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Restaurant Industry Outlook Pretty Okay in 2011

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Some good (not great) news on the outlook for restaurants in 2011. The Chicago Tribune reports:

“According to Technomic, a Chicago-based restaurant consultancy, the industry is expected to post a 1.6 percent sales increase in 2011, essentially on higher prices, after eking out a 0.1 percent increase in 2010. Gains were driven by a strong second half of the year. Industry sales are still about 7 percent below 2007 levels, according to the group.”

While the restaurant recovery is far from complete, the small gains are an important development for an industry that saw some of its worst declines in recent years. High unemployment among 18 – to 34-year-olds, a demographic that eats out more, is partially to blame, and will remain challenging for the industry, according to the Tribune.

But here’s a little dash of sunshine to start your week. One reason that more people are eating out is because they’ve apparently become totally bored with being frugal.

Technomic President Ron Paul (not the same as that other guy) calls the trend “frugality fatigue,” a phenomenon he believes started in the third quarter of 2009. The theory goes like this: Sure, pinching pennies sounded like a good idea a couple years ago. But, c’mon! Sitting at home with your family eating vegetable broth and leftover toast? Yaaaawn! Now it’s time to get back out there and spend, spend, spend!

As the public continues to fall out of love with quaint notions of austere living, restaurants should continue to see gains. Chief among companies to benefit are “fast casual” restaurants, which include places like Chipotle and Panera Bread. This segment, which is expected to be the fastest growing in the industry, saw a 1 percent increase in visits, versus casual dining seeing a 2 percent drop, and midscale restaurants seeing a 3 percent drop, according to the Tribune.

So, for the sake of restaurants everywhere, here’s hoping that 2011 is a very, very boring year.
POSITION:  No positions in stocks mentioned.