Full-service sushi restaurant operators can only wish that flat had been their new normal during the 2007-2011 period. Revenues fell during this time, shrinking at an annualized rate of 3.4 percent. Now market research firm IBISWorld foresees a turnaround, forecasting a 2.4 percent revenue gain in 2012 and an annualized growth rate of 3.5 percent through 2017.
We’re not quite sure how IBISWorld was able to track down information about the highly fragmented full-service sushi restaurant segment. But we definitely like the numbers it came up with. They show that the U.S. sushi restaurant segment has 3,846 operators who collectively earn $89 million in profits from revenue of $1.8 billion. Now bouncing back from 2009’s market bottom, it should be on a steady growth trajectory until 2017, becoming a $2.1 billion segment then.
Plenty of full-service restaurants have found success with sushi, a category that qualifies as hip, healthful and indulgent all at once. Yet in the aggregate, sushi restaurants have struggled as of late, the IBISWorld report notes.
How come? Blame higher costs and fewer customers willing to pay them.
“During the past five years, the industry has exhibited increased volatility,” the report declares. “American tastes for sushi were growing well into 2008, but the economic downturn of 2009 and subsequent slow recovery are estimated to have set the industry back to 20th century levels.
“While high input prices added further impediments to sales during the recession, competition from substitutes also rose as consumers sought cheaper alternatives, including sushi from sources like grocery and convenience stores.”
Full-service restaurants should be able to lure these bargain-hunting customers back now that times are better. IBISWorld pegs full-service sushi eaters as higher-income individuals, typically households that earn $100,000 or more. Even should the current economic recovery remain tepid, a rise in disposable income among the sushi-eating demographic will be a key driver of increased revenue for full-service sushi restaurants.
But this measured return to good times won’t have sushi operators celebrating come 2017. “While IBISWorld forecasts a positive five-year outlook for the sushi restaurants industry, most of the industry’s key statistics will merely reach their prerecession levels,” the report concludes. Given how the last five years in the full-service sushi segment have gone, the operators will take it.