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What They Say About the Restaurant Industry

September 5, 2011
KEYWORDS forecast / restaurant
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Every year the National Restaurant Association (NRA) publishes Forecast, a detailed report designed to go “inside the mind of today’s consumers,” which in the case of NRA members are those they hope will use full-service and quick service restaurants.

I glanced through the most recent print edition (you do remember print editions, don’t you?) of the publication mainly to see the potential jobs for HVACR contractors. Not so much for the repair business, but for plans regarding upgrades in equipment, in light of rising energy costs and/or environmental considerations. After all, every soft drink, mixed drink; salad; fish or poultry or beef entrée; and ice cream dessert that comes to the table or is picked up at the take out counter has to have relied on some form of refrigeration in the store. And every customer sitting in a restaurant is expecting good air conditioning in the summer and adequate heat in the winter. (Here I do stress sitting “in” the restaurant. I love hiking, biking and canoeing in the outdoors, but I don’t understand alfresco dinner especially on hot, humid days. Where we live most alfresco dining is along busy roadways with 18 wheelers rolling by belching noise and pollutants. Not to mention pesky flies. But if alfresco is your thing, go for it. But, I digress.)

So if HVACR is needed, how needy is the restaurant industry?

Recovering

First of all, as every contractor knows, the past few years have been tough regarding work because of the economy. Just as the housing market struggled, so did the restaurant industry. Forecast noted “three straight years (2008-10) for real sales declines” which the publication diplomatically called “a pause in the industry’s long term positive trajectory.”

By contrast, “Total restaurant-industry sales are projected to reach a $604.2 billion record high in 2011 — a 3.6 percent increase over 2010.” (It should be noted that the report is issued early in 2011 and final figures won’t come in until the end of the year, but that’s the projection.)

Equipment

The report then gets into the rising cost of electricity which ties into the issue of environmental responsibility. “Restaurateurs are adding green initiatives to their menus to help reduce energy usage and expense,” was one phrase.

I think the reference here in terms of “menus” was related to energy saving options throughout the store rather than just the printed list of food products available to customers. Anyway, according to a survey NRA took, “Roughly four out of 10 operators plan to purchase energy saving kitchen equipment and energy-efficient refrigeration, air conditioning or heating systems in 2011.”

Now there are 960,000 restaurant industry locations in the United States according to Forecast. So if 40 percent of the operators of those locations plan to upgrade HVACR, that means 384,000 locations for upgrades.

Here we are almost three fourths of the way through the year, so we might be able to get a handle on how many of those upgrades were actually done. If you are a contractor involved in such work, congratulations — and let me know what was the work involved and why the owner wanted it to be done. Did it jive with my theory of wanting to be environmentally correct and save money? Or one or the other? And how did that owner justify the cost in this tight economy? You don’t have to name names. Just tell me about the project and why it was done.

If you are a contractor who does restaurant service work but there has not been much work, why haven’t big ticket jobs come your way? I’m not sure the 4 of 10 operators planning upgrades are geographically confined. So in theory, if I drive past 10 restaurants, four of them should be willing to have HVACR upgrades done this year. Is that possible in your area? How do you go about getting a part of that business?

As you can see, I based this column on a published forecast from a major trade association. Only you can confirm the reality of the assertions.

Publication date: 09/05/2011

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