Michigan’s restaurant industry enjoyed a solid fourth quarter to wrap 2018 and is poised for ongoing growth in the year ahead. That’s the quick take-away from research released recently by the Michigan Restaurant & Lodging Association following industry surveys across the state.
The Michigan Restaurant & Lodging Association recently released its fourth quarter research report tracking economic and demographic trends within the restaurant industry on a statewide basis. The survey also inquired how legislation that passed in late 2018 to keep a “tip credit,” or a separate wage for tipped employees would impact their 2019 outlook.
Highlights from the Q4-2018 Trends Report include the following:
- Same-store restaurant sales in Michigan increased by 3.0-percent in 2018 according to survey respondents. Operators are even more optimistic about 2019, with sales growth estimated to reach a very robust 3.7-percent.
- Restaurant traffic (or in-store attendance) increased by 3.1-percent in 2018, bucking an industry trend towards carry-out and delivery. Operators are bullish on the trend continuing in 2019, anticipating 3.8-percent growth in traffic in 2019.
- Menu prices are expected to increase by 2.0-percent in 2019 according to survey respondents, which would surpass actual increases the previous two quarters.
- Both food and labor costs increased from the 3rd to 4th quarters last year, however, respondents believe they will stabilize or even decrease slightly in 2019.
Survey respondents were asked how legislation signed in December to restore a lower minimum wage for tipped employees, commonly referred to as the tip credit, would impact their business decisions in 2019. The legislation was in response to a potential ballot proposal seeking to make Michigan the 8th state to eliminate the tip credit. Their responses overwhelmingly demonstrated that jobs would be saved, and economic opportunities expanded as a direct result of the legislation:
- Overall, 76-percent of respondents said they would either retain current staffing levels or increase their workforce in 2019 as a direct result of Michigan retaining a tip credit.
- A staggering 19-percent said they would keep their business open whereas they otherwise would have closed if the tip credit had been eliminated.
- Restaurant growth through new locations are now possible, according to 10-percent of respondents, thanks directly to the retention of a tip credit.
Justin Winslow is President & CEO of the Michigan Restaurant & Lodging Association. He says, “The restaurant industry had a year of reliable and consistent growth in 2018 despite enduring several challenges.” He notes, “Even with labor shortages, wage inflation and an existential threat to owners and servers alike, restaurants continued to meet demand and make people happy. This survey unequivocally illustrates that keeping Michigan one of the 43 states that operate with a tip credit will make for a far better 2019 than if it had been lost.”
Participation in the Q4-2018 Trends Report was significant, with 1,500 MRLA member locations and $760 million in annual revenue represented in the survey.
The Michigan Restaurant & Lodging Association Industry Trends Report represents the first and only independent statewide research report tracking the state’s second-largest private-sector employer.
The Michigan Restaurant & Lodging Association (MRLA) is the recognized leader of Michigan’s hospitality industry, providing essential services to the foodservice and lodging community. Founded in 1921 as the Michigan Restaurant Association and now known as the MRLA, the Association represents over 5,000 Michigan foodservice and lodging establishments. The industry plays an integral role in Michigan’s economy, employing more than 595,000 people and creating nearly $40 billion in annual sales. For more information, visit online at www.mrla.org and www.detroitrla.org.
