Advice for Buying a Restaurant and Selling a Restaurant

Restaurant Sales to Top $863 Billion This Year - We Sell Restaurants Weighs In

Posted by Robin Gagnon on Apr 29, 2019 9:05:17 AM

It's official.  The National Restaurant Association says that U.S. restaurant sales will reach a record high of $863 billion this year, up 3.6% over last year.  That's great news for the industry overall.  We see this overall trend for restaurant sales, after a few disappointing years, as an indicator of the overall strength of the economy since that rising tide, appears to be pulling all industries, not just restaurant sales, higher.

The National Restaurant Association, Senior Vice President of research and knowledge, Hudson Riehle, said of his research, "The growth rates for the industry are definitely more moderate than before the onset of the Great Recession in late 2007."  The group's data shows that if you look at the compound annual growth rate between 1970 and 2019, it is 6.4%.  That means, the most recent results are good, but not outstanding. 

Why are restaurant sales facing such pressure?  Strong growth in unit counts, particularly among certain channels, like burgers or sandwiches, intersected with a weaker economy in the Obama years. This is a market share issue.  There just are enough restaurant sales to fund this many outlets and there will be deterioration of topline sales overall.

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Another reason restaurant sales are lagging.  Blame the Millennials.  A recent set of data released by Technomic Ignite consumer data, reveals that the percentage of millennials who say they visit restaurants “more than once a week” has declined to 55% from 59% over the past year. That's a lot when they have the highest percentage of frequent restaurant users.

That might not seem like much, but no other group saw that kind of change over the same period. And millennials had the highest percentage of frequent restaurant users. Overall, according to the National Restaurant Association, more than half, or 51%, of all consumer spending on food in the United States is allocated to restaurants.  Millennials were at 59% and have declined to 55% over the past year.

How are operators responding a challenge in restaurant sales?  Those who have not yet moved to add delivery are far behind the curve and need to get going. They are also looking at technology to deliver better front and back of the house experiences.

Do consumers like the restaurant experience?  That's a given.  Around 90% of consumers like to spend money in restaurants.  There is also, according to the National Restaurant Association a pent up demand for eating out, highest among baby boomers who say they are not using restaurants as often as they would like.

What are the projections for restaurant sales by concept?  Full service and quick service are poised for gains while cafeteria style concepts are taking the largest hit.  The survey shows snack and non-alcoholic beverage bars with the highest gains at 4.6%.  Based on the We Sell Restaurants performance this year with transactions on Smoothie and Juice concepts, we agree with this assessment.

The full table is shown below.

Screen_Shot_2019-04-08_at_9.35.57_AM.pngWhich states will shown positive restaurant sales growth?  According to the National Restaurant Association, "all 50 states have positive sales growth projected for this year."  That's great news for those of us in the industry.  Their table of projected sales by state is available at this link

The NRA State of the Industry report is available to association members and available for purchase to non-member a www.restaurant.org.

Are you in the business and thinking of selling your restaurant?  We offer a free, no obligation evaluation of your business. 

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