom apples

Ethnic Cuisines and Flavors1 Ethnic fusion cuisine

2 Peruvian cuisine

3 Regional ethnic cuisine

4 Cuban cuisine

5 Southeast Asian cuisine (e.g., Thai, Vietnamese, Malaysian)

Other Food Items/ Ingredients1 Artisan/specialty bacon

2 Artisan cheeses

3 Ancient grains (e.g., khorasan wheat, spelt, amaranth)

4 Greek yogurt

5 Ethnic cuisine cheeses (e.g., queso fresco, paneer, lebneh, halloumi)

Culinary Themes1 Hyper-local sourcing (e.g., restaurant

gardens)

2 Sustainability

3 Children’s nutrition

4 Gluten-free/food allergy conscious

5 Farm/estate-branded ingredients

Download the full results of the National Restaurant Association’s “What’s Hot in 2012” Chef Survey plus watch and share the videos at www.restaurant.org/foodtrends.






Local Libations Liven Up Beverage MenusMore consumers are making toasts with drinks produced locally, according to chefs surveyed by the Association. More than seven out of 10 chefs said the hottest alcoholic beverage trend is locally produced wine and beer.

Alcoholic BeverageTrends for 20121 Locally produced wine and beer

2 Micro-distilled/artisan spirits

3 Culinary cocktails (e.g., savory, fresh ingredients, herb-infused)

4 Food-beer pairings/beer dinners

5 Onsite barrel-aged drinks

6 Bar chefs/mixologists

7 Gluten-free beer

8 Specialty beer (e.g., seasonal, fruit, spiced)

9 Organic wine

10 Craft beer/microbrews

Source: National Restaurant Association, “What’s Hot in 2012” chef survey, 2011

NonalcoholicBeverageTrends for 20121 House-made soft drinks/soda/pop

2 Specialty iced tea (e.g., Thai-style, Southern/sweet, flavored)

3 Gourmet/house-made lemonade

4 Organic coffee

5 Dairy-free milk (e.g., soy, rice)

Source: National Restaurant Association, “What’s Hot in 2012” chef survey, 2011

wheels of Change Move Slowly for Food Trucks

Taking It to the StreetsOperators’ usage of food trucks in their existing restaurant operations


Currently operate a food truck 2% 3% <1% 6% 4%

Very or somewhat likely to start up a food truck in the next year or two 13% 11% 6% 13% 22%

Expect food trucks will become more popular within their segment in the future 26% 29% 16% 43% 47%

How Operators Feel About Food Trucks

Food trucks are a good way to expand a restaurant’s business 25% 26% 20% 40% 36%

Food trucks are an added layer of competition to your business 45% 48% 38% 52% 45%

Food trucks are a fad that will likely go away soon 28% 29% 37% 27% 25%

Food trucks are a good way to meet customers where they are 26% 26% 28% 30% 36%


Food trucks are making inroads among some consumers, but have yet to enjoy widespread appeal. According to the Association’s 2011 Restaurant Trends Survey, 6

percent of quickservice operators and 4 percent of fast-casual operators said they currently operate a food truck. In comparison, only 3 percent of casual-dining operators, 2 percent of family-dining operators and less than 1 percent of fine-dining operators said they operate a food truck.

Fast-casual operators (22 percent) are the most likely to say they will start up a food truck in the next year or two, while 13 percent of quickservice and family-dining opera-tors said they are likely to start up a food truck.

At present, many operators consider food trucks competition and are not expanding their business via such an outlet. In fact, most fullservice operators do not believe food trucks will become more popular within their segment in the future. Only 16 percent of fine-dining operators and nearly three out of 10 family-dining and casual-dining opera-tors think food trucks will grow in popularity in their segments. A higher proportion of fast-casual (47 percent) and quickservice operators (43 percent) think food trucks will become more popular in their segments.

Find out the latest food truck trends

Plan to visit the “Food Truck Spot” at NRA Show 2012.

www.restaurant.org/show

http://www.restaurant.org/show


2012workforceOutlookRestaurant industry job growth is expected to outpace the overall economy for the 13th consecutive year.

SECTION 6



After two consecutive years of job

losses—and only the third total year on record—the restaurant industry rebounded with a solid employment gain in 2011. Eating-and-drinking places, which represent approximately three-fourths of the total restaurant-and-foodservice workforce, added jobs at a 1.9 percent rate in 2011. The healthy 2011 gain came on the heels of 2.1 percent and 0.5 percent

declines in 2009 and 2010, respectively.In comparison, total U.S. employment

grew at a 1.0 percent rate in 2011, nearly a full percentage point below the gain in eating-and-drinking place jobs. Moreover,

the national job growth followed three years of more significant jobs losses: -0.6 percent in 2008, -4.4 percent in 2009, and -0.8 percent in 2010.

Within the industry, job growth was broad-based in 2011, as the fullservice, quickservice, and snack-and-nonalcoholic-beverage-bar segments all added jobs at rates above the overall economy.

No Lost Decade for the Restaurant IndustryThe restaurant industry’s 2011 perfor-mance marked the 12th consecutive year in which job growth outpaced the overall economy. Indeed, one only has to look at recent history to see that the restaurant industry is an engine of job growth for the U.S. economy, even when many other industries are shedding jobs.

During the challenging economic period of the last 11 years that included two recessions, job growth in the U.S. economy stagnated. In fact, excluding eating-and-drinking places, there were 1.8 million fewer private-sector jobs in the economy in December 2011 than there were in January 2000 — a decline of 1.8 percent.

In contrast, eating-and-drinking places added 1.5 million jobs during the same period, which represented an increase of nearly 19 percent. This substantial growth occurred despite back-to-back job losses in 2009 and 2010, when the restaurant industry was negatively impacted by the recession.

