Restaurants: Labor, Food, Competition and Sales Expected to Rise in 2019


Restaurant owners should take note that labor, food and competition are all expected to rise in 2019. But there is a glimmer of good news too.

Marketing journal AdAge reports:

...Consumer spending at U.S. restaurants and bars is expected to rise 3.9 percent in 2019, according to research firm Technomic...That's just a bit healthier than the 3.6 percent growth in 2018 and 3.5 percent increase in 2017. "It's a low-growth environment," says David Henkes, senior principal at Technomic.

In that scenario, the restaurant wars are expected to heat up more as individual brands struggle to stand out and gain market share.

The marketing journal points out that for quick service restaurants, it expects the segment to grow in sales by 3.4 percent, which is higher than 2018 or 2017. Look out for McDonald's, the leader in the industry. Domino's is another chain to watch.

But there is also this concern that within fast food, the coffee wars are boiling a little too hot -- e.g. Starbucks, Dunkin', McCafe, et al.

"The industry [coffee outlets] is growing too fast, and they're growing twice as fast as the [fast-food] industry," says Howard Penney, who follows restaurants as managing director of Hedgeye Risk Management."

I suppose the concern is that Americans can and will only stomach so much of an increase in coffee; or, that there is some sort of business axiom for marketers that says what suspiciously inflates too fast in a specific food will also likely oversaturate and deflate.

In the high growth segment of fast-casual, watch Chipotle. And in casual dining, watch Texas Roadhouse and Applebee's.

AdAge also lists the top ten food chains by systemwide sales. It's a good read.