• by Karlene Lukovitz  @KLmarketdaily, January 21, 2010

The restaurant industry should see gradual improvement during the course of this year as the economy continues its slow recovery, according to the National Restaurant Association's just-released 2010 forecast.

Key to restaurant growth will include continued stress on value, convenience, expanded menu options and sustainable practices (including locally sourced and better-for-you offerings), as well as expanded use of online/mobile/social media capabilities and marketing efforts.

The association expects industry-wide sales to reach $580 billion in 2010 -- representing a 2.5% increase in current dollars, but essentially flat sales in adjusted-for-inflation dollars. However, flat sales would represent an improvement over 2008 and 2009, which saw inflation-adjusted sales losses of 1.2% and 2.9%, respectively.

Pointing to surveys showing that many consumers indicate they are not dining out as often as they would like, the forecast predicts that "pent-up demand will turn into restaurant traffic as economic recovery continues."

"While there are still substantial challenges ahead, we are encouraged that the outlook is improving," summed up Dawn Sweeney, president and CEO of the association.

As in 2009, quick-serve restaurants are expected to continue to perform better than full-service formats, reflecting consumers' continued emphasis on value and specials. QSR sales are projected to rise 3% to $164.8 billion this year, while full-service restaurants' sales are projected to rise 1.2% to $184.2 billion.

Among all eating-and-drinking place segments, social caterers are expected to see the largest growth (4.5%). Among all commercial segments, retail-host restaurants (including those located in gas/service stations and drug and grocery stores) should see the strongest growth (4.9%).

For only the second time in nearly half a century, the restaurant industry lost jobs in 2009. However, restaurants still outperformed other industries on the employment front last year. The forecast calls for resumed restaurant employment growth in 2010 -- to reach 12.7 million jobs -- and total growth of 1.3 million industry jobs by 2020, to reach 14 million. The industry is one of the nation's largest private-sector employers.

States expected to show the largest sales gains include Colorado (2.9%), Idaho (2.8%) and New Jersey, New York, North Carolina and Texas (all projected to see 2.7% growth). The top states by projected 2010 restaurant volume are California ($58 billion, 2.3% growth); Texas ($34.8 billion, 2.7% growth); New York ($29 billion); Florida ($27.6 billion, 2.4% growth) and Illinois ($18.7 billion, 1.9% growth).

Marketing and Menu Trends

In addition to expanding convenience options (such as home delivery and pre-ordering/on-site pick-up), restaurants will seek growth through expanded on-site events and activities (such as cooking classes), according to the forecast.

Online/mobile ordering capabilities and marketing outreach -- including email, cell phone texting and Net-based offers/promotions -- will need to continue to grow in sophistication, reflecting consumers' increasing use of the Web to browse menus, make reservations and get recommendations from other diners.

A sound social media strategy and understanding of channels such as Facebook, Twitter, Yelp and YouTube will be even more critical this year, as word of mouth continues to migrate online, the association stresses.

Green initiatives -- including energy-efficient equipment and fixtures, recyclable materials and reduced water usage -- will continue to help attract consumers, as well as reduce restaurant operating costs. Four in 10 consumers say that sustainability practices influence their choice of restaurants, and four in 10 full-service operators, as well as 31% of QSR operators, report that they intend to invest more resources in green initiatives in 2010, the forecast reports.

Top menu trends for the year include locally sourced and healthier offerings. About 70% of consumers report that they are more likely to visit restaurants that offer locally produced food, and nearly three out of four say they are trying to "eat healthier" in restaurants now, as compared with two years ago.

The top menu trends, according to the association's "What's Hot in 2010" survey of more than 1,800 professional chefs, include: locally produced/sourced produce, meat/seafood and beer/wine, as well as sustainability as a "culinary theme," sustainable seafood, bite-sized desserts, healthy kids' meals, half portions, farm/estate-branded ingredients, and gluten-free/allergy-conscious items.

Chefs expect continuing growth in demand for ethnic cuisines and flavors -- including regional ethnic and fusion. French, Spanish, Japanese (both sushi and other offerings), Thai, Cajun/Creole and "soul food" are expected to be especially popular.