Industry Jobs to Drive the RecoveryThe restaurant industry not only provided much-needed job growth during the sluggish last decade, it also is poised to post steady growth well into the future. The Association expects eating-and-drink-ing places to add jobs at a 2.3 percent rate in 2012, a full percentage point above the projected 1.3 percent gain in total U.S. employment.

In addition, eating-and-drinking places are expected to gain back all of the jobs lost during the recession by early 2012, while the overall economy likely won’t be back to its pre-recession employment level until 2014.

workforce Outlook

2012 workforceOutlook2012 REsTAuRANT INdusTRy FORECAsT

Total Restaurant-and- Foodservice Employment

11.4 million12.9 million

14.3 million

2002

Source: National Restaurant Association * Projected

2022*2012*

Restaurant Job Growth Set to Outpace Overall Economy for 13th Straight YearAnnual job growth — eating-and-drinking places versus total U.S. employment

2008

Total U.S. Employment Eating-and-Drinking Place Employment

Source: Bureau of Labor Statistics, National Restaurant Association * Projected

–0.6%

2009 2010 2011 2012*

0.1%

–4.4%

–2.1%

–0.8% –0.5%

1.0%

1.9%

1.3%

2.3%



workforce Outlook

Steady Job Growth AheadOn a larger scale, the broadly defined restaurant-and-foodservice industry is projected to provide 12.9 million jobs in 2012, which represents nearly 10 percent of the total U.S. workforce. Looking ahead, the Association expects the restaurant-and-foodservice industry to employ 14.3 million individuals by 2022, an increase of 1.4 million jobs over the 10-year period.

On an occupational level, the strongest gains in both the number of positions and percent increase are projected to be in positions that combine food preparation

and service. These positions are expected to grow by 409,000 between 2012 and 2022 for an increase of nearly 15 percent.

In addition, the restaurant industry is expected to create 245,000 additional server positions over the next decade, a 10 percent increase over the current employ-ment level.

Supervisory and management positions also are expected to register gains over the next 10 years. The number of foodservice managers is projected to increase 8 percent between 2012 and 2022, while the number of first-line supervisors/managers of

Restaurant workforce Expected to Approach 14.3 Million by 2022Growth in restaurant-industry employment by occupation, 2012 to 2022

TOTAL RESTAURANT INDUSTRY EMPLOYMENT 12,916,000 14,279,000 1,363,000 10.6% 1.0%Foodservice Managers 343,000 371,000 28,000 8.2% 0.8%Food-Preparation-and-Serving-Related Occupations 11,783,000 13,106,000 1,323,000 11.2% 1.1%

Supervisors, food-preparation and -serving workers 961,000 1,078,000 117,000 12.2% 1.2% Chefs and head cooks 111,000 123,000 12,000 10.8% 1.0% First-line supervisors/managers of food-preparation and -serving workers 850,000 955,000 105,000 12.4% 1.2% Cooks and food-preparation workers 3,014,000 3,300,000 286,000 9.5% 0.9% Cooks 2,102,000 2,305,000 203,000 9.7% 0.9% Cooks, fast food 577,000 639,000 62,000 10.7% 1.0% Cooks, institution and cafeteria 398,000 437,000 39,000 9.8% 0.9% Cooks, private household 5,000 5,000 0 0.0% 0.0% Cooks, restaurant 932,000 1,028,000 96,000 10.3% 1.0% Cooks, short order 172,000 176,000 4,000 2.3% 0.2% Cooks, all other 18,000 20,000 2,000 11.1% 1.1% Food-preparation workers 912,000 995,000 83,000 9.1% 0.9% Food-and-beverage-serving workers 6,445,000 7,243,000 798,000 12.4% 1.2% Bartenders 517,000 567,000 50,000 9.7% 0.9% Fast-food and counter workers 3,312,000 3,793,000 481,000 14.5% 1.4% Combined food-preparation and -serving workers, including fast food 2,776,000 3,185,000 409,000 14.7% 1.4% Counter attendants, cafeteria, food concession, and coffee shop 536,000 608,000 72,000 13.4% 1.3% Waiters and waitresses 2,425,000 2,670,000 245,000 10.1% 1.0% Food servers, nonrestaurant 191,000 213,000 22,000 11.5% 1.1% Other food-preparation and -serving-related workers 1,363,000 1,485,000 122,000 9.0% 0.9% Dining room and cafeteria attendants and bartender helpers 426,000 458,000 32,000 7.5% 0.7% Dishwashers 532,000 592,000 60,000 11.3% 1.1% Hosts and hostesses, restaurant, lounge, and coffee shop 354,000 380,000 26,000 7.3% 0.7% All other food-preparation and -serving-related workers 51,000 55,000 4,000 7.8% 0.8%

Other Eating-and-Drinking Place Occupations* 790,000 802,000 12,000 1.5% 0.2%

*Includes operational, business, financial, entertainment, sales, administrative and transportation occupations

Source: National Restaurant Association projections, based on historical data from the Bureau of Labor Statistics

––– EMPLOYMENT CHANGE, 2012–2022 –––

2012 2022 Jobs Total % Avg. Annual Employment Employment Added Change % Change

Restaurant Job Growth is projected to Outpace Labor Force in Next 10 YearsProjected growth in labor indicators for 2012 to 2022

Total Restaurant-and-Foodservice

Employment


16-to-24 Year-oldLabor Force

Total U.S.Labor Force

11%

8%

6%



workplace Outlook

food-preparation and -serving workers is expected to grow by 12 percent.

