Foodservice Equipment Reports

Technomic Forecasts Fourth Year Of Real Declines For Operators in 2011

Technomic Inc. predicts foodservice real operator sales will fall 0.3% next year, an unprecedented fourth consecutive year of real sales declines. The Chicago-based research group unveiled the numbers Sept. 23 during the annual Forecast & Outlook Conference sponsored annually by the International Foodservice Manufacturers Association. Nominal sales are forecast to rise 1.7% in 2011.

Technomic estimates operator sales fell 3.6% in ’08 and 5.9% in ’09 in real terms. The current forecast for this year is a real decline of 1.2%.

Technomic’s V.P. Joe Pawlak told FER Fortnightly, “The big issues facing foodservice are painfully slow jobs growth and the outlook for disposable income.” The current forecast for real DPI is a mere 1.4% this year and only 2.1% next, according to the latest consensus forecasts from Blue Chip Economic Indicators.

Pawlak noted that higher-income households account for a disproportionate share of foodservice spending. Uncertainty about Bush-era tax cuts, among other factors, is constraining spending by these higher-income households. And unemployment and/or underemployment are limiting foodservice occasions in lower-income households.

Pawlak added operators will most likely face higher costs for food, healthcare and other inputs next year, squeezing profits. In an unusual turn, many noncommercial operator segments are expected to outperform commercial segments. Total ’11 real sales at restaurants and bars is forecast to fall 0.4% next year, following a 1.4% real decline this year. Quick service is predicted to be flat while full service is forecast to post a 1% decline.

On the other hand, colleges and universities are forecast to show 1.5% real growth, as are lodging, senior living and supermarket foodservice. School foodservice is expected to grow 0.6%, hospitals 0.5% and military 1%.

Information on Technomic research products can be found at foodpubs.com.

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