I get a little confused when “experts” in our industry forecast “aggressive” growth for the next year or two — experts who may find it in their best interests to do so. Maybe it is just wishful thinking on their behalf – who knows. I would like to see aggressive growth occur as much as the next guy, but I have my doubts about their prognostications.

For my part, I try to look at the long-term macro drivers affecting our industry, as well as the economy as a whole. I don’t get all excited when I see an article in an industry “rag” saying something along the lines of “restaurant receipts are up over the same month last year,” and things of this nature. Let’s take a look at a few drivers that I believe have a more telling impact upon our industry:

  • Fewer annual visits – The number of annual restaurant visits made by older Millennials (25 to 34) has dropped by 45 per person over the past six years. (NPD Group – reported in NRN – September 22, 2014) This is a VERY significant number. With this demographic group eating out less, it is not hard to see why the industry will not grow by leaps and bounds in the future!
  • Shifting Consumer Habits:
    • Consumers have become used to cooking at home more (I know I have!)
    • Related to the point made earlier, Millennials as a whole are not eating out as much as they have in the past — they are the key to any real growth
    • Breakfast and evening snacking have shown some growth — but traditional lunch and dinner dayparts are declining

The net result …

  • Industry traffic will decrease 1.9% industry wide in 2014 – the 6th consecutive year of negative trends (Black Box intelligence / TDn2K > NRN September 22, 2014) If the industry doesn’t have the traffic, then how can we expect the industry to grow?
  • 0.5% — the maximum rate of growth for year-over-year traffic forecasted for the next several years (2022) (NPD Group – reported in NRN – September 22, 2014). This number doesn’t look real aggressive to me!

To complicate the picture just a little bit more, a recent study conducted by ADP Research Institute found that only 15% of mid-sized business (50 to 999 employees, which covers a huge majority of foodservice operators) are confident that the US economy will improve over the next 12 months, yet 51% expect they will see improvement in the industry in which they work. The top issues and concerns for these businesses?

  • 69% are concerned with the cost of health care coverage and other such employee benefits
  • 54% are concerned with health care reform legislation
  • 51% are concerned with the level and volume of government regulations

So, what does all of this mean? In spite of all of those optimists out there that think the foodservice industry is going to have a “robust” year next year, I believe both macro and micro economic indicators are saying otherwise. Hopefully I’m wrong!! We’ll see.