Southern and western States to Set the paceStates in the southern and western regions of the United States are expected to drive much of the industry’s job growth in the coming years. Texas is projected to set the pace with total restaurant-and-foodservice job growth of 17.1 percent between 2012 and 2022, followed by Arizona (16.4 percent), Florida (15.8 percent) and North Dakota (15.6 percent).

In terms of total jobs added, Texas once again tops the list with a projected 174,500 industry jobs added between 2012 and 2022. California’s restaurant industry is projected to add 145,900 jobs during the next 10 years, while restaurants in Florida are expected to add 132,900 jobs.

Labor Challenges poised to Heat UpIn the business environment of the last few years, labor shortage wasn’t top of mind for most restaurant operators. Amid elevated food and energy costs and a persistently high unemployment rate, recruiting and retaining employees typically wasn’t the most-pressing issue for operators.

Indeed, only 6 percent of respondents to the National Restaurant Association’s December 2011 Restaurant Industry Tracking Survey said recruiting and retaining employees is the top challenge currently facing their business, well below those who cited the economy (30 percent), food costs (17 percent), building and maintaining sales volume (14 percent) or government (8 percent). Flash back five years and the story was quite different — 31 percent of restaurant operators said recruiting and retaining employees was their top operational challenge.

In the Association’s 2011 Restaurant Trends Survey, restaurant operators were asked if recruiting and retaining employ-ees posed a greater difficulty for them in 2011 than it did in 2010. Fullservice operators were more likely to say it was less of a challenge for them in 2011, while quickservice and fast-casual operators were

In addition to providing nearly 13 million job opportunities from entry-level to management

positions, the restaurant industry also gives individuals of all backgrounds the chance to become business owners. In fact, 80 percent of restaurant owners said they started out as hourly employees in the restaurant industry, according to the Association’s 2009 “Who Is the American Restaurateur?” Survey.

U.S. Census Bureau data shows that growth in restaurant ownership among minorities and women outpaced growth in the overall restaurant industry during the last 10 years.

Between 1997 and 2007 (the most recent year available), the number of black- or African-American-owned restaurant businesses soared 188 percent, more than five times the rate of growth in the overall number of restaurant businesses (36 percent). The number of Hispanic-owned restaurant businesses jumped 80 percent during the same 10-year period, while Asian-owned restaurants increased 60 percent.

The number of women restaurant owners also grew sharply — increasing 50 percent between 1997 and 2007, well above the 36 percent increase in the number of overall restau-rant businesses.

Opportunities for Ownership AboundGrowth in the number of restaurant businesses from 1997 to 2007

Source: U.S. Census Bureau, Economic Census — 1997 and 2007

All RestaurantBusinesses

36%

Women OwnedHispanic OwnedAsian OwnedAmerican Indian/ Alaskan Native

Owned

Black or African-American Owned

188%175%

60%

80%

50%

Restaurants Offer Ladder to Success

80%Restaurant owners

who said they started out as hourly

employees

50%Increase in women restaurant owners

1997-2007

80%Increase in Hispanic- owned restaurant

businesses 1997-2007




workforce Outlook

state Restaurant-Industry Employment GrowthProjected growth in restaurant-industry employment* from 2012 to 2022

