Signs Of Maturity For U.S. Foodservice Market

If you missed it last week in FER Fortnightly, the number of restaurants in the U.S. fell for the second year in a row. We published data from The NPD Group’s biannual ReCount restaurant census. From Oct. 1, 2014 to Sept. 30, 2015, the number of units declined 0.6% to 629,488, a loss of 3,919 restaurants on a net basis. This is the second year in a row the total number of restaurants in the U.S. has declined. The market lost 2,589 net units in the same period from 2013-14, or a 0.4% loss.

All of the lost units are independents, according to NPD. In the year ending in the fall 2015, the number of independents fell 2.1%, a drop of  7,136 restaurants. Since fall 2013, the number of independent units has fallen almost 15,000 to 336,545. Nearly all the independent unit loss comes from the casual dining and fine dining segments, NPD reports.

Meanwhile, the number of chain restaurants has grown by 3% since 2013 to 292,943. That growth has been led by the growth of fast-casual concepts. The number of fast-casual units was up by nearly a thousand from fall 2014 to ’15 to 19,043, a 5% growth rate.

This data provide further evidence of what we’ve been discussing for nearly a decade: The foodservice market in the U.S. is quite mature. Long gone are the decades of rapid unit growth. The equipment and supplies market is now driven by renovation, replacement and menu changes, not new unit growth.

In this environment, the game is keeping facilities fresh and inviting. Last week, TGI Fridays announced a big renovation program. And the renovation trend affects not just the commercial market. This month’s Foodservice Equipment  Reports features a huge renovation at the Ohio State University, designed by Ricca Design and equipped and installed by Best Restaurant Equipment & Design.

The ReCount data also show what most of us have long known: Chain restaurant operators, and chain and multiunit operators in nearly every other segment, are gaining share. They simply have more sophistication and resources. The timing of the decline in total restaurant counts is also revealing. The total number of units rose slightly from 2010, during the depth of the recession, until 2013. But now we’ve seen two years of declines. The lag is apparent.

Of course, net unit counts are not the same as the number of restaurants that open and close each year. That number generally runs somewhere between 45,000 and 60,000 each year, or 8% to 10%. While a lot of that change involves one operator turning over the keys and the kitchen to another, the turnover does provide opportunities for new equipment and supplies sales.

The maturity of the foodservice market in the U.S. should benefit dealers in the long run. Not that it isn’t and won’t always be an extremely competitive market.

Cheers,

Robin Ashton

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