Cafeterias Cooking Up Explosive Sales, Expansion in Restaurant Market
There are more than a half million enterprises in the restaurant and bars market generating approximately $5.5 billion in all lines premium. This is a sector that has enjoyed generally solid to exceptional growth in sales and employment in recent years, and is a sector dominated by small commercial accounts.
For the purposes of this article, restaurants and bars can be defined as those establishments such as full service restaurants, limited service restaurants, cafeterias, snack and non-alcoholic beverage bars, and drinking places. Not covered in this article are food service contractors, caterers and mobile food services, the remaining classes within the larger North American Industry Classification System 722 category.
In the restaurant and bar sector, a dominance of small commercial accounts (defined as those with between one and 49 employees) is in contrast to most other classes, in which non-employer firms are typically the most numerous. Also of interest, given the predominance of smaller firms in the category, less than 20 percent of this market segment is covered under business owners’ policies.
Cafeterias show strongest growth
The restaurant and bar sector overall experienced strong mid-single digit growth in sales over the 2002-2006 period. The class showing the strongest growth has been cafeterias, which has shown sales gains in excess of 24 percent, and experienced similarly robust employment growth (23.5 percent).
Cafeterias primarily engage in preparing and serving meals for immediate consumption using cafeteria-style serving equipment, such as steam tables, refrigerated areas, and self-service non-alcoholic beverage machines. Familiar cafeteria chains include Furr’s and Luby’s in the south central and southwest, and HomeTown and Country Buffets elsewhere.
Based on the National Restaurant Association’s 2006 Economic Forecast, the growth in this segment reflects increased consumer preference for dining convenience and value.
In the 10 states with the highest growth in cafeteria sales and employment, the rate of expansion could be described as explosive. Oregon and Delaware have seen sales growth in excess of 100 percent. Within these states, the lowest rate of sales growth was an exceptionally strong 29.1 percent in Florida. Employment growth has been equally robust.
Cafeterias number six million nationally, just a 3 percent shadow of the larger limited service restaurant category. However, the number of cafeteria enterprises is also expanding. In Delaware, Mississippi, Oregon, Indiana, Nevada, Kentucky, Colorado and Iowa, the growth in number of cafeteria firms has blossomed between 10 percent and 20 percent. In another 15 states, firm growth rates are in the very healthy mid-to-high single digit range.
States with greatest opportunity
Nationwide and for the restaurant and bars sector as a whole, the 10 states offering the greatest opportunity, as measured by number of accounts, premium and growth rates, are: Florida, California, Texas, Georgia, North Carolina, Illinois, New York, New Jersey, Arizona, and Tennessee.
These 10 states comprise a premium potential of more than $3 billion and some 260,000 enterprises.