The Michigan Restaurant and Lodging Association’s fourth-quarter 2018 results on the state’s restaurant industry report that it grew in 2018, and restaurant leaders are optimistic for a strong 2019.
The report was released Wednesday and says same-store restaurant sales in the state increased by 3 percent in 2018, according to survey respondents. Restaurant operators estimated 2019 sales growth will be 3.7 percent.
Restaurant traffic, or in-store attendance, increased by 3.1 percent in 2018, despite an industry trend favoring carry-out and delivery options. Operators think the trend will continue this year and anticipate 3.8 percent growth traffic.
Menu prices are expected to increase by 2 percent in 2019, survey respondents said. This would surpass actual increases in the previous two quarters.
Food and labor costs increased from the third to fourth quarters last year, but respondents said they believed they would stabilize or decrease slightly in 2019.
Legislation signed into law in December will restore a lower minimum wage for tipped employees and is commonly referred to as tip credit.
The legislation was in response to a potential ballot proposal seeking to make Michigan the eighth state to eliminate tip credit. Overall, 76 percent of respondents said they would either retain or increase current staffing levels in 2019 as a direct result of the state’s retention of a tip credit.
About 19 percent said they would keep their business open and would have had to close if the tip credit had been eliminated. About 10 percent of respondents said restaurant growth through new locations is possible for their businesses thanks to the retention of a tip credit.
“The restaurant industry had a year of reliable and consistent growth in 2018 despite enduring several challenges,” says Justin Winslow, president and CEO of the Michigan Restaurant and Lodging Association.
“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.”
About 1,500 of the association’s member locations and $760 million in annual revenue are represented in the survey.
The report is the only independent statewide research report tracking the industry.
The association was founded in 1921 as the Michigan Restaurant Association and represents more than 5,000 Michigan foodservice and lodging establishments. The industry employs more than 595,000 people and creates nearly $40 billion in annual sales.