Alabama 164,000 189,300 25,300 15.4% 1.4%

Alaska 29,500 34,000 4,500 15.3% 1.4%

Arizona 260,200 303,000 42,800 16.4% 1.5%

Arkansas 115,100 132,500 17,400 15.1% 1.4%

California 1,445,000 1,590,900 145,900 10.1% 1.0%

Colorado 237,100 271,200 34,100 14.4% 1.4%

Connecticut 142,300 149,900 7,600 5.3% 0.5%

Delaware 41,100 47,000 5,900 14.4% 1.4%

District of Columbia 49,200 52,500 3,300 6.7% 0.7%

Florida 841,900 974,800 132,900 15.8% 1.5%

Georgia 374,000 431,700 57,700 15.4% 1.4%

Hawaii 79,400 83,500 4,100 5.2% 0.5%

Idaho 58,600 65,000 6,400 10.9% 1.0%

Illinois 516,400 554,500 38,100 7.4% 0.7%

Indiana 287,400 311,700 24,300 8.5% 0.8%

Iowa 146,700 158,900 12,200 8.3% 0.8%

Kansas 126,300 138,100 11,800 9.3% 0.9%

Kentucky 191,000 207,000 16,000 8.4% 0.8%

Louisiana 189,500 206,900 17,400 9.2% 0.9%

Maine 62,700 68,200 5,500 8.8% 0.8%

Maryland 222,700 239,300 16,600 7.5% 0.7%

Massachusetts 309,300 329,800 20,500 6.6% 0.6%

Michigan 374,800 400,700 25,900 6.9% 0.7%

Minnesota 250,700 269,400 18,700 7.5% 0.7%

Mississippi 110,200 123,000 12,800 11.6% 1.1%

Missouri 281,900 303,800 21,900 7.8% 0.8%

Montana 51,700 55,000 3,300 6.4% 0.6%

Nebraska 87,300 93,900 6,600 7.6% 0.7%

Nevada 187,800 216,700 28,900 15.4% 1.4%

New Hampshire 63,800 69,200 5,400 8.5% 0.8%

New Jersey 309,200 330,300 21,100 6.8% 0.7%

New Mexico 82,400 93,600 11,200 13.6% 1.3%

New York 718,600 775,500 56,900 7.9% 0.8%

North Carolina 401,700 458,300 56,600 14.1% 1.3%

North Dakota 39,200 45,300 6,100 15.6% 1.5%

Ohio 530,500 565,400 34,900 6.6% 0.6%

Oklahoma 153,700 169,400 15,700 10.2% 1.0%

Oregon 170,900 192,500 21,600 12.6% 1.2%

Pennsylvania 537,900 565,900 28,000 5.2% 0.5%

Rhode Island 52,800 56,600 3,800 7.2% 0.7%

South Carolina 192,700 215,700 23,000 11.9% 1.1%

South Dakota 44,800 49,500 4,700 10.5% 1.0%

Tennessee 263,400 287,400 24,000 9.1% 0.9%

Texas 1,017,500 1,192,000 174,500 17.1% 1.6%

Utah 103,400 118,600 15,200 14.7% 1.4%

Vermont 29,500 31,600 2,100 7.1% 0.7%

Virginia 334,500 369,500 35,000 10.5% 1.0%

Washington 275,100 305,600 30,500 11.1% 1.1%

West Virginia 72,900 77,400 4,500 6.2% 0.6%

Wisconsin 261,400 279,300 17,900 6.8% 0.7%

Wyoming 26,300 28,200 1,900 7.2% 0.7%

*Includes employment in all eating-and-drinking-place occupations, plus employment in foodservice positions that are not located at eating-and-drinking places

Source: National Restaurant Association projections, based on historical data from the Bureau of Labor Statistics

––– EMPLOYMENT CHANGE, 2012-2022 –––

2012 2022 Jobs Total % Avg. Annual Employment Employment Added Change % Change

Number of restaurant-and-foodservice jobs in 2012

1 California 1,445,000 2 Texas 1,017,500 3 Florida 841,900 4 New York 718,600 5 Pennsylvania 537,900 6 Ohio 530,500 7 Illinois 516,400 8 North Carolina 401,700 9 Michigan 374,800 10 Georgia 374,000

Top RestaurantWorkforces

Expected growth in restaurant-and-foodservice jobs, 2012 to 2022

1 Texas 17.1% 2 Arizona 16.4% 3 Florida 15.8% 4 North Dakota 15.6% 5 Georgia 15.4% 6 Alabama 15.4% 7 Nevada 15.4% 8 Alaska 15.3% 9 Arkansas 15.1% 10 Utah 14.7%

Fastest RestaurantJob Growth

Texas and Arizona are predicted to experience the biggest leap in job growth

Top-10 states

Top-10 states



more likely to report it as a greater challenge.

Looking forward to 2012, many restaurant operators across the major segments expect recruiting and retaining employees to become a somewhat bigger obstacle. Thirty-two percent of both fine-dining and quickservice operators expect recruiting and retaining employees to be more challenging in 2012 than it was in 2011, while 27 percent of family-dining, casual-dining and fast-casual operators reported similarly. A smaller proportion in each of the five segments expects labor to be less of a challenge for them in 2012.

Finding employees isn’t a widespread problem today, but it will likely grow increasingly difficult as the economy continues to improve and the labor market tightens. The question for business owners then will again become where to find employees, particularly if the recent trends in labor-force participation don’t turn around.

Between 2000 and 2011, the labor-force participation rate among 16 to 19 year olds plunged from 52 percent to 34 percent — the lowest level since recordkeeping began in 1948. Although the drop was not as precipitous among 20 to 24 year olds, their labor-force participation rate also declined over the last 11 years, from 78 percent in 2000 to 71 percent in 2011. As a result, there were more than 1.5 million fewer 16 to 24 year olds in the labor force in 2011 than there were 11 years earlier, a development that cut into the restaurant industry’s prime labor pool.

Labor-force participation among 16 to 24 year olds is expected to improve somewhat as more jobs become available, but it will likely not get back to 2000 levels any time soon. In contrast, the labor-force participation rate among adults aged 55 and older rose from 32 percent in 2000 to 40 percent in 2011, an upward trend that is expected to continue well into the future.

These labor-force trends are already impacting the distribution of the restau-rant industry’s workforce. In 2010, 16 to 24 year olds worked in 38 percent of foodser-vice jobs, down from 42 percent in 2000. During the same 10-year period, the proportion of foodservice jobs held by

adults aged 55 and older rose from 8 percent to nearly 10 percent.

Looking forward, the Association projects total restaurant-and-foodservice employment to grow 11 percent in the next 10 years; the 16-to-24-year-old labor

force is only expected to grow 6 percent. As a result, now is a good time for restaurant operators to focus on expand-ing their labor pool, so they will be ahead of the curve when the economy recovers and the pool becomes shallower.

workforce Outlook

Labor Challenges Expected to Ramp Up in 2012Restaurant operators’ outlook for recruiting and retaining employees in 2012

Labor-Force participation Rate Among 16 to 24 Year Olds Fell to a Record LowLabor force participation rate among 16 to 24 year olds

Source: Bureau of Labor Statistics

65.8%

2000 20112001 2002 2003 2004 2005 2006 2007 2008 2009 2010

64.5% 63.3%61.6% 61.1% 60.8% 60.6% 59.4% 58.8% 56.9%

55.2% 55.0%

Family Dining

27%



Casual Dining Fine Dining Quickservice Fast Casual

16%

27%

20%

32%

18%

32%

14%

27%

12%


2012Supply-ChainOutlookDuring the last four years, capital spending activity remained below the pre-recession average, which suggests that pent-up demand for capital expenditures is being accumulated by restaurant operators.

SECTION 7



Supply-Chain Outlook

The outlook for 2012 is positive for companies that are in the business of manufacturing, selling and

distributing food, beverages, equipment and supplies to the $632 billion restaurant industry. Restaurateurs and other foodser-vice operators are projected to buy a record $225.4 billion in food and bever-ages from industry suppliers in 2012. More than $63 billion is projected to come from the fullservice segment, while $64.5 billion

is expected to come from the limited- service eating-place segment.

