III. Industry Analysis
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[Company Name] directly or indirectly competes with all foodservice providers nearby our store that offer similar dining experiences. Competition will come from supermarkets, restaurants, coffee shops, bakeries and other retail establishments. Direct competition will come from companies offering 100% natural, organic foods similar to [Company Name].
Industry Statistics & Trends
The following industry size facts and statistics bode well for [Company Name].
According to a recent National Restaurant Association Restaurant Industry Forecast, annual restaurant industry sales are expected to reach $566 billion.
Full-service restaurants are expected to reach $182.9 billion; in contrast, quick service restaurants are expected to grow to $163.8 billion, a gain of 4.0 percent over last year. Eating-and-drinking places will see an increase in sales from of 2.2 percent from last year, totaling $395 billion.
The Forecast projects that while overall restaurant industry sales will increase in current dollars by 2.5 percent over recent figures; the numbers translate to an inflation-adjusted decline of 1.0 percent. Despite the economic downturn, the industry will remain a cornerstone of the economy, representing 4 percent of the U.S. gross domestic product.
With the economic downturn, restaurants are trying to give their patrons more value for their money in addition to making operational improvements to help cut costs.
36 percent of quick service operators and 16 percent of casual-dining operators are seeing the demand for value as the year’s top trend in their segment.
Consumer and Menu Trends
Research shows that Americans are looking for healthier options with restaurants that deliver value and convenience.
Among top trends restaurateurs see are an expanded focus on value, healthy options in kids’ meals, locally sourced items and green initiatives.
Among 1,600 of American Culinary Federation member chefs, it was decided that balanced children’s meals was number 4 on list of the most popular recent trends and fruit/vegetable side items for kids ranked sixth. In a separate survey, quick-service operators named healthy options in kids meals as the No. 1 food trend in the segment.
Overall, chefs ranked nutrition/health as the No. 11 trend on restaurant menus—this includes healthy foods, produce and fruit, smaller dishes, fish and gluten-free/ allergy According to Association consumer research, three in four adults say they are trying to eat healthier now at restaurants than they did two years ago. Nearly three in 10 adults – 27 percent – have gone online to search for nutrition information about restaurant food, up from 24 percent a year ago.
Restaurateurs will also continue to show increasing leadership in becoming “greener”— by taking action such as reducing energy and water use—in step with patrons’ interest in environmental issues. About four in 10 full-service-restaurant operators and nearly three in 10 quick service operators say they plan to devote more of their budgets to green initiatives. Restaurant patrons like the idea: 44 percent surveyed recently said they are likely to make a restaurant choice based on an operation’s practices in the areas of energy and water conservation.
Forty-five percent of adults say restaurants are an essential part of their lifestyle, one of three say they are not eating out as often as they wish, and 35 percent of adults say that on a weekly basis.
According to the U.S. Department of Agriculture, prices are expected to rise by 4 to 5 percent, lead by red meat and poultry. This will be the third straight year where food prices have surged by at least 4% or more. With 25% of our corn harvest now going to produce fuel, the biggest hits will be on cereals and bakery products with a projected 14% price hike on these items, and a 13.5% predicted hike for fats and oils.
This market segment has found itself in deep trouble, and frankly, this does not come as much of a surprise. Offering un-niched, high cost, low-value items in a boring outdated format has proven itself to be the formula for failure. Tough economy or not, consumers want a great meal AND a great experience.