Foodservice Equipment Reports

Despite Challenges, The Outlook For Many Foodservice Markets Is Positive For 2015

In addition to Foodservice Equipment Reports’ forecast of relatively strong growth of the equipment and supplies market in the U.S. and Canada (see related article this issue), we recently checked in with several leading research firms for their outlooks on the markets they cover. We queried Joe Pawlak of Technomic Inc. for insight on the U.S. market, Peter Backman at Horizons in the U.K. as well as Bob O’Brien, global senior v.p.-foodservice for The NPD Group. In addition, Restaurants Canada, Canada’s foodservice association, just released its 2015 forecast. Here’s a quick overview of what they reported:

The U.S. market, Pawlak said, “continues to grow at a relatively modest pace, driven primarily by menu price increases, rather than significant traffic growth.” He notes that two segments are bucking the trend in the U.S.: fast casual and supermarkets. Consumers here “are willing to spend ‘more’ for better quality food, service and experiences that are customized to their liking,” which is fast casual’s strength. And supermarkets have upgraded their prepared offerings “to where they compete strongly with restaurants.” Technomic forecasts the foodservice market will grow 3.1% in current dollars and 1.2% in real terms in 2015 following 3.3% nominal and 0.1% real growth in 2014. For information on Technomic research, go to technomic.com.

After five or six years of declining or flat growth, the market in the U.K. is “now beginning to regain its stride,” Backman wrote. But in spite of the difficult situation, “some sectors…have shown great resilience,” including pubs that concentrate on food, branded casual dining and the lunch grab-and-go segments. But margin pressures are still a problem and government-funded segments continue to suffer. Still, the outlook is much improved. Horizons can be found at hrzns.com.

Restaurants Canada is forecasting 4% current dollar growth of the foodservice market in Canada for 2015 to a record Canada$59.8 billion, the association announced Oct. 20. Greatest growth is expected in the provinces of Albert, Nova Scotia, Manitoba and Saskatchewan, was resource industry continue to drive population , employment and income growth trends. Restaurants Canada also forecasts average annual growth from 2014 through 2018 of 4%.

O’Brien kindly sent us NPD’s global foodservice overview for the second quarter 2014. NPD currently tracks consumer foodservice behavior in 11 markets. The story in most developed markets is similar to that in the U.S.: Flat or slight traffic declines are being offset by rising check averages to create moderate growth. In the second quarter, only the U.K. and Australia show traffic gains. Among the developing markets, China posted a 2% traffic increase, its second since traffic went negative in the fourth quarter 2013. The young Russian market continued to expand, with a 4% gain in visits. (See related article this issue.)

NPD noted two other key points about the second quarter. Global quick-service operators in both China and Germany experienced supply-chain food-safety crises that undercut sales and traffic. And it appears that the market in Spain might finally be on the verge of recovery. Information on NPD research can be found at npd.com.

On a more worrisome note, economies in Europe have been slowing this year, while China’s real domestic product growth has been stuck in a 7%-7.5% range as it seeks to rebalance its economy toward more consumer spending. Still, other than slight slowdowns in growth in the U.K. and China, the latest consensus forecasts from Blue Chip Economic Indicators predict modest real GDP growth gains in most European and Asian economies next year.

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