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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SEPTEMBER 2017 • FOODSERVICE EQUIPMENT & SUPPLIES • 29 A re you trying to forecast the foodservice industry for the rest of 2017 and 2018? Well, then you have to take the good with the bad. First the good: the foodservice industry remains on solid ground. "It's a good stable economy. We've added jobs. Unemployment is low. Discretionary income is stable, maybe even rising a little bit," says Robert Veiden- heimer, partner and president at Pentallect, a Chicago-based food industry consulting firm. "Traditional foodservice is generally stable." Now the bad: Despite a seemingly stable overall economic environment, growth in the foodservice industry remains inconsistent. "We've seen areas of growth and areas of challenges," Veidenheimer says. "In general, growth has been modest for the overall foodservice industry." Along those lines, the National Restaurant Association (NRA) projects the restaurant industry will grow to $799 billion in revenues in 2017, up 4.3 percent from 2016. In real terms, though, this translates into a growth rate of 1.7 percent, consistent with the past few years. "The past several years, and even the first quarter of this year, have definitely been one of the slower growth environments," says B. Hudson Riehle, senior vice president of research for the NRA. Looking ahead to 2018 and beyond, the restaurant industry should anticipate much of the same moderate growth rate. That's because, according to most industry observers, macroeconomic indicators, such as national employment levels and disposable personal income, can be ex- pected to continue edging up but will not experience a period of rapid growth. "It is sustained real growth for the industry, but it is definitely a sustained moderate growth environment," Riehle says. On a year-by-year basis, that growth may seem modest, but looking at the big- ger picture, the industry remains healthy. Over the past decade, the NRA reports, the industry has posted a 3.7 percent com- pound annual growth rate. And over the past 47 years, the restaurant industry has grown at a rate of 6.4 percent. "That's better than many industries," Riehle notes. The industry's modest performance remains reflective of how well consumers are — or are not — faring in today's economy. "There's an element of the population that's doing great and is spending on foodservice," Veidenheimer says. "And there's another part of the population that's not doing as well. They are looking for cost-effective solutions for food and other areas." Given the political gridlock in Washing- ton, D.C., and other parts of the country, it's not likely that the overall consumer outlook will greatly improve in the near future. "There's a general uncertainty about where we are going from an overall economic sense," Veidenheimer says. "Some of those potential policy issues regarding trade and monetary have the potential to trickle down and impact foodservice. It could impact cost of goods and wages, and that could impact discretionary spending." The foodservice industry's steady, if un- spectacular, growth continues to manifest itself in various ways. For example, some of the larger chains have been struggling to grow even by a couple of percentage Real growth may be slow in the foodservice industry, but the pace of change will only intensify thanks to a cadre of emerging players, a series of dynamic, business- related issues and operators' insatiable appetite for growth.

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