January 21, 2014
January 23, 2014
Foodservice operators had a surprisingly good year in 2013. Yes, growth slowed to 3% in current dollars, down from 4% in 2012, according to Technomic Inc. The forecast for 2013 real growth is now 1% vs. 1.9% the year before. That was the best year for foodservice-operator sales since 2007.

But 2013 could have been so much worse. First there was the “fiscal cliff” standoff at the end of 2012. Then the payroll-tax holiday—a 2% reduction put in place during the depths of the Great Recession—expired, taking hundreds of dollars per household from consumers’ pockets. Then gas prices spiked in January and the federal budget sequester kicked in. Operators got socked with big snows and cold in January and February, in comparison with an unusually mild winter the year before. And everyone was afraid food prices would soar, as the drought of 2012 led to spiking prices for animal feedstock.

So did the market tank? Well, not exactly. The first quarter was the toughest of the year with flat traffic and shrinking same-store sales, but things popped back nicely in the second quarter and held most of the gains in the third. Preliminary eating-and-drinking-place sales data from the U.S. Department of Commerce show restaurant sales hit a record in October, in spite of the government shutdown and debt-ceiling fight.

The threatened food-price spikes never really materialized, though wholesale food prices are running about half a point ahead of the gain in 2012. Gasoline prices moderated over the spring and fell nearly all fall. While consumer confidence has declined since the government shutdown (and that might undercut foodservice sales somewhat in the fourth quarter), what is apparent as we write this in late November is how well foodservice did in spite of all of the challenges.

Somewhat Stronger Growth Forecast For 2013
So what’s the outlook for 2014? Modestly better. All of the key macroeconomic drivers of foodservice are expected to improve in 2014. Blue Chip Economic Indicators forecasts real disposable personal income will grow by 2.5% in 2014, a nearly two-point improvement over 2013. Employment trends finally look more positive. Gas- and food-price increases are forecast to be moderate. While lower income households were a bit more fearful after the government shutdown, the mood of wealthier Americans, who buy the most foodservice, is upbeat thanks to record equities market prices.

Technomic’s latest forecast for total foodservice, revised last August, calls for 3.8% nominal growth, with real growth of 1.3%. Menu-price inflation is predicted to increase only slightly to 2.5% in ’14 from 2% in ’13. On the restaurant side, The NPD Group is looking at a 1% increase in traffic next year, after a year of little or no gains in visits in 2013.

With regard to foodservice in 2014, we don’t expect any watershed moments. The industry is expected to continue its path of slow growth, as it has seen over the past two to three years.

NPD’s noted. While consumers’ mindset for cautious, controlled spending is expected to remain in place for some time, NPD’s forecast of traffic and dollar growth for 2014 shows improved performance compared to 2013. The group is forecasting a 2% gain in consumer spending on restaurants, which, with the forecast traffic increase, would add up to 3% growth.

Among the segments expected to drive growth in 2014 are fast-casual chains, sub-sandwich shops, gourmet coffee and donut concepts, supermarkets and healthcare foodservice. Technomic earlier reported that fast-casual concepts now account for 8% of all restaurant sales, up from only 2% five years ago.

It is expected that more operators to incorporate new technologies into their restaurants. He notes that nearly two-thirds of consumers recently have used technology, such as smart phones or tablets, to order takeout.

When it comes to what consumers will order with that new technology, locally sourced items, environmental sustainability and healthful kids’ meals will continue to be the top menu trends for the year.

For those who sell equipment and supplies, a better year for operators should translate into a better year for the E&S market, too.

Source:  uniproweb.com, 1-13-2014


Leave a Reply

Your email address will not be published.