In addition, roughly half of restaurant operators plan to make a capital expendi-ture for equipment, expansion or remodeling during the first half of 2012, according to the Association’s monthly Restaurant Industry Tracking Survey. During the last four years, capital spend-ing activity remained below the pre-reces-sion average, which suggests that pent-up demand for capital expenditures is being accumulated by restaurant operators. Overall, the uptick in operators’ capital spending plans bodes well for the supply chain in 2012.

Although more than nine out of 10 supply-chain professionals (manufacturers, suppliers, distributors and brokers) responding to the Association’s 2011

Restaurant Trends Survey described the current state of the economy as “fair” (67 percent) or “poor” (27 percent), their outlook for 2012 is generally positive. Forty-one percent of supply-chain profes-sionals think the economy will get better in 2012, while just 10 percent think it will get worse.

The supply-chain segment also is comparatively optimistic about overall business conditions in the U.S. restaurant industry. One out of four supply-chain professionals assessed overall business conditions in the restaurant industry as either “excellent” (1 percent) or “good” (23 percent), while only about one out of 10 restaurant operators reported similarly.

In terms of their own business condi-tions, the supply chain is quite upbeat. Nearly two-thirds of supply-chain profes-sionals described their own business conditions as either “excellent” (5 percent) or “good” (59 percent), while only 2 percent said their business conditions are poor.

Overall, the supply chain reported positive sales results in 2011. Fifty-two percent of supply-chain professionals said their business in 2011 was better than it was in 2010, while just 10 percent said their business was down from 2010.

The outlook is even more optimistic for 2012, with 63 percent of supply-chain professionals expecting business in 2012 will be better than it was in 2011. Only 2 percent of supply-chain professionals think their business will be down in 2012.

2012 Supply-Chain Outlook2012 REsTAuRANT INdusTRy FORECAsT

Food purchases and Capital Spending Expected to Rise in 2012

Source: National Restaurant Association, Restaurant Industry Tracking Survey

Restaurant Capital Spending RemainsBelow pre-Recession AverageProportion of restaurant operators making a capital expenditure in the previous three months

2004–2007 Average60

50

40

30

20

0

Jan 04

November 2011: 46%

Nov 11Jan 05 Jan 06 Jan 07 Jan 08 Jan 11Jan 09 Jan 10



Supply-Chain Outlook

Purchasing: 2012 projectionsRestaurant-industry food-and-drink purchases: 2012*

Projected Food-and-Drink Purchases ($000)

GROUPI—COMMERCIALRESTAURANTSERVICES**EATING PLACES Fullservice restaurants $63,034,066 Limited-service (quickservice) restaurants 53,148,173 Cafeterias, grill-buffets and buffets 3,031,156 Snack and nonalcoholic beverage bars 8,328,659 Social caterers 2,098,120 TOTAL EATING PLACES $129,640,174Bars and taverns*** 6,397,718 TOTAL EATING-AND-DRINKING PLACES $136,037,892MANAGED SERVICES Manufacturing and industrial plants $2,958,184 Commercial and office buildings 1,124,671 Hospitals and nursing homes 1,987,484 Colleges and universities 4,815,874 Primary and secondary schools 2,310,236 In-transit restaurant services (airlines)*** 1,060,471 Recreation and sports centers 1,660,944 TOTAL MANAGED SERVICES $15,917,864LODGING PLACES Hotel restaurants $9,101,106 Other accommodation restaurants 144,474 TOTAL LODGING PLACES $9,245,580Retail-host restaurants 10,603,039Recreation and sports 4,221,513Mobile caterers 193,409Vending and nonstore retailers 3,398,816TOTAL — GROUP I $179,618,113GrOuP II — NONcOMMercIal reStauraNt SerVIceSEmployee restaurant services $245,893Public and parochial elementary, secondary schools 5,927,738Colleges and universities 2,750,636Transportation 1,216,661Hospitals 7,050,278Nursing homes, homes for the aged, blind, orphans, and the mentally and physically disabled 5,120,568Clubs, sporting and recreational camps 3,257,557Community centers 3,422,087Penal institutions 4,111,837Convents and seminaries 61,952TOTAL — GROUP II $33,165,207TOTAL — GROUPS I AND II $212,783,320Food furnished to foodservice employees (FSE) in Groups I and II 8,978,476TOTAL — GROUPS I, II AND FSE $221,761,796GrOuP III — MIlItarY reStauraNt SerVIceSDefense personnel $2,768,073Officers’ and NCO clubs (open mess) 602,752Military exchanges 271,427TOTAL — GROUP III $3,642,252

GRANDTOTAL $225,404,048

*Purchases refers to expenditures by foodservice establishments for their food-and-drink supplies**Data are given only for establishments with payroll ***Food purchases only

Supply-Chain professionals’ Reporting of Their Business in 2011

About theSame as

2010

38%

Down From 2010 10%Better Than

2010

52%

Source: National Restaurant Association, Restaurant Trends

Survey, 2011

Supply-Chain professionals’ Outlook for Business in 2012

About theSame as

2011

35%

Down From 2011 2%

Better Than 2011

63%

Supply-Chain professionals’ Assessment of Their Own Business Conditions

Fair

34%

Poor

2%

Good

59%

Excellent

5%


Two-thirds of supply-chain professionals describe their business conditions as either “excellent” or “good”



