Foodservice Growth Slows

The convenience store industry was projected to post strong foodservice sales over the next four years, according to industry analysts. However, a new study released by foodservice consultants Technomic Inc. at the International Foodservice Manufacturers Association's (IFMA) annual conference, said the impact of the September 11 terrorist attacks caused an economic slowdown on the U.S. foodservice industry.

Over the past several years, U.S. foodservice in the aggregate had been enjoying nominal growth rates that averaged between 5 percent and 6 percent. "Recently, we had witnessed slow-downs across several foodservice segments," stated Ron Paul, president of Technomic. "The events of September 11, however, triggered several major shifts in our expectations."

Given the higher level of uncertainty, Technomic is suggesting that precise forecasts are no longer valid, and that scenario-planning across a range of expectations is more appropriate. Among other findings cited by Technomic:
* Retail outlets, such as convenience stores and supermarkets, should old steady with growth of at least 3.5 percent forecasted for 2002, reflecting consumers' willingness to select these outlets for convenience and in lieu of dining out. Business and industry is expected to see no to only modest growth, as continued layoffs may constrain growth in this segment.
* Consumers are expected to continue eating out, but will likely "trade down" in their dining choices. As a result, Technomic sees limited service restaurants enjoying a slight boost, with 2002 growth projected to range from flat to approximately 3.5 percent. The full service segment, however, will have to contend with the "trade down," and growth could be between 1 percent and 3 percent.
* Travel and leisure, which represents 7 percent of the total foodservice industry, clearly has been the hardest hit segment. While business travel may improve over the next several months, leisure may not rebound as quickly. A decline is predicted for this segment in 2002, down as much as 30 percent.
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