WASHINGTON – Although an improving economy will bolster the business environment for restaurant operators in 2011, food prices are likely to remain elevated, which will further cut in to the bottom line, according to Bruce Grindy, the National Restaurant Association's chief economist.

Grindy predicts restaurant operators will see a markedly improved business environment in 2011. In fact, the NRA is projecting jobs and income to grow at their strongest rates in five years. Although the improving economy will help bolster sales, food prices are expected to remain elevated, which will cut in to restaurant operators’ bottom line.

Restaurant operators saw their wholesale food prices rise sharply in 2010, after a brief reprieve in 2009. Average wholesale food prices – as measured by the Bureau of Labor Statistics’ Producer Price Index for All Food – jumped nearly 5% in 2010. This wiped out the record-tying drop registered in 2009, when average prices fell 3.8% on an average annual basis, Grindy said.

The 2009 decline matched the 3.8% drop in 1976 as the largest wholesale food price decline since recordkeeping began in 1967. Combined with the 2007 (7.6%) and 2008 (7.7%) gains – which were the largest jumps in nearly three decades – average wholesale food prices were up more than 17% in the last four years.

Commodity prices are generally expected to remain elevated in 2011. In 2011, the US Department of Agriculture expects beef prices to grow between 1% and 9%, which would build on the sharp 14% increase in 2010.

Primary market prices for pork, broilers and turkeys are expected to remain relatively steady, with USDA projection range including both gains and declines, Grindy concluded.