Appendix

Alabama 1.3% 2.0% 0.8% $5,909,128 $6,098,220 3.2% 164,000 189,300 25,300 15.4% 1.4%Alaska 1.5% 3.1% 1.2% $1,206,311 $1,248,532 3.5% 29,500 34,000 4,500 15.3% 1.4%Arizona 1.6% 2.3% 2.9% $9,674,544 $9,993,804 3.3% 260,200 303,000 42,800 16.4% 1.5%Arkansas 1.1% 1.6% 0.7% $3,233,576 $3,333,817 3.1% 115,100 132,500 17,400 15.1% 1.4%California 1.0% 1.6% 1.1% $61,999,060 $63,837,084 3.0% 1,445,000 1,590,900 145,900 10.1% 1.0%Colorado 1.6% 2.7% 1.5% $8,694,169 $8,998,465 3.5% 237,100 271,200 34,100 14.4% 1.4%Connecticut 0.2% 0.5% 0.2% $5,659,106 $5,823,220 2.9% 142,300 149,900 7,600 5.3% 0.5%Delaware 1.0% 2.1% 1.2% $1,512,394 $1,559,278 3.1% 41,100 47,000 5,900 14.4% 1.4%District of Columbia 0.0% 2.1% 0.5% $2,483,112 $2,565,055 3.3% 49,200 52,500 3,300 6.7% 0.7%Florida 1.9% 3.0% 1.7% $30,277,053 $31,463,913 3.9% 841,900 974,800 132,900 15.8% 1.5%Georgia 0.9% 1.5% 1.3% $14,759,494 $15,224,418 3.1% 374,000 431,700 57,700 15.4% 1.4%Hawaii 0.7% 1.9% 0.5% $3,446,428 $3,546,375 2.9% 79,400 83,500 4,100 5.2% 0.5%Idaho 1.2% 1.9% 1.5% $1,786,767 $1,843,944 3.2% 58,600 65,000 6,400 10.9% 1.0%Illinois 0.4% 0.8% 0.4% $20,036,466 $20,677,633 3.2% 516,400 554,500 38,100 7.4% 0.7%Indiana 0.4% 0.6% 0.8% $8,625,599 $8,849,865 2.6% 287,400 311,700 24,300 8.5% 0.8%Iowa 0.8% 0.9% 0.5% $3,258,560 $3,333,507 2.3% 146,700 158,900 12,200 8.3% 0.8%Kansas 1.3% 1.8% 0.8% $3,577,717 $3,674,316 2.7% 126,300 138,100 11,800 9.3% 0.9%Kentucky 1.8% 2.1% 0.9% $5,768,705 $5,959,073 3.3% 191,000 207,000 16,000 8.4% 0.8%Louisiana 2.0% 2.0% 0.3% $6,289,922 $6,497,489 3.3% 189,500 206,900 17,400 9.2% 0.9%Maine 0.4% 0.7% 0.3% $1,870,405 $1,920,906 2.7% 62,700 68,200 5,500 8.8% 0.8%Maryland 0.4% 1.4% 0.6% $9,458,322 $9,804,497 3.7% 222,700 239,300 16,600 7.5% 0.7%Massachusetts 1.0% 2.1% 0.1% $12,336,811 $12,632,894 2.4% 309,300 329,800 20,500 6.6% 0.6%Michigan 0.8% 1.0% 0.1% $12,224,741 $12,554,809 2.7% 374,800 400,700 25,900 6.9% 0.7%Minnesota 1.2% 3.1% 0.9% $7,654,536 $7,891,827 3.1% 250,700 269,400 18,700 7.5% 0.7%Mississippi 0.8% 0.8% 0.8% $3,190,982 $3,280,329 2.8% 110,200 123,000 12,800 11.6% 1.1%Missouri 0.5% 1.5% 0.6% $8,560,093 $8,774,096 2.5% 281,900 303,800 21,900 7.8% 0.8%Montana 1.1% 1.7% 1.2% $1,352,945 $1,396,239 3.2% 51,700 55,000 3,300 6.4% 0.6%Nebraska 1.3% 3.2% 0.6% $2,272,937 $2,341,126 3.0% 87,300 93,900 6,600 7.6% 0.7%Nevada 0.9% 2.4% 2.0% $5,309,566 $5,490,091 3.4% 187,800 216,700 28,900 15.4% 1.4%New Hampshire 1.5% 2.4% 0.8% $2,192,180 $2,251,369 2.7% 63,800 69,200 5,400 8.5% 0.8%New Jersey 0.8% 1.0% 0.4% $13,136,180 $13,567,704 3.3% 309,200 330,300 21,100 6.8% 0.7%New Mexico 1.8% 2.5% 1.0% $2,888,266 $2,983,579 3.3% 82,400 93,600 11,200 13.6% 1.3%New York 1.4% 2.4% 0.3% $30,877,316 $31,927,145 3.4% 718,600 775,500 56,900 7.9% 0.8%North Carolina 0.8% 2.3% 1.7% $14,216,729 $14,685,881 3.3% 401,700 458,300 56,600 14.1% 1.3%North Dakota 3.4% 5.2% 1.3% $769,187 $800,948 4.1% 39,200 45,300 6,100 15.6% 1.5%Ohio 0.9% 1.2% 0.2% $16,135,361 $16,619,422 3.0% 530,500 565,400 34,900 6.6% 0.6%Oklahoma 2.1% 3.7% 0.7% $4,724,532 $4,885,166 3.4% 153,700 169,400 15,700 10.2% 1.0%Oregon 1.3% 2.0% 1.6% $6,019,456 $6,206,059 3.1% 170,900 192,500 21,600 12.6% 1.2%Pennsylvania 0.8% 0.9% 0.1% $16,554,737 $17,084,489 3.2% 537,900 565,900 28,000 5.2% 0.5%Rhode Island 0.9% 0.7% 0.3% $1,831,370 $1,873,491 2.3% 52,800 56,600 3,800 7.2% 0.7%South Carolina 1.3% 1.8% 1.2% $6,912,442 $7,161,290 3.6% 192,700 215,700 23,000 11.9% 1.1%South Dakota 1.1% 1.9% 1.1% $989,728 $1,019,420 3.0% 44,800 49,500 4,700 10.5% 1.0%Tennessee 1.2% 1.5% 0.9% $9,168,182 $9,424,891 2.8% 263,400 287,400 24,000 9.1% 0.9%Texas 2.2% 2.4% 1.8% $36,908,621 $38,421,874 4.1% 1,017,500 1,192,000 174,500 17.1% 1.6%Utah 2.0% 2.6% 1.7% $3,213,310 $3,328,989 3.6% 103,400 118,600 15,200 14.7% 1.4%Vermont 0.2% 0.5% 0.3% $809,349 $827,154 2.2% 29,500 31,600 2,100 7.1% 0.7%Virginia 0.8% 2.0% 1.0% $12,840,111 $13,263,834 3.3% 334,500 369,500 35,000 10.5% 1.0%Washington 1.4% 1.9% 1.2% $10,066,790 $10,398,994 3.3% 275,100 305,600 30,500 11.1% 1.1%West Virginia 1.0% 2.1% 0.2% $2,034,149 $2,078,900 2.2% 72,900 77,400 4,500 6.2% 0.6%Wisconsin 0.7% 0.9% 0.4% $6,842,559 $7,034,150 2.8% 261,400 279,300 17,900 6.8% 0.7%Wyoming 2.0% 4.9% 1.0% $779,772 $808,725 3.7% 26,300 28,200 1,900 7.2% 0.7%

