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Industry Trends

Industry Expected to Grow in 2011 — but Here’s the Catch

October 4, 2010 By: Dave Henkes


Technomic released its 2011 foodservice industry forecast last week during the IFMA Forecast & Outlook seminar. The overall foodservice industry is expected to grow 1.7 percent next year in nominal terms (i.e. consumer spending), up from what will essentially be a flat market in 2010 (growth of only 0.3 percent to finish 2010.) However, this growth will be driven largely by some increases in menu pricing and operators passing on higher commodity costs, and Technomic expects the industry to decline 0.3 percent in real terms.

Overall, restaurants are expected to underperform relative to many of the "Beyond Restaurant" segments, with casual dining still lagging in expected growth. Some segments, like supermarket foodservice, lodging, colleges and senior living, are expected to do relatively well in 2011.The forecast is based on economic expectations that include 9.3 percent unemployment next year, slow growth in disposable income and food costs that are inching higher next year. The CPI for food away from home is expected to grow 2 percent next year vs. 1.5 percent in 2010.

Based on our current forecast for 2011, the foodservice industry will be down almost 12 percent in real terms from its high in 2007. While the dollar growth is slowly moving in the right direction, our definition of a foodservice recovery won't be met until we've climbed out of this hole and have started growing beyond where we were at the high. In short, next year will be a slightly better version of this year, but no major recovery quite yet.

Technomic is in the process of finalizing its more specific on-premise/beverage alcohol forecast, which will be released later in October.

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