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FROM THE FIELD
June 2008
We've Been This Way Before
L ast month—well, the last day of April, actually—the National Restaurant Association announced its Restaurant Performance Index had declined again in March. It was the fifth consecutive month below an Index value of 100, the fifth month of contraction. Not to paralyze you with data, but suffice to say virtually every slice-and-dice was gloomy.
That same day, the Commerce Department announced first-quarter U.S. Gross Domestic Product grew at a sloth-like 0.6% rate. It was the second straight quarter at that level of growth. The good news, for those who hang on technical definitions, was that the economy still hadn't had a single quarter of negative growth, let alone the two needed to fit the definition of "recession." So that was good by at least some standards.
But however you look at it, the fun factor admittedly is down at the moment. Jobs data, unemployment rates and real-estate trends all have been going the wrong way. Consumers are registering the negatives. No longer buoyed by a blind faith in their employment and perpetual residential real-estate appreciation, consumers are registering really miserable sentiment scores.
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"The wave of woe-is-me frankly is starting to sound silly."
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So some pessimism is understandable, yes. But frankly the wave of woe-is-me is starting to sound silly. Contrary to what the 30-year-old TV reporters seem to think, the sky is not falling.
We've been this way before, as you know if you're old enough to have a history and young enough to remember it. Economies rise and fall, and then they do it again. Often much more steeply than what's happening now.
A little perspective: Anybody remember the Oil Crisis of 1973? The Organization of the Petroleum Exporting Countries seriously squeezed our oil supplies for political purposes. We had rationing of gasoline. Gas stations had lines that were blocks long. In '74 inflation was 11%. By '75, unemployment peaked at 8.5%.
Then in '79, we had a second Oil Crisis, this time largely triggered by the Iranian Revolution. Inflation that year jumped to 11.2% and rose the following year to peak at 13.8%. In '81 it was still more than 10%. By '82 unemployment topped out at 9.7%. Mortgage rates in the early '80s averaged in the low- to mid teens, and some even approached 20%. Think about those numbers.
And who can forget the recession of the early '90s? After the boom of chain expansion in the late '80s, the downturn was a shock to lots of people, not least of which were the people on the capital-expenditures side of foodservice. As in the two Oil Crises, foodservice took its share of the punishment with negative growth. The equipment and supplies market contraction was measured in double digits.
So let's get this all in perspective. Not to make light of any tough economic times compared to any others. Tough is tough. But isn't that when the tough are supposed to get going?
Even during challenging periods, opportunities do continue to open and close and change shape and move around, like blobs in a lava lamp. They're there. And the people and companies that stay intent on finding them will do it. Your job is to be one of them.
As a consultant at an industry seminar said a couple years ago, "We all keep chasing the same opportunities. And we all keep overlooking the same ones, too."
The sky's not falling. Let's get on with it.
Brian Ward
Chief Editor
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