March 31, 2014
We knew the brutal winter in most parts of the U.S. was hurting restaurant and other foodservice sales. But we had no idea it was this bad. New research from Technomic Inc., the Chicago-based research firm, indicates just how bad it’s been.
Technomic research in February found 40% of restaurant operators in every region of the country—except the Pacific Coast—report the extreme winter weather has hurt business. The percentages reporting negative impacts in the most severely affected regions, such as the South Atlantic, West South Central, Middle Atlantic and New England, were much higher. Declines in sales vs. this time last winter—which was not mild either—range from 10% in New England to 18% in the West South Central region for those affected. The national average decrease is 14%. The full-service segment has been affected the most because consumers just were not able to go out to eat in a sit-down venue.
Technomic also surveyed consumers. Nearly two-thirds said the inclement weather had negatively affected their ability to go out to eat; 61% reported the weather also had a negative impact on their desire to go out. While more than half said they expect to dine out more often once the weather improves, the impact of the winter on consumer dining-out behavior is likely to linger, thanks to higher home-heating bills and other added costs affecting household budgets.
Given this new data, Technomic estimates total industry sales fell 3%-4% in January and February with declines of 7%-8% in the regions most affected by the weather. Therefore, the research group is cutting its latest 2014 operator sales forecast, which just was released in the third week of January.
The total industry forecast is down to 2.5%-3% from 3.6%. And all of this assumes a return to normal weather patterns beginning this month.
The impact on the equipment and supplies market is still hard to gauge. National Restaurant Association data on capital-spending activity continued to rise in the January Restaurant Performance Index survey. But we think declines in the 5%-15% range year-to-year first quarter are likely, at least in the most severely affected regions of the country.
The good news: Once we get past this winter—and we will—we expect business to pick up strength for operators and the E&S market. The fundamentals, minus the weather, remain strong.
This new data from Technomic was released as part of the research group’s new “Technomic Talks” webinar series, presented in cooperation with the International Foodservice Distributors Association. The series features concise briefings on topics of interest to foodservice companies. It is open on a complimentary basis to any foodservice company. For more information on the series and registration info, contact Katie Ordorver at kordorver(at)technomic.com or 312/506-3941.
And don’t despair: When the weather warms, so will foodservice sales. Most everyone in America has cabin fever and will be dying to get out.