Foodservice at Retail 2014: Growing in Fits and Starts

Industry pushes on in face of strong headwinds

By
Robert Lillegard, Freelance writer

Abbie Westra, Editor-in-Chief, Convenience Store Products

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Like the snack-centric consumers it feeds, today’s foodservice industry is more prone to many small bites of sales growth vs. great big gulps.

Despite 360-degree attacks from Obamacare, commodity costs and recession-weary consumers, the industry is expected reach a record high of $683.4 billion this year—a 3.6% increase over 2013.

“The good news is 2014 represents the fifth consecutive year of sales increases for the restaurant industry. The growth rates still remain more moderate compared to the onset of the recessionary period back in 2008 and 2009,” says Hudson Riehle, senior vice president of the National Restaurant Association’s (NRA) Research and Knowledge Group.

So what’s the bad news? That depends on your segment, but industrywide pain points include the 20% of consumers who assess their personal finances as “poor,” according to the NRA. Another 38% report their personal finances as “fair,” while 33% say they are in “good” financial health; 8% feel they are in “excellent” standings.

Recent increases in commodity costs have also rankled operators. “Cheese is up 19%, eggs are up 18%, pork is up 16%,” says Riehle. “Dependent upon what the menu theme is, it can be dramatically different than the index increase.”

Even more than usual, operators can’t simply raise menu prices to make up for those commodity costs. “Over the past decade wholesale food price increases are substantially above menu price increases,” Riehle continues. “What that means is operators have to look for additional internal operating efficiencies.”

When comparing segments, some non-commercial and managed-services areas—including self-op and managed college and university and self-op business and industry—are among the few that are expected to see a decline in real sales growth this year.

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