Restaurant sales up 6.2 percent Arizonans hungry for more diverse dining experiences Jan-30-1998 6:52 PM, The Business Journal - Phoenix, STEPHANIE BALZER The Business Journal
Arizona's restaurant industry is expected to boast $5.7 billion in sales in 1998, a 6.2 percent increase from last year, according to the 1998 Restaurant Industry Forecast.
The Mountain region - including Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming - is projected to be the fastest-growing area for dining out in the nation.
The region represents 8 percent of national sales, totaling $336.4 billion, a $15 billion increase from last year.
Growth is attributed to overall economic well-being, according to a study conducted by the National Restaurant Association's research department in Washington.
There's also a growing diversity of cuisine, flavors and cooking techniques to encourage more people to eat out. The study found more than 60 percent of adults agree their favorite restaurant foods provide flavors and tastes they cannot easily duplicate at home.
Nationally, fast-food sales should reach $105.7 billion, up 5 percent from 1997. The sales will be driven in part by expansion into nontraditional locations, the study says.
Arizona is starting to see more and more alternative facilities providing sites for restaurants, said Joe Yuhas, executive director of the Arizona Restaurant Association. For example, Texaco gas stations that now house Taco Bells.
"That's probably one example of fast-food branching out into what might be considered unconventional ways. That's not a phenomenon unique to Arizona, although it's happening at a greater extent because of the overall growth," Yuhas said.
Chains also are investing more in cities outside of the Valley such as Tucson and Flagstaff. Interest in Flagstaff grew when its population reached 50,000, he said.
The restaurant industry always has found the Valley to be an exceptional test market for new products, he said, and that trend will continue. Phoenix has been a key market to debut the wrap, a burrito-like sandwich filled with healthy fare such as chicken, rice and vegetables; and Pacific Rim cuisine offering rice bowls, steamed vegetables and teriyaki chicken.
Full-service restaurants, which include many independent small businesses as well as national chains, are expected to top $110 billion in sales in 1998 - also a 5 percent increase from 1997.
Chain restaurants with an average check size of $5 to $15 continue to increase sales. To be successful, the study found many of these mid-priced restaurants have improved food flavor and presentation, customer service, advertising, and physical environment. More attention is being paid to a building's design and decoration.
"People don't want to simply eat out," Yuhas said. "People want an experience. The Rainforest Cafe {at Arizona Mills} is probably the most recent example of entertainment. Operators that can integrate entertainment as a part of their overall appeal are going to benefit the most."
On the other hand, independent restaurants can compete with chains because of customer and management rapport and the individualized attention.
Due in part to the increasing wealth of households in the top 20 percent income bracket, restaurants that charge $20 and more per meal also are expected to see strong growth.
Most optimistic about sales were restaurants that charge $25 or more per meal, according to the study. Seventy-three percent of restaurant owners charging $25 or more per meal indicated business conditions would improve in 1998, as compared with only 7 percent who expect a decline.
Not surprisingly, the study found individuals with higher incomes spent more money dining out. Households begin to spend a significantly larger amount on food away from home once their pretax income reaches $30,000.
According to a 1995 study by the U.S. Bureau of Labor Statistics, households with incomes between $30,000 and $40,000 spent an average of $1,803 on food away from home.
Households with incomes of more than $40,000 make up 58 percent of total spending in restaurants even though they represent just slightly more than one-third of all households.
The other group that tends to spend a relatively higher amount of the food dollar away from home is singles living alone.
"People are eating out more," Yuhas said. "In fact, a greater percentage of the food dollar is going to the restaurant industry rather than the grocery stores." |
