ROSEMONT Ill. In a forecast that doesn’t yet reflect this week’s market turmoil and what it could mean for the economy, the foodservice industry is not expected to show any significant strengthening until the second half of 2009, according to new data from the International Foodservice Manufacturers Association and Technomic Inc.
Operator mood is depressed, according to the research presented here today, with just 9 percent of the 663 restaurant operators surveyed in August by Technomic indicating they held an optimistic outlook for the foodservice industry over the next 12 months. That figure is down dramatically from this time last year, when 48 percent of respondents said they held a positive outlook for the industry.
“The realities on foodservice are particularly hard,” said Joseph M. Pawlak, a vice president at Technomic. “It’s caused a perfect storm ... and there is not yet light at the end of the tunnel.”
According to the research, the foodservice industry will continue to face challenges from both cost inflation and the tightened consumer economy, including soaring unemployment rates, higher gas and energy costs, and a slumped housing market.
Total food and nonalcoholic beverage sales, including receipts at restaurant, retail and on-site locations, are expected to reach $517.3 billion this year, a 1.2-percent nominal increase from last year, Technomic said. Adjusting for an inflation rate pegged at 4.2 percent, the industry’s real growth this year is expected to be negative, down 3.0 percent from last year.
This year is projected to be the industry’s first year of negative real growth since 2002. The last time before 2002 that the industry posted negative real growth was 1991, according to Technomic’s data.
For 2009, industry food and nonalcoholic beverage sales are projected to total $526.1 billion, a 1.7-percent nominal increase from the year earlier. Adjusted for an expected inflation rate of 4.5 percent in 2009, real growth in food and nonalcoholic beverage sales would fall 2.8 percent. Only once before, in 1980 and 1981, has the foodservice industry posted two consecutive years of negative real growth. Technomic’s most recent forecasts are subject to change and are typically revised to account for updated data.
Total sales at restaurants and bars, a segment that makes up the lion’s share of the industry, are expected to rise 0.9 percent this year on a nominal basis, and when adjusted for inflation, to fall 3.3 percent. In 2009, those sales are expected to rise 1.7 percent, but to fall 2.8 percent when adjusted for inflation.
The full-service restaurant segment, which includes the struggling casual-dining sector, will continue to be a drag on the industry, Technomic’s data showed. This year, full-service sales are expected to fall 1.0 percent on a nominal basis, and to fall 5.2 percent when adjusted for inflation. In 2009, full-service sales are projected to remain flat from the year earlier, and to fall 4.5 percent when adjusted for inflation.
What Technomic calls limited-service restaurants, which mainly include quick-service eateries, are expected to continue to post industry-leading results. This year, that sector’s sales growth is pegged at 2.5 percent, or a negative 1.7 percent on a real basis when adjusted for inflation. In 2009, quick-service sales are projected to increase 3.0 percent, or to drop 1.5 percent when adjusted for inflation.
Total foodservice sales, when including alcohol sales, are expected to total $610.2 billion this year, a 1.2-percent nominal increase from last year, Technomic said. Adjusting for an inflation rate pegged at 4.2 percent, the industry’s real growth including alcohol this year is expected to be negative, down 3.0 percent from last year.
Further data from Technomic’s August operator survey shows that restaurateurs and executives within hotels and on-site businesses are not confident about sales and profit growth for this year. About 52 percent of respondents said they expected sales growth this year, down from 65 percent last year. The most recent result was the lowest since 2001, when 49 percent of operator respondents expected sales growth.
The profit picture is even worse, according to Technomic. About 31 percent of survey respondents said they expected increased profit this year, down from the 50 percent of respondents who said last year they expected a profit increase. The latest result also is worse than that in 2001, when 40 percent of operators said they expected increased profit.