Looking Ahead: What to Expect in 2013

The good news is that the business environment is expected to improve in 2013. The bad news is that foodservice operators face no shortage of challenges heading into next year.

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While the foodservice industry has a positive outlook heading into 2013, that perspective remains pretty fragile. So said Hudson Riehle, vice president of the Knowledge and Research Group for the National Restaurant Association during a webcast the organization hosted to reveal its 2013 forecast.

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Consumers will continue to manage their check as their fragile confidence continues to improve. They will also look at new engagement channels to interact with foodservice operators. "Value is more than a price point," Riehle says. "Consumers will be more discerning in how they spend their dollars."

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As a result, in 2013 the industry is expected to enjoy moderate but positive growth (0.8 percent in inflation-adjusted dollars). This means the restaurant industry will continue to grapple with competitors trying to take market share from one another in the absence of significant real growth. Compounding this phenomenon will be increased operational pressures on several fronts including increased wholesale food prices and the need to integrate technology to not only meet customers' expectations but to function more efficiently.

Heading into 2013 the restaurant industry will continue to face a number of operational challenges, chief among them will be increases in wholesale food prices. The NRA projects a 4.2 percent increase in wholesale food prices for 2013. While that's a 2 percent increase from this year it's still not as high as the 2011 level of 8.1 percent. The net result is that foodservice operators will have to diligently look at their cost structure to manage this situation, according to Hudson Riehle.

In addition, operators will need to continue to evaluate the way they incorporate technology into their operations. Consumers are more interested in using technology — in the form of websites, kiosks and the like — to make reservations and order meals. "

Of course, leveraging technology can help operators better manage labor costs but it can introduce other challenges. "The major challenge for operators is to remain high touch in a high-tech world," Riehle says. In other words, it's ok to embrace technology but not at the expense of compromising hospitality.

Another challenge for operators centers on overall moderate growth when it comes to such critical economic indicators as gross domestic product and personal income levels. "This is important because there is a direct correlation between industry growth and the growth of these indicators," Riehle said. Or, to put it another way: the more solid consumers' financial position the more likely they are to spend.

Further complicating the national picture is the fact that the employment situation continues to vary dramatically on a state by state basis. "There's no substitute to being in a good area with good employment growth," Riehle points out.

The good news is that the NRA reports the industry now has 980,000 locations, thus making food prepared outside of the home even more accessible. "And we have learned over the years that convenience drives consumer behavior," Riehle says.

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