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Restaurants Regain Momentum

Adjustable Bib ApronThe economic recession the past years brought us to witness how restaurants had to contend with the effects of the recession to their businesses.  As an aftermath of the economic downturn, cash strapped customers lessened their visits to dining places and focused on their other priorities, which greatly affected the restaurant industry’s bottom line.

Here’s a bit of good news: According to the latest survey conducted by AlixPartners LLP, a worldwide business-advisory company, there has been an increase in the number of Americans eating out at restaurants. The food industry, particularly the restaurant business, is on the road to a remarkable comeback.

The survey reported that the number of Americans that ate out at least once a week rose to 70% this year–a definite leap from last year’s reports of 49%.  Dining trends have unquestionably gotten better, with a substantial rise in figures for high end and low end dining.  High end covers fine-dining with smartly dressed, apron-clad wait staff servicing their customers, while low end are the mostly self-service convenience stores.

Adam Werner, AlixPartners’ managing director and head of the company’s Restaurant & Foodservice Practice in North America stated that consumers are once again spending for their dine-outs, which can be seen in the industry’s recent statistics.  Such development offers us a more positive outlook on the business trend.

Continuous Challenges

The thing is, even with this good news, there are still a few problems that the restaurant industry would have to face.  The survey showed that customers are still very much conscious of their expenditures and still have not recovered from their tightfistedness that was brought about by the recession.   Americans still feel appalled by what happened to the nation’s economy, and are still extremely cautious when it comes to their spending habits. On a separate statistics conducted by the AlixPartners Company, 28% of the respondents said that consumers are more likely to spend on fuel costs the coming year, while 13% said it they are likely to spend more for their personal debts. Asked what they would have to cut down to compensate for the rising fuel costs, 38% said they would have to sacrifice eating in restaurant and being waited on by apron-clad waiters and waitresses.

AlixPartners’ reports corroborated this analysis, as it revealed the dropping trend of the customers’ per-meal spending. Consumers said that for the next 12 months, they plan to spend around 5% less than their usual spending at restaurants.  This averages to around $13.40 a meal as compared to the usual $14.00 spending the previous year, translating to a possible fall in restaurants’ overall revenue.

Another challenge that restaurants are facing is the high cost of food the past years, which does not seem to have any improvement. Vegetables, beef, rice, wheat, cheese, cooking oil and nearly all menu ingredients have increased their prices.  The price of pork went up by 11.2%, bread and pasta went as high as 23%, poultry was at 2.2%, and potatoes were at 21% as well as many other food items.  While we all were aghast by the increase the past years, we have now all gotten used to the idea and presently consider the increase to be the “normal” prices.  The cost of restaurant menu ingredients are said to have increased to as high as 42%, prompting food industry experts and analysts to advise restaurateurs to focus on their supply chain to be able to maintain and keep up with this recent improvement on the industry’s numbers.

Factors That Led To the Recovery

One big factor in this remarkable recovery is the growth of the casual and convenience store segments of the industry.  The incidence of dining at convenience stores in the last quarter of 2010 increased to 63% while fast casual grew to 25%.

The restaurant industry deserves to be congratulated, as they were able to bring on the increase of their customers’ visits despite the past year’s serious challenges.  By coming up with different ways to entice their customers to part with their money, like coming up with discounted “daily deals” and options for healthy dining, they turned out successful in drawing their customers back to the fold. With a little more persistence and careful planning, the recovering trend could still go higher.