Foodservice Equipment & Supplies

SEP 2017

Foodservice Equipment & Supplies magazines is an industry resource connecting foodservice operators, equipment and supplies manufacturers and dealers, and facility design consultants.

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36 • FOODSERVICE EQUIPMENT & SUPPLIES • SEPTEMBER 2017 With disparities like this, it should come as no surprise that operators continue to embrace the promise of implementing technol- ogy in their businesses. "In a labor- intensive industry like the restaurant industry, when applying technology correctly, it can have very important results," Riehle adds. To help offset rising labor costs, operators will need to apply a variety of tactics. One approach is to recruit new employees and retain existing ones through industry-specific apprentice- ship initiatives. To that end, the U.S. Department of Labor awarded the National Restaurant Association Edu- cational Foundation and the American Hotel & Lodging Association a $1.8 million contract to develop the Hospi- tality Sector Registered Apprenticeship, an apprenticeship program specifically for the restaurant, foodservice and hospitality industries. The goal of this program is to place 400 individuals in apprenticeships in the restaurant, foodservice and hotel and lodging industries. The intent of the program is that by placing individu- als in paid apprenticeships focused on management-level positions across those industries, that will translate into professionals with increased skills, higher wages, recognized credentials and career advancement plans. Technology will also play a big role in helping offset rising labor costs. Applying customer-facing technology solu- tions such as ordering via a website or mobile app, or even in-store kiosk ordering, allows operators to make more effec- tive and efficient use of their labor and enhance revenues. "If you look at quick-service and their use of tablets or apps or other forms of technology, they are able to change their pricing by day to help spark demand," Riehle says. While customer-facing technology offers lots of promise, it may not be right for every foodservice operation — both financially and philosophically. "There's obviously a cost associated with that as well as a strategic ques- tion," Veidenheimer notes. "Do you want to change the way customers interact with your business?" Technological advances in foodservice equipment that allow staff members to automate certain tasks or even multitask without compromising food quality or food safety will become more important too. "Going forward, the ability to use new equipment and new techniques at restaurants is imperative to ensure organizations remain viable," Riehle says. "Equipment suppliers have the ability to shorten the labor requirements on site." Along those lines, 39 percent of operators plan to increase their foodservice equipment and supplies budgets in the coming year, according to FE&S' 2018 Forecast Study. This is consistent with last year's results. It's interesting to note, however, that only 7 percent of operators anticipate decreasing the amount they spend on equipment and supplies in 2018, which is 11 percent lower than last year's projections. WILL MERGERS AND ACQUISITIONS CONTINUE? Given the moderate growth environ- ment, the restaurant industry seems ripe for merger-and-acquisition related activ- ity. "There's overcapacity and a need to drive efficiencies, and acquisitions can help with that," Veidenheimer says. Veidenheimer's explanation dovetails nicely with a spate of high-profile mergers and acquisitions that have made restau- rant industry headlines this year. They include private equity firm JAB Holding Co.'s acquisition of Panera Bread and Amazon's acquisition of grocer/emerging restaurateur Whole Foods, among others. The mergers and acquisitions continue to impact the supply chain for similar reasons. For example, in June of this year, private equity firm Trivest Partners acquired B&J Food Service Equipment and Beltram Foodservice Group, merging the two to become BJ Beltram Inc. This came a few months after TriMark USA announced its plans to acquire Hockenbergs, a Nebraska- based dealership with locations throughout the Midwest. Most industry observers don't expect this M&A activity to slow down any time soon. "You are going to see it in the restaurant industry and in distri- bution certainly through the next 6 to 12 months," Veidenheimer says. CONCLUSION Despite relatively moderate growth rates, expect the pace of change within the foodservice industry to quicken. Consolidation among both operators and suppliers, paired with disruptive forces (such as members of the con- sumer direct segment and nontradi- tional players like Amazon going head- to-head with traditional powers), will only intensify the foodservice industry's competitive appetite. Unfortunately, foodservice will not grow its proverbial pie at a rate fast enough to satiate all of its players — which means 2018 will be another "take share" environment for the industry. FE&S Increase 61% Decrease 7% Stay the Same 32% Dealer Sales Outlook for 2018 STEADY AS THE FOODSERVICE INDUSTRY GROWS

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