This month, Food Chain is diving deep into the state of the restaurant sector to learn more about the industry’s ecosystem, and who better to discuss its secrets than the association that works to support its success? We sit with Hudson Riehle, Senior Vice President of Research to discuss the latest annual State of the Restaurant Industry report, as well as how businesses can continue to thrive in a post-pandemic era.
The National Restaurant Association serves as the guardian of restaurant and food service businesses in the United States. “We represent everyone, from the corner coffee shop to the international multi-unit operators,” says Hudson, who has been with the association for over 36 years. His journey started at the University of Pennsylvania’s Wharton School of Business where he received an MBA, and has remained a veteran of the organization since graduating. “Over the years, we have sustained a source of data and information regarding the size and scope of the industry, not only on a national basis, but at state and city levels as well.”
In February 2023, the association released its annual State of the Restaurant Industry report, which examines how the food service sector is fairing against current economic challenges and forecasts major trends for the year ahead. Three years following the impact of Covid-19, Hudson is optimistic that the industry seems to be finally stablizing. “There are still obstacles that continue to confront the industry, and the purpose of the report is to shed some light on useful information for how businesses can overcome them.”
According to the report, the food service industry is forecast to see $997 billion in sales, an all-time high. Table service is forecast to be a $324 billion market, while quick service is expected to reach $395 billion. Hudson shares that quick service’s higher sales is owed to the fact that the sector, which includes takeaways, delivery and drive-thrus, catapulted during the pandemic, and continues to be a reliable favorite for customers. “It’s driven by convenience, while table service is driven by socialization. As the remnants of the pandemic continue to be felt, it makes sense that table service is taking longer to recover.”
It is fantastic news that the industry is set to experience growth. However, this could be hampered by the fact that many markets are trying to shoulder inflation. Furthermore, operators are struggling with labor recruitment and how to incorporate technology to improve efficiency. The National Restaurant Association’s role is to continue to support and motivate those businesses that are struggling with these challenges. “Restaurants have become a cornerstone for the national economy. You’ll find them in every community, and they serve as the nation’s second largest private sector employer. Over the past couple of decades, the industry has become a more important player in the national economic infrastructure, and as consumers continue to shift their spending towards restaurants, the overall industry will keep growing.”
Not only is the association keen to see growth within the industry, it is also pushing to see legislative reforms that will help both employees and employers. It was noted during the delivery of the report that the association is tackling policies for workforce development in particular. According to Sean Kennedy, the Executive Vice President of Public Affairs, the organization is changing the current advocacy profile to meet the evolving needs of the industry. In addition to workforce development, it is also supporting measures to manage the cost of doing business, and ensure supply chain stability.
Championing the sector
Sean wants to see the Senate implement policies that encourage immigration reform, including the Essential Worker Enhancement Act for the restaurant sector, and protect the tip wage. He shares that each of these measures will open greater opportunities for any worker looking to develop a career in the restaurant sector. Sean adds that in order to grow the food service industry, the National Restaurant Association would like to raise awareness of how the last three years impacted businesses, while also ironing out problems within the supply chain.
For new restaurants looking to achieve success this year, Hudson advises that having a meticulous business plan and distinctive niche is an excellent start. “This industry is incredibly competitive, so it is important to know the demographics of the area in which business owners are operating. The remigration after large groups of people leave city centers impacts more restaurants than realized. For example, 16 states and Washington DC actually lost population in 2021. So it’s important to be in tune with your local market conditions.”
In summary, as 2023 begins to speed by, Hudson expects that industry sales growth will continue overall. This will be influenced by returning levels of travel and tourism, which, in a typical year brings in about three-in-ten dollars spent in restaurants nationwide. And while visits to restaurants for dinner are still down a little from pre-pandemic levels, in place of going out, more consumers are choosing an evening relaxing on the sofa, with a takeaway from their local restaurant.