Demographics and Geo-graphics

Top 5 congressional districts in California with the highest concentration

of restaurants:
Source: US Census
Distric # %Tota
t Stores #Emp l Location in CA Popular cities
53,60
8 3,003 9 4.86% San Francisco San Francisco
38,03 Agoura Hills, Calabasas, Malibu, Santa
30 2,131 9 3.45% Los Angeles Monica
36,64 National City, Chula Vista, Imperial
53 2,053 4 3.32% San Diego Beach
29,44
36 1,650 9 2.67% Los Angeles Torrance, El Segundo, Manhattan Beach
26,53 Central
6 1,487 9 2.41% California Santa Rosa, San Rafael, Novato

Market Behaviors

Market saturation
The consumer food service industry in the US in general is very saturated but more
so in California. There is limited room for growth among existing concepts especially
in the San Francisco and Los Angeles areas. See chart above. Growth then will have
to come from new, emerging concepts such as healthy food chains, organic foods,
lunch trucks, and a greater emphasis on customization.

Impact of the recession

As consumers decreased their spending on dining out, all food service channels
were affected during the most recent recession. Fast food chains were affected the
least as they often provide meals for Americans and their families for less than the
cost of buying individual ingredients and cooking at home. Taco Bell for example
can offer you a complete meal for less than $5.00. Full service restaurants
experienced the strongest declines in value as they are typically the highest priced
and perceived to offer less value than fast food or 100% home delivery takeaway
outlets.
Full-service restaurants have also suffered as consumers trade down to fast food
and fast casual restaurants. In addition to offering a lower price point, fast food and
fast casual restaurants have expanded their premium food offerings and improved
their quality of menu items.
The recovery
As the economy continues to recover, the U.S. restaurant industry is also
recovering. According to the National Restaurant Association’s 2011 Restaurant
Industry Forecast, total restaurant-industry sales are projected to reach a $604.2
billion record high in 2011. The 3.6 percent increase over 2010 marks the first time
that industry sales topped $600 billion. Restaurant industry sales are projected to
register real growth for the first time in four years. Total restaurant industry sales
are expected to grow 1.1 percent in 2011.
Who are the frequent restaurant users?
Data collected by the Association’s 2010 National Household Survey revealed three
groups of frequent restaurant customers:
1-Frequent full service customers
Guests who eat at sit-down restaurants with wait staff more than once a week, on
average.

2-Frequent quick service customers

Customers who buy meals or snacks from quick service restaurants or carry-out
places more than once a week, on average.

3-Frequent off-premises dinner customers

Guests who buy dinner from restaurants carry-out or delivery places and eat it at
home more than once a week, on average.

Each of these groups relies heavily on the restaurant industry on a daily basis.
Restaurant owners/operators need to know how to reach those customers, find out
what their tastes and preferences are, and determine what motivates their
restaurant decisions.

Technology and Social Media

Per the National Restaurant Association, in general, technologically connected
people are more likely than the general public to be restaurant customers. In the
Association’s 2010 National Household Survey, 83 percent of adults said they
bought at least one meal or snack from a fast-food restaurant or carry-out place in a
typical month. In comparison, 89 percent of connected adults and 92 percent of the
social-media savvy group said they patronized fast-food restaurants or carry-out
places at least once in a typical month.

Wired adults and social media savvy individuals also were more likely than the
general public to say they ate at sit-down restaurants with wait staff and purchased
dinner from restaurants, carry-out or delivery places to eat at home.

As with frequent restaurant customers, enjoyment is what drives the majority of

technologically connected individuals to patronize restaurants. Per the National
Restaurant Association, ninety-four percent of connected adults and social-media
savvy individuals said they enjoyed going to restaurants, compared with 88 percent
of the general public.
E-mail and texting
E-mail and cell phones can be efficient and effective marketing tools in today’s
technology-driven society. Twenty-five percent of adults said they likely would use
the option of receiving e-mail notifications of daily specials if offered by a full
service restaurant.

Market Needs
Health and wellness issues in restaurants began to surface over the past few years;
however most recently they came to the forefront. Restaurant patrons are
becoming more aware of the food they eat and how it impacts their lives. Although
many are making smaller changes, they often find it difficult to stick to a healthy
regimen as restaurants have long offered indulgent, high-fat, high-calorie foods.
People go to restaurants to enjoy a tasty meal not necessarily to restrict themselves
in what they have to eat. The US government and the media have also played an
important role in creating greater consumer awareness of health and wellness. As
rates of obese and overweight people and diabetes levels increase, the government
is calling for action to be taken by restaurant operators.

Restaurant operators have begun to offer healthier alternatives and some have
begun posting calorie and other nutritional information on their menus. In addition
to concerns about obesity, many people suffer from food allergies. As a result,
restaurant operators are beginning to address these concerns as well.

Market Outlook (National Restaurant Association California Forecast 2011)

Since the National restaurant Association began issuing its annual forecast the sales
growth for the restaurant industry has been declining from a high of about 13% in
the nineteen seventies to a low of almost 3% in 2008-2009. However data indicates
that sales growth may be on the rebound. It is estimated that sales growth will
rebound to 3.6% on a national level and 3.1% in California. California is also the
state that will generate the most restaurant jobs in country in the next 10 years. In
terms of total jobs, the California restaurant industry is expected to employ nearly
1.6 million people by 2021 — an increase of more than 141,000 jobs over 2011