Report: Restaurants poised for better 2012

by The City Wire staff ([email protected]) 119 views 

Restaurant owners large and small are poised for growth in 2012 despite their continued struggle to combat wholesale food price inflation, according to the National Restaurant Association’s annual forecast released today (Feb. 2).

The trade group predicts a record $632 billion in annual sales, up 3.5% from 2011. The increase is related to more traffic and higher overall menu prices. The restaurant sector also expects to outpace the overall economy in job creation. 

Restaurant jobs fall in the hospitality sector which during December employed 18,900 workers in Northwest Arkansas, up from 18,300 in December 2010. The sector in the Fort Smith metro area employed 8,700 people during December, up from 8,600 in December 2010. Local economist’s say this employment sector has one of the more resilient as the overall economy continues its slow recovery.

In the last 12 months hospitality hiring rose 3.3% in the Fayetteville metro area and 1.2% in the Fort Smith metro area, according to the U.S. Bureau of Labor Statistics.

In 2012, one in 10 working Americans will be employed in the restaurant or food service industry, as owners and operators will increase hiring 2.3% over 2011, according to Hudson Riehle, spokesman for the trade group.

“The industry is expected to gain back all of the jobs lost during the recession by early 2012. The overall economy isn’t expected to be back at pre-recession employment levels until 2014,” Riehle noted in the release.

Bruce Spinas, a partner with TGI Friday’s in Fort Smith, said sales at the restaurant were “flat across the board” in 2011. But Spinas said 2012 is off to a good start, with sales up 10% during January.

“There is a lot of competition in Fort Smith … But everybody is holding their own. There are new restaurants coming to town all the time, so the competition is there,” Spinas said about the challenge to grow revenue.

The restaurant, in Fort Smith for 18 years and employing about 70, recently was awarded its “stripes” from the Carlson Restaurants, the parent company of TGI Friday’s. The “Earn Your Stripes” program requires franchisees to meet a list of requirements designed “to provide an overall better experience for our guests,” Spinas explained.

Among the industry’s biggest concern going forward is the rising inflation of wholesale food prices. In 2011, the industry swallowed an 8% jump in wholesale prices — the highest annual increase in 30 years.

Riehle said food price inflation is expected to average 4% in 2012, still higher than historical averages.

Global food service suppliers like Springdale-based Tyson Foods have continued to raise wholesale prices with their customers which include quick service venues like McDonalds and Taco Bell, to casual dining options like TGI Friday’s.

Food giant McDonald’s raised menu prices three times in 2011, totaling about 3%, the company noted last week in its fourth quarter earning release. While wheat and corn prices have moderated, McDonald’s said it expects commodity costs in the U.S. to rise between 4.5% and 5.5% in 2012. Company executives said further menu price hikes are not out of the question for 2012.