Winter Has Battered Foodservice Sales, Equipment Sales Probably, Too

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. Technomic launched a new open webinar series last week (more on that in a moment) and the first topic was “The Wicked Winter of 2014.”

To cut to the heart of the presentation, conducted by Technomic Exec. V.P. Bob Goldin and Principal Wade Hanson, Technomic research 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, are much higher. Declines in sales versus this time last year—which was not a mild winter—range from 10% in New England to 18% in the West South Central region, for those affected. The national average is -14%. Full-service has been affected the most, as consumers were just not able to go out to eat in a sit-down venue.

In addition, Technomic polled foodservice distributors (we’re assuming mostly food-focused firms). They report sales off 5% to 15%. They also said they’ve been plagued with service and supply chain disruptions and are also coping with property damage caused by the severe weather. I’m sure many of you have had the same problems.

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. More than 80% of consumers in weather-affected areas expect higher home-heating bills and as a result, more than half expect to cut back on entertainment and will eat out less often. And, of course, the volume lost this winter is gone forever.

Given this new data, Technomic estimates total industry sales fell 3% to 4% in January and February, with declines of 7% to 8% in the regions most affected by the weather. And the research group is therefore cutting its latest 2014 operator sales forecast, just released the third week of January.

The sales forecast for nominal growth of limited-service restaurants is being shaved from 3.6% to 2.5% to 3%. The forecast for full-service restaurants is now 2% to 2.5%, down from 3.5%. The group expects sales growth at all other segments to fall to 3% to 3.5% from the original 3.6%, with travel and leisure, business and industry and K-12 schools the most negatively affected. The total industry forecast is down to 2.5% to 3% from 3.6% And all this assumes a return to normal weather patterns beginning this month.

The impact of all this on equipment and supplies sales 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 same range as seen by the food distributors are likely, at least in the most severely affected regions of the country. The good news is, once we get past this winter—and we will—we expect business to pick up strength. The fundamentals, minus the weather, remain strong.

As you send in your FER Top Dealer survey forms, drop us a line on how the winter has affected your business.

And do check out the 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. In addition to the webinar itself, participants receive an executive summary of each session. Five more sessions are scheduled this spring including two on sustainability issues from the consumer and operator sides, the impact of big food distributors and the evolution of independent restaurants. For information and registration info, contact Katie Ordorver at kordorver@technomic.com or 312/506-3941.

Cheers,

Robin Ashton

Publisher