Challenging times require the keenest minds, so to shine a light on the road ahead, we sought the opinions of three individuals who have spent their careers fielding and analyzing data. All are uniquely qualified to speak about the outlook for the restaurant industry in 2009. This three-part article shares the perspectives of J. Walker Smith, executive vice chairman, The Futures Company; Hudson Riehle, senior vp and information services, National Restaurant Association; and Harry Balzer, vice president and chief restaurant industry analyst, NPD Group.

HARRY BALZER: VICE PRESIDENT AND CHIEF RESTAURANT INDUSTRY ANALYST, NPD GROUP – A GLOBAL MARKET AND RESEARCH COMPANY

“The restaurant industry has benefited from means and need. For 50 years, its pillar of growth has been an increase in the number of women working, which hit a peak at the turn of this century. Women in the workplace are why the use of restaurants and the number of take-out meals (the reason for overall sales growth in the last few decades) has increased. Now there are declining rates of employment – in particular, an increase in stay-at-home moms. The economy is certainly not helping, but this trend in female employment is resulting in fewer dinners in restaurants.

“The current economic climate is simply exposing the industry’s weaknesses, particularly at a time dinnertime, which restaurants have been facing for years.” – Harry Blazer

That said, the need for food is an important part of our lives. It’s not that we aren’t eating out and won’t eat out – people will continue to use restaurants. It’s just that we’re not eating out with the increasing frequency that we have in the past. Regardless of the economy, when surveyed, people always tend to say they are eating out less as opposed to eating out more – that they prefer home-cooked meals – which might give you worry. But this would mean that they would have to cook more and they’re just not going to do it.

The growth in 2009 will be from market share. Even if the average number of meals that Americans eat out annually is down – from 207 in 2007 to 205 in 2008 – it’s about getting a share of those 205 meals. People aren’t cutting out eating, and there are 800 or so other meals in a year that are prepared at home. As a result, the potential market for foodservice is nowhere near saturation.

Money will be made in selling food as fuel – a means to an end – and supermarkets are probably in the best competitive position. They will likely further extend their food offerings; also, in the future, Americans will be looking for packaged meals, not just packaged foods. In the competition for the food dollar, quickservice also provides good quality, inexpensive food, and an easy way to obtain it. On the other end of the spectrum, I’d say to fine dining operators to continue doing what they’re doing – fine dining is about art and social interaction, not about food as fuel.

There will be no recession in eating; there will just be winners and losers. My belief is that Americans are looking for ways to moderate food costs so they don’t rise faster than their income…without cooking more. No matter where they are in the spectrum, the restaurants that deliver value and make it easy to get food cheaper without cooking more, in new and compelling ways, will win. (“Newness” is important, but value is of greater concern now, even beyond the price pressures we see today.)

Ultimately, to be competitive, every restaurant should ask itself how it could make the lives of its customers easier. You’ll win if you can do that.”