Technomic Forecasts Another Decent Year Of Operator Growth In 2017

Anticipating that the economic fundamentals that drive foodservice sales will remain positive, Technomic Inc., the Chicago-based foodservice research firm, forecasts that total industry sales will grow 4.9% in current dollars and 2.3% after menu price inflation of 2.7% is factored out in 2017. The firm released its revised forecast for 2016 and its preliminary forecast for ’17 to clients Monday, May 23 during the National Restaurant Association Show in Chicago.

Technomic did not change its overall forecast for 2016 much from its last revision in January, though it did rejigger significantly the growth rates of major segments. The 2016 real growth forecast remains at 2.4%. But the firm lowered the anticipated commercial menu price inflation to 2.7% from January’s 2.9%. Nominal growth for ’16 is now pegged at 5%, up from 4.7% in January. The forecast growth rates for ’16 and ’17 compare with Technomic’s final estimate of nominal growth of 5.1% and real growth of 2.3% in 2015.

Forecast growth for total restaurants and bars is now 5.2% in current dollars for ’16 and 2.5% real, up from 4.7% and 2.4% in the January revision. But the researchers boosted growth for limited-service concepts while lowering them for full-service segments. Technomic gave a substantial bump in anticipated growth to traditional fast-food/quick-service from 3.8% nominal in January to 4.5% in the new forecast. With the slight drop in predicted inflation, the real growth rate for ’16 was increased to 1.8% from 1.2% in January. And growth in ’17 is forecast at 4.8% nominal and 2% real for fast-food/quick-service. Some of the anticipated higher growth in the segment can be attributed to McDonald’s improved results and outlook.

The growth rate for the fast-growing fast-casual segment was also boosted for ’16, though the firm expects a slight cooling in ’17. For this year, fast casual is predicted to grow sales 10.4% in current dollars, 7.5% real. Next year growth is expected at 10.1% nominal and 7.2% real.

Technomic dropped the previously forecast growth rates for all three full-service segments with the nominal growth rate for all full-service lowered to 4.9% from 5.5% in January. For ’16, nominal growth was pared from 4.5% to 4.2% for midscale concepts, 5.6% to 4.8% for casual dining, and 8.1% to 7.3% for fine dining. Technomic forecasts 2017 nominal growth in these segments will slow another 0.5 point to a full point again. Combined nominal growth for all full-service is forecast at 4.3% in ’17 down from 4.9% this year.

Other key segments forecast to grow faster than the average next year include supermarkets at 8.9% nominal, lodging at 6.8%, social catering at 6.3%, and senior living at 8%.  

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