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    Restaurant Sales Expected to Improve in '05

    CHICAGO - Sales at the nation's restaurants and bars will improve moderately next year, but rising costs will temper the impact on profits, according to a leading forecast recently issued by Technomic, based here.

    CHICAGO - Sales at the nation's restaurants and bars will improve moderately next year, but rising costs will temper the impact on profits, according to a leading forecast recently issued by Technomic, based here.

    Overall, sales will rise during 2005 by 2.6 percent in inflation-adjusted or real terms, vs. an increase of 2.1 percent this year, according to Technomic, which performed the analysis on behalf of the International Foodservice Manufacturers Association. The numbers translate into a $15.37 billion bump in intake, split between the nation's roughly 574,000 restaurants and bars. Collectively, according to Technomic, that amounts to $289.82 billion in 2005 sales.

    In a break from the pattern of past years, quick-service outlets and other limited-service establishments are expected by Technomic to fare as well as full-service places during '05. Although the researcher attributed the closing of the gap to improved performance by fast-food outlets, it noted that most of the gain would come from a rebound at McDonald's. Sandwich, coffee, and bakery-cafes have also been growing at a faster rate than the limited-service category as a whole, a dynamic that Technomic attributed to the exceptional performances of Subway, Starbucks, and Panera Bread, respectively.

    Technomic also observed that cost pressures could pinch restaurants' margins more sharply than the profits of other foodservice segments. Representatives of the research house forecast a 3.5 percent pass-along rise in prices for so-called commercial establishments, vs. a 3 percent hike for the industry as a whole. They cited research showing that 79 percent of foodservice operators expect better sales in 2005, but only 63 percent anticipate an improvement in profitability.

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