1 National growth rates for these indicators for 2012 are expected to be 1.3 percent for total employment, 2.0 percent for real disposable personal income and 1.0 percent for total population.

2 State restaurant-sales figures are in current dollars and are not adjusted for menu price inflation. Restaurant sales include sales at eating places and managed-restaurant-services providers (contract foodservice). Sales at hotel- and casino-owned restaurants are not included in this grouping. National sales for this grouping are projected to increase at a 3.2 percent rate in 2012.

3 Includes employment in all eating-and-drinking-place occupations, plus employment in foodservice positions that are not located at eating-and-drinking places.

4 Real disposable personal income.

Source: Economic indicators and restaurant sales: National Restaurant Association; industry employment: National Restaurant Association projections, based on historical data from the Bureau of Labor Statistics

State ecONOMIc INdIcatOrS1 GrOWth IN reStauraNt SaleS2 FOOdSerVIce eMPlOYMeNt3

% change, 2011–2012 2011–2012 ($000) 2012–2022 ‘11–’12 ‘12–’22 Average Total Real Total 2011 2012 Percent 2012 2022 ‘12–’22 Percent Annual % Employment DPI4 Population Sales Sales Change Employment Employment Jobs Added Change Change

state Economic data and Outlook for Restaurant sales and JobsHere’s where key economic indicators are headed in each state in 2012, as well as the National Restaurant Association’s projections for

restaurant sales in 2012 and foodservice employment over the next decade.



Appendix

State Restaurant AssociationsThe National Restaurant Association works closely with its state restaurant association partners.

