In This Section:
Technomic Foresees Soft Foodservice Market
Food-Price Increases To Continue
Early-Bird Discount For FER'S President's Preview Forecast Seminar Extended
This issue's Regulatory Report Sponsor: Enodis
Industry ReportSponsor: Server Products
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Technomic Foresees Soft Foodservice Market
Current economic and consumer woes are clearly having a negative impact on the foodservice market, according to Technomic Inc., and the outlook is not expected to improve much until next year. The research firm presented its revised forecast of market growth for 2008 at its annual Restaurants 2008 Trends & Directions Conference June 25 at the Rosemont Convention Center, Rosemont, Ill.
Technomic now forecasts the total foodservice market will grow only 2.2% in nominal dollars this year. When menu-price inflation of a predicted 4% is factored out, real sales will decline 1.7% (due to rounding). Sales at restaurants and bars are expected to grow only 2.1%, and segments beyond restaurants, including noncommercial operators, are projected to post growth of an only slightly better 2.2%. Real declines are expected for nearly all segments.
Ron Paul, Technomic president, succinctly outlined the problems foodservice operators face. Growth of the general economy and disposable personal income is barely above break-even, consumer confidence is at a 35-year low, job growth is declining, and consumers are being hammered by rising energy and food costs. As a result, consumers are scaling back restaurant visits, especially to full-service operations, and ordering less when they do go out to eat. Even quick-service operators, who have benefited from consumers trading down from full-service, are beginning to feel the pinch.
This environment, which also includes rapidly rising food and energy costs for operators, is understandably having an impact on operator optimism, Paul said. An exclusive survey conducted in May had only 32% of operators optimistic about future foodservice growth. This compares with readings in the 64% to 67% range in similar surveys conducted in '06 and '07.
Still, Paul reminded attendees that there are always pockets of growth in the huge, diverse foodservice market.
Information on the revised forecast and other Technomic research can be found at www.foodpubs.com or by calling 312/876-0004.
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Section sponsored by Manitowoc Foodservice Group
Food-Price Increases To Continue
Not only are grain prices, and particularly corn prices, likely to continue to rise during the coming year, but their impacts on major protein prices such as beef, poultry, pork and eggs are just now beginning to show up. And the rising costs will have a major impact on foodservice operators' margins in both the short and long terms, according to agricultural economist Bill Lapp. He made his comments at Technomic Inc.'s Restaurants 2008 Trends & Directions Conference in Rosemont, Ill., last week. Lapp is principal at Advanced Economic Solutions.
Lapp said surging worldwide demand for corn, fueled in part by the shift of corn production to ethanol, and record-low U.S. and worldwide corn supplies are behind the price run-up. Corn prices have increased a whopping 143% during the past two years. Corn for ethanol now accounts for more than a quarter of all U.S. corn acreage, Lapp said, and current government bio-fuel mandates will require an additional nine million acres to be used for ethanol over the next seven years.
Lapp showed that producers of every major protein, including beef, chicken, turkey, pork and eggs, have so far not passed on their increased feed costs to retail and foodservice buyers. But nearly all are now losing money and will almost certainly raise prices to cover the gap.
In fact, Lapp said he expects overall food prices to continue to climb over the next five years at rates not seen since the 1970s, when food-price increases averaged more than 8% a year. Lapp projects annual food prices will rise an average 7.5% between now and 2012.
With food costs averaging 30% to 35% of operators' sales, this will almost certainly lead operators to continue to raise menu prices to try to cover the margin squeeze.
Early-Bird Discount For FER'S President's Preview Forecast Seminar Extended
Given the possible softening of the foodservice equipment and supplies market, we thought it only fair that we extend the early-bird discount for Foodservice Equipment Reports' annual President's Preview Equipment And Supplies Market Forecast meeting. Sign up by Thurs., July 3, and you'll save $100 on the seminar fee. The seminar will be held at the Eaglewood Resort and Spa in Itasca, Ill., on July 30.
Given all the turmoil in the general economy and the impact it is having on foodservice operators, you need the best intelligence on what the future holds. And you'll get it as the meeting features the magazine's hard-number forecasts for E&S market growth in 2008 and '09, and includes a wealth of data on general economic, operator and materials and E&S price trends.
Presenters will include Robin Ashton, publisher of FER; John Muldowney, principal at Clarity Marketing, Tipp City, Ohio; and Kent Motes, president of AutoQuotes Inc.
A panel of lead operators including Martin Cowley from Disney, Rob Foraker from Steak 'n Shake, Kevin Golden from Au Bon Pain, Kent Kelso from P.F. Chang's and Bernard Morauw from McDonald's will kick off the seminar with an open-forum discussion of drivers affecting their businesses and their organizations' capital-spending plans.
The meeting program is just one day, with a mid-morning start, so most attendees can fly in and out the day of the meeting. A limited number of hotel rooms at Eaglewood is also available for July 29. The seminar fee is $845 before July 4, $945 after.
Information on registration and the hotel is available at www.fermag.com/events/index.htm or by calling Jessica Scurlock or Robin Ashton at 800/986-9616.
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