Few industries have demonstrated the continual growth that the U.S. restaurant industry has over the past two decades. The National Restaurant Association's 2005 Industry Forecast predicts that this year will mark the 14th consecutive year of real sales growth for restaurants. The association expects the nation's approximately 900,000 restaurants to ring up $475.8 billion in total sales in 2005, a 4.9% increase over last year.
The reason for such uninterrupted growth is simple: unrelenting consumer demand. U.S. consumers have less time to cook at home and are eating out more than ever, said Steven C. Anderson, National Restaurant Association president-CEO. "In total, American consumers will spend almost 47% of their food dollar in the restaurant community in 2005," he said.
Such growth presents tremendous opportunities for those that supply restaurants. "[Restaurateurs] make changes every year, if not more often, to introduce new menu items, update their decor and improve the dining experience," said Steve Kalman, restaurant industry VP for Reed Exhibitions.
Labor remains one of the biggest challenges for restaurants today, said Randy Karns, president of BKI-Worldwide, a vendor of foodservice equipment. "Newer, better, more durable equipment and processes can help cut costs across the board-especially in labor-and improve efficiency."
In 2003, sales per full-time-equivalent employee in restaurants were $57,567, notably lower than in other industries, according to the National Restaurant Association report. Rising energy and employee health care costs further put the squeeze on restaurants, but the report also noted that technology and training have helped more than two-thirds of restaurant operators claim they are more productive than they were two years ago.
In the past 18 months, restaurants have been forced to make significant changes in their menus. Consumer demand for healthier dining options has never been higher. At the same time, consumer eating habits have never been more sophisticated, said Gerald White, associate publisher of sales development of Nation's Restaurant News. "Just take a look at the breadth and depth of ethnic cuisines that have exploded onto the marketplace," he said. "It's no longer just Italian, but Tuscan. It's no longer Mediterranean, but Moroccan."
Restaurant owners have extra incentive to overhaul their look in 2005 because of new tax depreciation rules. According to the National Restaurant Association, more than 54% of quick-service restaurant owners surveyed said they would dedicate a higher portion of their budget to remodeling this year.
With all these avenues opening up for suppliers to exploit, how can new players on the block best reach potential restaurant customers?
"Two-thirds of our business results from being very active at restaurant industry trade shows and conventions," said Andy Zurawski, VP-sales for True Foodservice Equipment, a provider of foodservice refrigeration. "[Restaurant owners are] not satisfied reading advertisements; they'd rather see the products up close and kick the tires, so to speak."
Equally as important, trade shows present a face-to-face selling opportunity that's difficult to achieve on the streets, Kalman said. "A vendor can reach thousands of interested, potential customers in just three days at a show," he said.
"Trade shows and events probably are the best way for marketers to reach restaurants," said Elliott Black, president of EMBA Inc., a management and marketing consultancy. "But traditional trade advertising and direct mail campaigns can play important roles in building awareness" (see case study, page 18).
It's increasingly important as well for vendors to have a strong online presence, Black said. "Many restaurants love being able to make first purchases and reorder products via the Internet."