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As 2011 gets
underway, it’s clear that the slowly recovering economy
continues to impact the restaurant industry as shown by
sluggish sales and limited expansion. These economic
conditions are reflected in the market measures that make
up the Restaurant Growth Index.
This annual
report, compiled by The Nielsen Company exclusively for
Restaurant Business, is designed to rank markets by
identifying restaurant sales and gaps in sales per capita
compared to the national average. This information can be
helpful to new restaurant concepts or chains considering
expansion as it illustrates which markets may have growth
opportunity.
Nielsen data
shows a decline of 4,628 U.S. restaurant units since last
year. Total restaurant sales figures for the U.S. are also
down significantly for the second year in a row, off
nearly $10 billion from a year ago. And, nationally, sales
have fallen on a per unit basis, by almost $10,000 from
$686,723 to $676,807 per foodservice establishment. |
These factors have
combined to affect the strength of the overall indices as the
average of the index scores among the Top 10 RGI markets is down
17 points from the 2010 report.
It should be noted,
though, that the decline in RGI scores among the Top 10 markets is
not as steep as last year’s 40 point drop. Indeed, an improvement
in market conditions appears to be ahead of us. The National
Restaurant Association is predicting 2011 to show the first real
sales growth in four years.
So, let’s look at
this year’s RGI rankings. At the top of the list for the second
year in a row is the Crestview, Florida, market, which includes
the cities of Fort Walton Beach and Destin. Myrtle Beach, South
Carolina, and Ocean City, New Jersey, are locked in a virtual tie
at the #2 and #3 positions, also for the second year in a row.
Jackson, Tennessee, and Barnstable Town, Massachusetts improve
upon last year’s Top 10 performances by securing the #4 and #5
spots, respectively.
In fact, while there
was a repositioning among the markets, the only new member of the
Top 10 this year is Panama City, Florida, in at #7, as
Springfield, Illinois, dropped to #15.
Among the country’s
Top 50 most populous markets, New Orleans shows that it continues
its comeback from the Hurricane Katrina catastrophe, climbing 13
spots in the overall rankings. Healthy population growth and
increased tourism have led to an increase of $124 million in
restaurant sales for the market.
New Orleans has also
added 98 eating and drinking establishments and sales per capita
have increased by $34 in the area. It ranks a strong #3 among the
big markets behind Las Vegas and Orlando, which both saw decreases
in restaurant sales. In fact, of the Top 50 markets by population,
only 10 showed increases in total restaurant sales.
The RGI is calculated
using restaurant sales figures based on the U.S. Census of Retail
Trade and per capita income figures, both compiled by the U.S.
Census Bureau and updated annually by Nielsen. Consideration
should be given to market size as well as market rank when
deciding which areas provide the most opportunity for specific
restaurant concepts
In addition, the
sales figures do not distinguish between residents of the market
and visitors, thus sales generated by visitors increase the sales
per capita and sales as a percentage of per capita income of the
markets’ residents. For this reason, vacation destinations and
markets with a high transient population tend to have high index
scores.
