Foodservice Equipment Reports
Publisher's Viewpoint

More Than A Spring Thaw

It’s been a long, slow grind for many foodservice operators since the end of the Great Recession. If one looks at the estimates of total foodservice industry growth since 2010, it’s been a record of fits and starts and falling back. Both Technomic Inc. and the National Restaurant Association have average annual growth during the post-recession years in the 3%-4% current dollar range with real growth often below 1%.

Our political dysfunction at the federal level has been a factor, but primarily it’s been the difficulty of climbing out of a so-called “balance sheet” recession. The total number of jobs in the U.S. didn’t recover from the peak in 2008 until May 2014. And most of us are aware many higher-wage jobs have been replaced by lower-wage and part-time jobs, thanks to globalization and the information revolution. Wage growth continues to stagnate. 

On top of all of the general economic issues, foodservice in the U.S. is the most mature in the world. There’s just not much impetus to growth, other than population gains.

Sorry. I’m not trying to depress you; I’m trying to cheer you up. For many of you, things rather suddenly and surprisingly improved beginning last September. Many commercial foodservice operators have seen a jump in customer counts and sales. A lot of it is the finally improved jobs picture, and part of it is the remarkable plunge in fuel prices. As NRA keeps repeating, their research shows lots of pent-up demand for foodservice. 

Some of the places seeing growth are very, very surprising. According to NPD Group data, family-dining/midscale full-service operators hadn’t seen a single quarter of year-on-year traffic growth since 2006! Until the last quarter of 2014, that is. Same-store sales growth at chains, such as Denny’s, IHOP, Bob Evans and Cracker Barrel, was remarkable at the end of last year. Nation’s Restaurant News reported that average same-store sales growth at the public family-dining chains it tracks rose 5.6% in the fourth quarter compared with 2013 and outperformed every segment except fast casual. Wow.

And the gains are continuing into 2015, thanks in part to a milder (yes, Boston, sorry) winter than the brutal four months of 2013-2014. Bob O’Brien, senior v.p. of global foodservice at NPD wrote in his blog in March that monthly same-store sales vs. year prior for the 60 big chains the firm tracks rose 4.5% in December and January and 2.5% in February. 

Combine this upbeat commercial foodservice sales situation with a slow-down in food-price gains, helping margins and what now appears to be a fully recovered noncommercial/spec market; as we’ve said, 2015 is likely to be a very strong year for the E&S market.

I heard another upbeat indicator this week: Michael Hawkins of M.J. Hawkins, the recruiting firm, called to say he needed to run another classified ad. “Everyone is desperate to find contract and kitchen design staff,” he told me. “Everyone.”

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