Alaska Cabaret, Hotel, Restaurant & Retailers Associationwww.alaskacharr.com

Arkansas Hospitality Associationwww.arhospitality.org

Connecticut Restaurant Associationwww.ctrestaurant.org

Colorado Restaurant Associationwww.coloradorestaurant.com

Illinois Restaurant Associationwww.illinoisrestaurants.org

Indiana Restaurant Associationwww.indianarestaurants.org

Iowa Restaurant Associationwww.restaurantiowa.com

Arizona Restaurant Associationwww.azrestaurant.org

Florida Restaurant & Lodging Associationwww.frla.org

Kansas Restaurant & Hospitality Associationwww.krha.org

Georgia Restaurant Associationwww.garestaurants.org

Idaho Lodging & Restaurant Associationwww.idahohospitality.net

California Restaurant Associationwww.calrest.org

Hawaii Restaurant Associationwww.restauranthi.com

Delaware Restaurant Associationwww.delawarerestaurant.org

Alabama Restaurant Associationwww.alabamarestaurants.com

Kentucky Restaurant Associationwww.kyra.org

North Carolina Restaurant & Lodging Associationwww.ncrla.biz

North Dakota Hospitality Associationwww.ndhospitality.com

Maine Restaurant Associationwww.mainerestaurant.com

Massachusetts Restaurant Associationwww.massrestaurantassoc.org

Mississippi Hospitality & Restaurant Associationwww.msra.org

Minnesota Restaurant Associationwww.hospitalitymn.com

New Jersey Restaurant Associationwww.njra.org

New Mexico Restaurant Associationwww.nmrestaurants.org

Restaurant Association of Marylandwww.marylandrestaurants.com

Montana Restaurant Associationwww.mtrestaurant.com

Nebraska Restaurant Associationwww.nebraska-dining.org

New Hampshire Lodging & Restaurant Associationwww.nhlra.com

Michigan Restaurant Associationwww.michiganrestaurant.org

Nevada Restaurant Associationwww.nvrestaurants.com

Missouri Restaurant Associationwww.morestaurants.org

Louisiana Restaurant Associationwww.lra.org

Ohio Restaurant Associationwww.ohiorestaurant.org

Oregon Restaurant & Lodging Associationwww.oregonrla.org

Puerto Rico Restaurant Associationwww.asorepr.net

South Dakota Retailers Association, Restaurant Divisionwww.sdra.org

South Carolina Hospitality Associationwww.schospitality.org

Washington Restaurant Associationwww.wrahome.com

West Virginia Hospitality & Travel Associationwww.wvhta.com

Wisconsin Restaurant Associationwww.wirestaurant.org

Pennsylvania Restaurant Associationwww.parestaurant.org

Texas Restaurant Associationwww.restaurantville.com

Wyoming Lodging & Restaurant Associationwww.wlra.org

Utah Restaurant Associationwww.utahdineout.com

Virginia Hospitality & Travel Associationwww.vhta.org

Rhode Island Hospitality Associationwww.rihospitality.org

Vermont Chamber of Commerce Hospitality Divisionwww.vtchamber.com

Tennessee Hospitality Associationwww.tnhospitality.net

Oklahoma Restaurant Associationwww.okrestaurants.com

New York State Restaurant Associationwww.nysra.org

http://www.alaskacharr.com

http://www.arhospitality.org

http://www.ctrestaurant.org

http://www.coloradorestaurant.com

http://www.illinoisrestaurants.org

http://www.indianarestaurants.org

http://www.restaurantiowa.com

http://www.azrestaurant.org

http://www.frla.org

http://www.krha.org

http://www.garestaurants.org

http://www.idahohospitality.net

http://www.calrest.org

http://www.restauranthi.com

http://www.delawarerestaurant.org

http://www.alabamarestaurants.com

http://www.kyra.org

http://www.ncrla.biz

http://www.ndhospitality.com

http://www.mainerestaurant.com

http://www.massrestaurantassoc.org

http://www.msra.org

http://www.hospitalitymn.com

http://www.njra.org

http://www.nmrestaurants.org

http://www.marylandrestaurants.com

http://www.mtrestaurant.com

http://www.nebraska-dining.org

http://www.nhlra.com

http://www.michiganrestaurant.org

http://www.nvrestaurants.com

http://www.morestaurants.org

http://www.lra.org

http://www.ohiorestaurant.org

http://www.oregonrla.org

http://www.asorepr.net

http://www.sdra.org

http://www.schospitality.org

http://www.wrahome.com

http://www.wvhta.com

http://www.wirestaurant.org

http://www.parestaurant.org

http://www.restaurantville.com

http://www.wlra.org

http://www.utahdineout.com

http://www.vhta.org

http://www.rihospitality.org

http://www.vtchamber.com

http://www.tnhospitality.net

http://www.okrestaurants.com

http://www.nysra.org



aBOut the NatIONal reStauraNt aSSOcIatION 2012 RESTAURANT INDUSTRY FORECAST

The National Restaurant Association’s 2012 Restaurant Industry Forecast projects nominal and real growth rates for all sectors of the restaurant industry. Real growth is calculated separately for each market segment.

To calculate real sales growth at eating-and-drinking places, the projected increase in menu prices (including projected price increases for alcoholic beverages served) is subtracted from the percent increase in sales.

For other industry sectors where food costs are the biggest determinant of expenses — such as colleges and universities — a modification of the Producer Price Index (PPI) for food (which measures changes in wholesale food prices) is used to calculate the sector’s real growth. Modifications to the PPI for food are based on historical patterns for each industry sector. The food-cost component constitutes the base percent increase, which is adjusted to reflect population changes and other pertinent factors, such as labor and overhead costs.

To arrive at 2012 real sales figures for the total restaurant industry, as well as for the Commercial and Noncommercial Restaurant Services groups, revised 2011 sales were multiplied by the respective 2011 real growth factors. The real sales figures for each of the industry sectors were added and compared with 2011 sales to obtain real growth for the industry overall and the industry’s two major segments.

Forecast updatesThe National Restaurant Association’s projections for 2012 industry sales are based on the best data available in mid-December 2011. If the outlook for general conditions or the food situation changes significantly in 2012, those projections will require adjustment. The latest developments are posted at www.restaurant.org/research. In addition, the performance of individual companies or sales in local market areas may differ substantially from the U.S. outlook.

Sales data for previous yearsGetting final estimates for restaurant-industry sales in previous years is an ongoing process. The National Restaurant Association’s Restaurant TrendMapper offers updated sales estimates as they become available. Subscribe at www.restaurant.org/trendmapper.

aBOut the State aNd reGIONal FOrecaSt

State restaurant-sales data is arranged according to the nine U.S. Census Bureau regions. Included for each state are revised restaurant-sales data for 2011, projected 2012 restaurant-sales figures and percent-change calculations for population, employment and disposable personal income. Much of the historical economic data in this report are based on information obtained from such sources as the Bureau of Economic Analysis, which is part of the U.S. Department of Commerce, and the Bureau of Labor Statistics, which is part of the U.S. Department of Labor.

A few reminders• Salesprojectionsfor2012arebasedonthebestavailabledatainmid-

December 2011. If the outlook for general economic conditions or the food situation changes significantly in 2012, those projections will require adjustments.

• AdjustmentsweremadetoarriveatapredeterminedU.S.total.

• Salesfiguresforeachstatearesubjecttoalargermarginoferrorthanthenational projections.

• ActualsalesfiguresrepresentanoverallallocationoftotalsalesintheUnitedStates. Although percent changes are subject to more variation, they have been shown here as a convenience to 2012 Forecast readers.

• “Restaurantsales”includessalesinfoodserviceoperationswithpayrollsthatfall under the North American Industry Classification System definition of Food Services and Drinking Places (NAICS Code 722). Sales totals also cover managed services (contract foodservice).

The information in this report was prepared in consultation with the research firm Malcolm M. Knapp Inc.

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2012 Restaurant Industry Forecast

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