Global Risks Cloud Outlook For U.S. Foodservice, Says Technomic Economist

Technomic Inc. held its annual Restaurant Trends & Directions Conference in Rosemont, Ill., on June 20. Among the highlights of this wide-ranging look at the trends driving the foodservice business was a presentation by Dr. Arjun Chakravarti, the Chicago-based research firm’s consulting economist.

Economic risks in Europe and Asia could indeed negatively impact foodservice spending in the U.S. over the next year, Chakravarti warned the audience of chain operators and their suppliers. Chakravarti, also an assistant professor at the Illinois Institute of Technology’s Stuart School of Business, previewed his address in an edition of Technomic on the Economy released June 13.

“In our view, the major domestic risk to U.S. foodservice demand,” Chakravarti wrote, “is asset price instability that would suppress spending of wealthier consumers and put middle class jobs at risk.”

The economist noted that most of the gains in consumer spending, and in foodservice use and sales since The Great Recession, have come from wealthier households as equity and other asset-based markets have recovered.

“The economy is working at three speeds: highly favorable conditions for the top income brackets, a near depression for the poor, and significant volatility for the middle class,” he said.

Since the sovereign-debt crisis in Europe and a slowdown in growth in major Asian economies would most likely impact equities and financial markets, including the value of stocks, bonds and other assets, the risk to foodservice is a slow-down in spending by wealthier consumers. Such consumers generate approximately half of all foodservice spending. And if the crisis is severe enough to affect job growth and stability for the middle class, this would add to the decline in restaurant use.

Information on Technomic research can be found at www.technomic.com. “””