Industry sales will reach an estimated $537 billion in 2007, according to the National Restaurant Association’s 2007 Restaurant Industry Forecast – when adjusted for inflation, a 2.1% increase over 2006. The Association predicts that although gas prices still pose a threat (the power of which was felt by restaurants in the middle of 2006), the restaurant industry will benefit from another positive economic outlook in 2007. Despite overall economic growth that will not quite match that of 2006, volatile energy costs, and marginal job growth (+1%), the Forecast concludes that the key drivers of restaurant industry growth are in place: a solid economy and disposable income on the increase (+3.3% adjusted for inflation). Snack and alcoholic beverage bars should continue to lead the pack of eating place growth, showing 5.9% real sales increase; sales in the fullservice and quickservice segments are both expected to grow 2.1% in 2007 – on par with each other and with the industry overall.

By far the biggest challenge in 2007 will be recruiting and retaining employees, cited as their top concern by both fullservice and quickservice operators. (Next in line for quickservice operators are concerns about labor costs/wages.) The industry will employ 12.8 million in 2007 (almost 10% of U.S. workers); with the strong economy, demand for workers is high and the labor pool is growing more limited, partially because fewer teens are opting to work (down by 10% from a decade ago). Competition follows as the next challenge for fullservice operators to address. To respond, they will integrate more technology to streamline operations, increase employee productivity, and improve customer service as well as use the Internet as a marketing tool. Technology may extend into the consumer experience – 35% of men and 24% of women would be likely to use wireless Internet access if their favorite tableservice restaurant offered it; 28% percent would watch a small tableside TV in a fullservice restaurant. The comforts of home also come into play with another opportunity: more than half of adults surveyed say that they would be likely to purchase front-of-the-house and other restaurant-related items. The Forecast predicts more restaurateurs – in conjunction with their suppliers – will tap into a growing demand for these items, purchased primarily through increasingly sophisticated restaurant Web sites. Marketing tip: more than one in five adults say they’d be interested in redeeming frequent-dining points for restaurant wares. Fullservice operators will also step up catering, takeout, and delivery services.

Training and technology are high priorities for quickservice. More than 40% plan to increase the proportion of their budgets for training; 50% will increase budgets for efficiency-enhancing technology, which will be used to deliver better value. Look for quickservice operators to build on strategies that have served them well – greater menu diversification, and more/better-for-you food choices, more remodeling. Other areas of sales growth will be drive-through, delivery, catering, expanded late-night hours, and gift cards; 60% anticipate gift cards will account for a larger proportion of their sales in 2007.

What’s hitting the mark with increasingly experienced, sophisticated, value-driven restaurant patrons? A survey of more than 1,000 chefs shows that the hottest fullservice menu trends are bite-sized desserts, locally-grown and organic produce (which may be the most enduring trends), flatbread, and bottled water. When it comes to quickservice restaurants, the fastest-growing menu items include espresso/specialty coffee, chicken sandwiches, energy drinks, deli-style sandwiches, wraps/pitas/tortillas, bottled water, and entrée salads. (For more information or for a complete 2007 Forecast, visit www.restaurant.org/research or call (800) 482-9122.