The National Restaurant Association publishes an annual industry fact book that can be found at www.restaurant.org Based on the information in the latest report, does it appear that macro-environmental factors and the economic characteristics of the industry will present industry participants with attractive opportunities for growth and profitability? Explain.
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The website www.restaurant (Links to an external site.).org shows the annual sales, at the end of 2017, of $799 million, up about 4.5% for the year. The rate of revenue growth of 4.5% is very moderate. However, it is positive to see that it is growing and it is expected that with the macroeconomic environment and industrial investments going up, the revenues should grow further. The menu prices are growing at a lesser rate than over the menu prices for the same month the previous year. However this again a moderate increase when adjusting for inflation.
On employment front, the industry is finding it difficult to fill the already vacant positions, finding trained and qualified personnel is difficult and turnover is high in the industry especially at the entry level positions. Labor costs are also rising and a complex legislative and regulatory landscape at all governmental levels put pressure on business performance and bottom line revenues. The good news is the restaurant industry is the second largest employment generator in the country and the regulator bodies may look on that favorably.
To summarize, the end of 2017 outlook is positive on the sales and revenue fronts, but margins may shrink if the minimum wages are increased in the industry on globally. Unfortunately, the National Restaurant Association’s Restaurant Performance Index (RPI) is a monthly composite index that tracks the health of and the outlook for the U.S. restaurant industry. Same store sales and customer traffic is down from December’s strong levels, the Restaurant Performance Index (RPI) fell sharply in January. The RPI stood at 100.9 in January, down 2.0 percent from a level of 102.9 in December. These are mixed macro-environmental factors and the economic characteristics in the industry and make it difficult to predict growth, based on the available numbers it appears growth and profitability will be moderate to low.