||Restaurant Operators Expect Better Sales, Profits in 2012
Survey Respondents Also Predict an Increase in Menu Prices
Restaurant operators are concerned about commodity costs and stalled consumer spending, but optimistically expect sales and profits in 2012 to beat last year's levels, according to an exclusive survey from Nation's Restaurant News.
More than 150 subscribers to NRN a.m. -- the daily e-newsletter from Nation's Restaurant News -- helped shed light on what the industry is expecting for the year ahead. Operators answered questions on hiring, expansion plans, menu pricing and even whether this year's Presidential election will change the political environment in Washington, and hence the economy or the consumer (hint: respondents don't think Washington politics will ever change).
Beyond positive outlooks for sales and profit, unit growth will remain a challenge for many, the results showed, and restaurateurs were split on whether to invest in redesigns, technology or equipment upgrades in 2012.
One of the most compelling survey results: As restaurant operators continue to brace themselves against rising costs, a full 67 percent of respondents said they would increase menu prices in 2012.
Continued sales optimism
For the second year in a row, restaurant operators expect total sales to increase over the year earlier. For 2012, 64 percent of respondents said total sales will be better than 2011, and 30 percent said sales will be about the same as a year ago. The positive results were a bit muted from a year ago, when 70 percent said they expected restaurant sales to be better than a year ago; 27.5 percent said they expected sales to be about the same as in 2010; and just 2.3 percent said they expected sales to be worse.
Profits are also expected to improve over 2011 levels, according to the survey, with a combined 88 percent of respondents expecting better or similar profits in 2012. Like sales, the results were slightly less positive than operators' answers as they were headed into 2011. A year ago, about 65 percent of survey respondents expected improved profit at their operations in 2011 versus 2010; about 25 percent predicted profit levels of about the same; and 10.8 percent expected 2011 restaurant profit to be worse than it was in 2010.
Markedly different than the positive sales and profit projections, unit growth expectations showed that nearly half of respondents plan to open zero restaurants in 2012, and about 6 percent plan to open fewer restuarants than they opened in 2011. About 28 percent of respondents said they would open more restaurants this year than last, and about 17 percent said they have been growing consistently through the downturn. A year ago, as operators were headed into 2011, more operators were eager to open locations, as 39 percent said they would open more locations.
Escalating menu prices
Facing a second straight year of rising commodity costs, many restaurant chains have said they will be forced to pass higher prices for food items to the consumer through menu price hikes.
From the coffee quick-service player Starbucks to the full-service Texas Roadhouse, chains are looking to test various levels of menu price increases in different markets. With today's consumer still price sensitive, any upticks in the cost of menu items can affect a restaurant's traffic, so many chains are treading lightly.
According to the NRN survey, results show a clear trend toward small percentage point menu price increases.
Of the 67% of respondents planning menu price increases in 2012, 64 percent cited an increase of between 1 percent and 3 percent. Also among those who said they would increase prices, about 31 percent said they would hike menu prices between 4 percent and 6 percent, while 6 percent said they would raise prices by more than 6 percent.
Just 2 percent of survey respondents said they would reduce menu prices in 2012.
Even with expected price increases, the majority of respondents cited "value pricing" as the most important aspect of the menu in 2012.
Respondents ranked their menu's main focal points for the year:
1. Value pricing
2. Improved food quality
3. Use of local or seasonal items
4. Lower-cost food items
5. Bold flavors or spicy foods
(Source: Nation's Restaurant News, 01/09/12)
Click here to email to client
Back to Radio Sales Today
Click here to view Job Postings.
What Advertisers and Agencies Want
During this timely webinar, you'll learn what America's leading advertisers and agencies expect when they meet with you -- creative solutions to their problems; custom recommendations on how to generate more business; and ideas for effectively using integrated media.
This presentation, conducted by RAB's John Potter, will be offered twice: Tuesday, January 17 at 3 PM (Central), and Thursday, January 19, at 10 AM (Central).
For more details and registration information, follow this link.