Question

You will be conducting research for Mcdonald and providing analysis on how the economy is doing. You are going to act as a consultant and provide economic research using 2-3 different data indicators/points. You are going to find two relevant economic data indicators(examples, unemployment rate, inflation rate, employment rate, GDP, producer price index….etc) that are relevant to your industry and evaluate how the industry is going to be doing in the next 6 months given the economic data and forecasts that you have evaluated. You are going to be consulting with the CEO to give him your predictions and what he should plan on doing in his job given the current economic situation. Make sure that you are clear and concise with the data indicator that you selected and why you selected it. You will need to make sure to focus on how the data indicator will focus on the industry that you selected and the decisions that businesses will be facing in the upcoming months with your advice. The CEO is relying on your evaluations to make sure that his company does well. You will be graded on the quality of your argument to the CEO, use of data indicators and application to industry, analysis of content

Answer 1

The two main macroeconomic influencing the restaurant industry are factors such as labour costs and Consumer Confidence

For American restaurants today, wholesale food costs rise and employment stabilizes. According to the National Restaurant Association’s performance index. Wholesale food prices grew 3.6 percent from 2004-2014, but menu prices only grew 2.9 percent during that same period. In order to stay competitive but stabilize food costs, restaurant operators need to become more productive and efficient.

LABOR COSTS

Over the last ten years, restaurant wages and restaurant prices have been highly correlated with one another. Lately, though, wages have been rising at a faster rate than restaurant prices. As a consequence, restaurants, especially those in the full-service category, are struggling to maintain their margins.

Though the federal government mandates a nationwide minimum wage of $7.25 per hour, several states and cities have pushed legislation to raise wages. In November, four states voted to hike their minimum wage, with dozens more expected to follow suit.

CONSUMER CONFIDENCE

Consumer confidence is just one of the many things keeping restaurant CEOs awake at night, and for good reason, as overall real sales in restaurants bear a high correlation to consumer confidence (87% since 2009). Good news for the industry as a whole? Consumer confidence peaked earlier this year (98.5 in January), and high levels have been maintained throughout the year.