State of the industry: Food service
Restaurant industry sales are expected to reach $783 billion by the end of 2016.

KANSAS CITY — Restaurant industry sales are expected to reach $783 billion by the end of 2016, the National Restaurant Association said, jumping 10.4% from $709.2 billion in 2015.

While this would represent the seventh consecutive year of growth in restaurant sales, operators are less optimistic due to uncertainty in the economy in connection to the presidential election. Only 33% of those surveyed by the N.R.A. expect higher sales in six months, and only 17% said they expect economic conditions to improve in six months.

Declining same-store sales and customer traffic have contributed to the dampened outlook. Fifty-three per cent of restaurant operators recorded a decrease in same-store sales from last year, the N.R.A. found, and 53% saw a decrease in customer traffic from last year.

While the customization has influenced food service, the trend shaping the industry is clean label. Clean label has permeated restaurants, prompting menu tweaks and innovation in several major restaurant chains.

“Consumers are demanding foods that are clean and free-from artificial sweeteners, antibiotics, G.M.O.s,” said Nancy Kruse, president of The Kruse Co., Atlanta, during a presentation at the National Restaurant Association Restaurant, Hotel-Motel Show in Chicago. “I think the primary driver is … the impact of the fast-casual segment because key players like Panera and Chipotle showed it was possible to deliver on a clean food promise in a mass-market context. Major chains are all over this bandwagon. It would be easier for me to tell you who is not engaged somehow in cleaning up the menu.”

Papa John’s, for example, recently completed a major initiative to reformulate its menu, which involved removing such ingredients as artificial colors, high-fructose corn syrup and preservatives. Panera Bread switched to bacon that is free of artificial ingredients.

McDonald’s overhauled its menu, too. The fast-food giant has announced the removal of artificial preservatives from Chicken McNuggets, pork sausage patties and omelet-style and scrambled eggs. The company also is debuting new buns without high-fructose corn syrup for its Big Macs, Quarter Pounders, hamburgers and cheeseburgers, Filet-O-Fish and McChicken sandwiches. Additionally, McDonald’s pledged to source 100% cage-free eggs by 2025 in the United States and Canada.

Cage-free commitments like this have surged in the restaurant industry, fueled by consumer concern about animal welfare and the origin of their food. The list of restaurants making the transition includes Burger King, Starbucks, Taco Bell and Chick-fil-A.

“Consumers aren’t just passive users of food and beverage products anymore,” Darren Seifer, food and beverage industry analyst at The NPD Group, said during a January interview with Food Business News. “They want to know more about how that food got to the shelf. They’re more interested in knowing how the animal was treated before it was slaughtered, what kind of feeding processes were used on that chicken. When we talk about cage-free eggs, it’s all part of that same wanting to know what happened down the chain before the food actually got to the consumer. Consumers are shopping more with a cause in mind, so when they go to a restaurant … they want to feel good about buying products that are in line with their values and causes they support.”

The cage-free egg market has experienced a surge in demand due to so many companies transitioning coupled with the new trend of all-day breakfast.

More than half of consumers enjoy breakfast at nontraditional times, Ms. Kruse said.

McDonald’s national launch of all-day breakfast earlier this year has “gone gangbusters,” she said, prompting other restaurant chains to add creative breakfast items to the menu. Carl’s Jr. and Hardee’s, for example, introduced a breakfast sandwich on an Auntie Anne’s pretzel bun, and White Castle debuted a waffle breakfast slider.

Mid-scale restaurant chains also are dishing up enticing twists on the morning meal. Shari’s, a regional family dining chain, offers breakfast poutine, featuring fries topped with cheese, bacon and an egg.