Eating is perhaps one of the most basic human functions and has been around since the dawn of time. Everyone needs to eat and there needs to be an industry to provide for this need. The food industry is one of the few industries that are immune from any bad economic effects because food is a must for survival. Other luxury industries may be affected and forced to go out of business because they are no longer considered to be important. This is not the case with the food business, since food is a fundamental bodily need. Some luxury meals may be phased out during economic downturns, but the food sector as a whole may rest confident that it will continue to exist for a long time. The number of mouths that need to be fed will increase as the country’s population increases. This guarantees that it will continue to rise year after year for a long time. The purpose of this research is to look at the strengths of several food industry categories and see how increases in employment, employee wages, and the number of restaurants correlate with sales growth. I’ll focus on New York City since it’s such a massive industry that impacts tens of millions of people. This place appealed to me since the city is renowned for its constant motion. Customers may select from a range of ethnic food restaurants due to the city’s diversity. According to my hypothesis, as the food industry’s profits increase, so will the number of people employed, employee wages, and restaurants. It would make sense to reinvest earnings from a growing business back into the industry itself, guaranteeing its immediate and long-term prosperity. Primary sources, such as the New York State Department of Labor and ReferenceUSA, will be utilized to compile the data for this article. The NAICS number 722211 will be examined, and it specifies the types of restaurants that will be evaluated (U.S. Census Bureau, 2002). This code applies to businesses that offer food services when the client selects and pays for his meal before getting it. Snack and non-alcoholic beverage bars will not be included in this study.
The sales figures for the whole food sector will be the dependent variable in this study. These statistics are extremely simple to get since they are compiled by the appropriate departments each year for public use. The scatter plot below depicts the food industry’s sales statistics over the past several years:
As the graph shows, the food sector as a whole is expanding year after year. Of course, the number for 2012 is just an estimate since we do not yet have those data. In fact, the slope has grown steeper in recent years, indicating that the food industry’s pace will not slow down anytime soon. The food industry’s annual sales are growing by $22.13 billion, or about 3 to 4%, on average. We may conclude that, barring some unexpected catastrophe, the food industry’s prospects are bright. Based on a base year of 1990, the slope of this graph is y = 22.13x + 167.26. With this equation, we can forecast food industry revenues for the year 2020. Each year, the calculation would be y = 22.13 (30) + 167.26 = $831.16 billion. Of course, the pace of growth may fluctuate due to external circumstances outside the food industry’s control. This number, on the other hand, provides a very accurate forecast of where the food sector will be by the end of this decade and indicates that everything is looking up.
Now that we’ve established that the food industry’s sales will continue to rise for some time, we need to figure out what’s driving that increase. Three independent variables will be examined in this paper: the number of employees, employee salaries, and the number of restaurants. For employee numbers, New York City can be broken down into the different boroughs (1= Bronx, 2 = Brooklyn, 3 = Manhattan, 4 = Queens, 5 = Staten Island, 6 = New York City):
As it turns out, there has been an increase in the number of employees working in the food industry in New York. As expected, food restaurants in the larger boroughs, Manhattan and New York City, experienced significant growth in employee numbers. Across the whole city, employee numbers in the food industry grew by roughly 30% over this time period. When this growth is broken down over the eight year period, this comes to just under 4% per year, which is in line with the percentage growth in sales for the food industry as a whole. The slope equation for a particular borough, New York City in this case, would be as follows: y = 7810.6x + 53,641, based on a base year of 1990. Once again, we will predict employee numbers for the year 2020. The equation would be as follows: y = 7810.6 (30) + 53,641 = 287,959. This shows that the number of food industry employees would more than double between 2000 and 2020. From this, we can conclude that the food industry job market will be one of the most highly sought after in the coming years.
Now that we have proven that employee numbers have increased the same amount as sales in the food industry, we need to see if employee wages have also risen by roughly the same amount. Once again, 1= Bronx, 2 = Brooklyn, 3 = Manhattan, 4 = Queens, 5 = Staten Island, 6 = New York City.
Quite surprisingly, the wages for food industry employees have changed very little over the seven-year period of 2000-2007. In some areas it has even decreased. When inflation is taken into account, it can be reasonably assumed that employees are actually earning less than they did in 2000. Between the years 2000 to 2007, the average inflation rate in the United States was roughly 2.81% per year (Worldwide Data Inflation, 2012). Applying this to the wages for food industry employees in the New York City borough only, the average wage in 2007 should have been $28,782.60, which is considerably more than what the real figure was ($23,537). The lesson that we can take out of this is that no matter how much sales and employee numbers grow in the food industry, it is very unlikely to see employee rise any time soon. The slope equation for this graph, only including New York City, is y = 5.857x + 23,437.43. Testing for employee wages for 2020 would give the following equation, y = 5.857 (30) + 23,437.43, where 1990 is used as the base year. The answer would be $23,613.14, which only a little more than a $100 increase than 20 years previous. Thus, employee wages for the food industry have not grown and will not grow anytime soon.
The final independent variable to test is the number of restaurants in the New York area. For the New York area as a whole, the following graph shows the increase in food restaurants:
The results are similar to the first independent variable that was tested. There has been a significant increase in the number of restaurants located in New York (roughly 28%). This confirms that an increase in restaurant numbers has a positive effect on the sales of the food industry as a whole. The equation for this graph is y = 360.75x + 6,755, where 1990 is once again the base year. Forecasting for 2020 reveals the following equation: y = 360.75 (30) + 6,755 = 17,577.5. Just as in the first independent variable, the number of restaurants in New York will grow at the same pace as sales for the food industry do.
This study sought to investigate the connection between fast food business revenues and the number of restaurants in New York, as well as the association between food industry workers, employee salaries, and the number of restaurants in the city. The findings show that two of these variables have an effect on the sales in the food industry: food industry employees and the number of restaurants. The one variable that did not show any correlation at all was the employee wages. The industry as a whole has been booming, so there is no excuse for employers not to increase the wages of their employees. One pleasing aspect has been that stagnant employee wages have not seemed to slow the growth of the food industry; in fact, they seemed to have helped it to grow. It could be that an increase in employee wages would have a negative effect on the sales of food restaurants because profits would be decreased.
The food industry will continue to grow in sales so long as the employee numbers and number of restaurants continue to increase. These variables have a correlation, so the decrease in any of the independent variables will likely have a negative effect on the sales of the food industry. The one variable that has absolutely no effect on the food industry at all is the wages of employees. This tends to suggest that there is a willing workforce out there who are desperate for job, and so will take the lowest wage they can get. This fulfills the belief that young, part-time workers make up the majority of food industry employees. Also, this says that there is likely high turnover within food restaurants, with employees coming and going all the time. This does not help food industry employees’ cause, because very few of them stay around long enough to push for wage increases. More stability among food industry employees would likely result in increased wages over the long term.
- U.S. Census Bureau. (2002). 2002 NAICS Definitions. Retrieved from United States Census Bureau: http://www.census.gov/epcd/naics02/def/ND722211.HTM
- Worldwide Data Inflation. (2012). Historic Inflation United States – CPI Inflation. Retrieved from Inflation.eu: http://www.inflation.eu/inflation-rates/united-states/historic-inflation/cpi-inflation-united-states.aspx