WASHINGTON – With an improving outlook for jobs and income, restaurant operators should see a vastly improved business environment in 2011, predicts the National Restaurant Association's Chief Economist Bruce Grindy in his latest commentary.

Although questions about the long-term impact on the federal budget deficit linger, the recently enacted fiscal policy package is expected to give a short-term boost to the economy. The legislation contains tax cuts and spending increases.


As a result of the stronger outlook for jobs and income growth, restaurant operators should see a vastly improved business environment in 2011, Grindy says.

Buoyed by the impact of the tax reductions and spending increases, the NRA expects the economy to add jobs at a 1.8% rate in 2011 — the strongest gain since 2006. While the 2 to 3 million additional jobs will be a welcome improvement over the sluggish 2010 gains, the economy likely won’t completely gain jobs lost in the recession until 2013.

Driven by an improving employment picture, income growth is expected to improve markedly from sluggish gains in 2009 and 2010. The association projects real disposable personal income to increase 3.4% in 2011, up from 1.1% in 2010 and the strongest increase since 2006. This bodes well for the restaurant industry in 2011, as restaurant spending often is driven by cash on hand.

Restaurant operators generally are optimistic about business conditions in 2011, Grindy continues. In the association’s November 2010 Restaurant Industry Tracking Survey, 35% of restaurant operators said they expected economic conditions to improve in the next six months, while only 12% expected economic conditions to worsen.

Fast-casual operators were the most optimistic among the five major segments, with 45% expecting economic conditions to improve and only 13% expecting conditions to worsen.

Thirty-six percent of casual-dining operators expect economic conditions to improve in six months. Just 25% of quickservice operators expect the economy to improve in the next six months, while 11% expect economic conditions to worsen.