A positive outlook is projected in the National Restaurant Association’s (NRA) recently published 2015 Restaurant Industry Forecast.Industry growth is expected to accelerate and represents the sixth consecutive year of real (inflation-adjusted) sales growth. Hot segments, such as quick service/fast casual chains, are projected to grow by 4.3% and reach $201 billion in 2015. But – as restaurant chains are well aware – maintaining margins still has significant challenges.
One of the key challenges is controlling Costs of Goods Sold (COGS). Volatile food costs continue to put pressure on the bottom line. In 2014, average wholesale food prices jumped more than 5%, which represented the fifth consecutive annual increase. In fact, over the last five years, average wholesale food prices rose a staggering 25%. Thankfully operators can expect to get pricing relief on some major commodities in 2015, including dairy and pork.
According to Hudson Riehle, senior vice president of research for the National Restaurant Association, “the wholesale food cost levels of many key commodities are putting significant pressure on many restaurateurs’ bottom lines. While price inflation is expected to ease for some items, the increases that have occurred over the past several years have pushed prices to an overall elevated level. Slowing price growth is obviously good news, but it doesn’t mean that food costs will be back down to what they were before those increases started,” he concluded.
In today’s market, restaurant chains need to analyze more dynamic scenarios, with more accurate commodity and inventory data, and immediately see the impact on cost of goods and margins. They are turning to SCA Technologies for a real-time COGS forecast that improves franchisee and investor reporting and provides proactive visibility of food and paper margins.
Want to see more of the industry trends? Check out the full 2015 forecast from NRA. And be sure to join us at the NRA’s Supply Chain Management Executive Study Group on May 14-15 in Chicago. More details coming soon!