Restaurants Remain Nation's Economic Driver as 2004 Marks 13th Consecutive Year of Growth, Says National Restaurant Association

12/15/2003

From: Tom Foulkes, 202-331-5902, or Katharine Kim, 202-331-5939, media@dineout.org, both of the National Restaurant Association

WASHINGTON, Dec. 15 -- Underscoring the importance of restaurants to the nation's economy, the National Restaurant Association simultaneously unveiled the 2004 Restaurant Industry Forecast and its national public policy agenda for the coming year during a press conference held today at the National Press Club. According to the Association's 2004 Forecast, the restaurant-and-foodservice industry remains strong and is projected to reach a record $440.1 billion in sales next year.

"Restaurants serve as an important and essential component to the American lifestyle, as well as the cornerstone of the national economy. As that role evolves, restaurants will continue to grow," said Steven C. Anderson, president and chief executive officer of the National Restaurant Association. "With sales expected to reach over $440 billion in the coming year -- equal to 4 percent of the U.S. gross domestic product (GDP) -- 2004 will be the 13th consecutive year of real growth for the restaurant industry."

With an improving economic outlook for the coming year, the National Restaurant Association's mission - to represent, educate and promote the restaurant industry - means fostering an environment in which restaurants can prosper, grow and continue to create jobs for millions of Americans. Lee Culpepper, senior vice president of Government Affairs and Public Policy, today outlined the Association's pro-employee/pro-employer public policy agenda, emphasizing the importance of restaurants to the economic health of the nation and how their continued success is a harbinger of the entire national economy.

The National Restaurant Association's legislative priorities for 2004 include: restaurant building depreciation, overtime clarification; enacting litigation reform; making tax cuts permanent, including the death tax repeal; passage of Association Health Plans (AHPs), increasing the business meal deduction; immigration reform; and opposing mandated entry-level wage hikes.

"In an increasingly service-oriented economy, the restaurant industry's success is now more directly linked to the nation's overall economic health than ever before. Restaurants generate an economic impact of over $1.2 trillion, directly affecting sales in related industries such as agriculture, transportation and manufacturing," said Culpepper. "The restaurant industry will employ 12 million Americans in 2004 and is comprised in large part - approximately 70 percent - by small business owners. It is those small businesses that are driving the economy and creating new jobs around the country, truly making restaurants cornerstones of the economy, career and employment opportunities and their local communities."

In its 34th year, the National Restaurant Association's 2004 Restaurant Industry Forecast provides an annual projection for the restaurant-and-foodservice industry as a whole and among a variety of industry segments. The Association defines the restaurant-and- foodservice industry as that which includes all meals and snacks freshly prepared away from home, including takeout meals and beverages.

"The more positive economic environment as well as gains in real disposable personal income for 2004 will continue to be the catalysts driving sales up 4.4 percent over this year and will propel the restaurant industry into yet another year of real growth," said Hudson Riehle, the Association's senior vice president of Research and Information Services. "On a typical day in 2004, the restaurant industry will post average sales of over $1.2 billion."

Top Trends to Watch

Driven by customers' need for convenience, socialization and increased disposable income, continued expansion is expected within the restaurant industry for 2004. The number of restaurant locations in the United States is expected to reach 878,000.

America's palate is becoming increasingly sophisticated. With heightened interest in health and nutrition, a host of new menu items and offerings are expected in the coming year.

Intensified efforts by government to regulate restaurants and other small businesses will increase the likelihood of costly and burdensome legislative mandates at the federal, state and local levels on nutrition labeling, restaurant meal taxes and other important issues.

Continued Solid Growth

With the number of restaurant locations in the United States growing in 2004, the number of restaurant jobs will also increase. According to Riehle, despite the uncertain economic environment in recent years, job growth in the restaurant industry has remained steady. While U.S. employment fell 0.2 percent during 2003, the industry posted a solid growth rate of 1.2 percent. The restaurant industry will remain the nation's largest private- sector employer for many years to come. By 2014, restaurant-and- foodservice employment will total 13.5 million-an increase of 1.5 million jobs over the next 10 years.

Fullservice/Limited-Service Segments

Among the major segments, sales at fullservice restaurants are projected to lead the way with sales growth of 4.6 percent. This segment is expected to reach $157.9 billion in 2004, a $6.9 billion increase over 2003. A majority of fullservice restaurant operators said they anticipate business in 2004 to be better than it was in 2003; however, they did indicate that the top operational challenge expected in 2004 would continue to be the economy.

Sales at limited-service or quickservice restaurants -- defined as those chain and independent establishments without waitstaff service -- are expected to increase by 3.9 percent with sales totaling $123.9 billion in 2003 (up $4.7 billion from 2003). Operators of restaurants in this segment said their top operational challenge would be recruiting and retaining employees, as well as building/maintaining sales volume. Perspective from Across the Country

Economic growth is expected in all nine U.S regions, with all regions adding jobs in 2004. When it comes to how restaurants in different parts of the country will fare, the top regions in terms of sales growth remain in the South and the West. These regions have the fastest growing local economies and are expected to post growth in disposable income and population-two important indicators of growth for restaurant sales. Specifically, the Mountain region will again lead the nation with a projected restaurant sales growth of 6.1 percent. The East North Central region is projected to register sales growth of 3.8 percent in 2004, the slowest of the nine regions.

On the state level, Nevada is expected to lead the nation with 6.8 percent sales growth. Arizona follows closely with 6.5 percent and Utah at 6.2 percent is expected to post the next strongest growth numbers. The District of Columbia (3.4 percent) and Hawaii (3.5 percent) are projected to show the lowest growth in sales, associated with the continued weakness in tourism.

For more information about the National Restaurant Association 2004 Restaurant Industry Forecast and its public policy agenda for 2004, visit http://www.restaurant.org. Also, to order a copy of the Forecast, visit the Web site or call 1-800-482-9122.

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The National Restaurant Association, founded in 1919, is the leading business association for the restaurant industry, which is comprised of 878,000 restaurant and foodservice outlets and a work force of 12 million employees -- making it the cornerstone of the economy, career opportunities and community involvement. Along with the National Restaurant Association Educational Foundation, the Association works to represent, educate and promote the rapidly growing industry. For more information, visit the Web site at http://www.restaurant.org.