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Employment and gasoline price trends are among two of the most important drivers of foodservice sales. Data released during the past week has jobs growth looking positive while gasoline prices have risen, though modestly, since an agreement by the Organization of Petroleum Exporting Countries to cut production.

The U.S. added 178,000 non-farm payroll jobs in November, a bit above economists’ expectations. The unemployment rate fell to a post-recession low of 4.6%, but mostly because of a drop in the number of Americans looking for work. Average hourly earnings fell slightly after several months of strong gains. Still, average hourly wages have risen 2.5% during the past 12 months, well ahead of the 1.6% gain in the Consumer Price Index during the past 12 months. Leisure and hospitality continued to add jobs with 29,000 created in November, including18,800 in foodservice.

Meanwhile, average gasoline prices, which had been falling for nearly a month as cheaper winter blends were being produced, have risen for eight consecutive days since OPEC announced an agreement to curtail production beginning Jan. 1. An average gallon of regular stood at $2.181 on Dec. 5, up from $2.125 the previous Monday, down from $2.222 a month ago and up from $2.042 a year ago. Crude oil prices have surged 12% since the announcement of the agreement. Still, while non-OPEC members such as Russia have said they will participate in the cuts, oil analysts and traders remain skeptical. 

The slowdown in restaurant sales and traffic, particularly at major chains but also in other key segments, has led the Chicago-based foodservice research firm Technomic Inc. to lower its forecast of sales growth for both 2016 and 2017.

“It’s pretty apparent that there’s some softening in certain parts of the industry,” Technomic Senior Principal David Henkes wrote in sending FER the revisions, which were released to Technomic customers in November. The firm now expects total industry nominal sales growth to be 4.1% this year and 4.2% in 2017. This compares with the preliminary forecast released last May of 5% nominal growth for 2016 and 4.9% for 2017. Real changes after factoring out inflation are now forecast at 1.6% for 2017 and 1.7% for 2017 compared with the earlier forecasts of 2.4% and 2.3% respectively. The firm forecasts menu-price inflation of 2.7% for commercial segments in both years.

The biggest revisions in growth rates are in the restaurant segments and lodging foodservice. Technomic cut the nominal forecast for limited-service restaurants, which includes both traditional quick-service and fast-casual concepts, to 4.5% for 2016 and 4.8% for 2017 from the previous 5.5% and 5.7% forecasts. The forecast for full-service restaurants was pared even more to 3.5% growth for both years from the previous forecast of 4.9% for 2016 and 4.3% for 2017. The forecast for lodging foodservice nominal growth was lowered to 5.3% in 2016 from 7.3% in the previous forecast and 5.1% next year from the original 6.8%.

In commenting on factors that led the firm to revise the forecasts, Henkes noted the following:

•     Casual dining, particularly the larger chains, has seen a fairly large decline in traffic, and many chains are reporting declining same-store sales. (This is a big part of the “restaurant recession” that the press has noted.) At the same time, we do believe independents are relatively strong and healthy, although perhaps not to the degree from 12 to18 months ago.

•     Fast casual is reaching maturation, with public chains also showing slowing same-store sales growth. Continued trouble at industry leader Chipotle doesn’t help.

•     Menu price inflation continues to make dining out relatively less attractive compared to eating at home; this is certainly impacting the frequency of dining out for many consumers.

•     Continued competition from other outlets, including c-stores, supermarkets, meal kits and other “non-traditional” areas have impacted restaurant sales.

Further information on the forecast and on other Technomic research can be found at www.technomic.com. 

The National Restaurant Association marked a major milestone in its commitment to promoting and elevating diversity in the restaurant industry by welcoming the Multicultural Foodservice & Hospitality Alliance (MFHA) to the Association.

Founded in 1996, MFHA is a non-profit organization and educational resource on multicultural diversity issues for the restaurant, foodservice and lodging industry. “Since our inception, the NRA and the NRA Educational Foundation have supported MFHA’s mission to increase cultural awareness and advance diversity throughout the hospitality industry,” says Gerry Fernandez, MFHA founder and president.

In addition to advocating for career opportunities for people of color, MFHA is developing Cultural Intelligence training modules that help the industry improve business results in culturally diverse markets. NRA members will have full access to these Cultural Intelligence solutions, webinars, conferences, roundtables and consultation services.

Howard Schultz is stepping down in April as chief executive of the Starbucks Corp. so he can lead the company’s new strategic initiative to build high-end coffee shops. He will remain chairman of the 45-year-old Seattle chain.

Schultz will be succeeded by President and Chief Operating Officer Kevin Johnson, who served on Starbucks’ board for several years before joining its executive team two years ago. Schultz, who began handing off daily oversight of the 25,000-unit chain a few months ago, says he has no plans to step away from the company.

Starbucks’ move toward high-end coffee is aimed at refreshing its brand, which has been facing increasing competition from specialty roasters such as Intelligentsia and from mass coffee purveyors like Dunkin’ Donuts. ​Two years ago, Starbucks opened the Seattle Reserve Roastery and Tasting Room, a 15,000-sq.ft. store where customers can buy $12 cups of small-batch “reserve” coffees made with a siphon brewing technique. The company is planning to open 20 to 30 more of the high-end stores, including one twice its size in Shanghai next year. Also on the drawing board are up to 1,000 smaller stores similar to the Roastery, minus the on-site roasting, under the “Starbucks Reserve” brand.

Starbucks is also remodeling many of its stores with Reserve-branded coffee bars.

Made your reservations yet for the E&S industry’s biggest exhibition? Hurry up… The NAFEM Show 2017 is looking to be a killer of a show. Literally. The three-day show in Orlando, Fla., even caps off with a closing night performance by The Killers.

More than 500 booths are already set for the Orange County Convention Center’s exhibit floor, and many of the show’s (and thus the foodservice equipment and supplies industry’s) most innovative concepts can be seen in the WHAT’S HOT! WHAT’S COOL! product gallery.

The centrally located gallery, in Booth #1840, will focus on concepts and products featuring technology advances, labor lifesavers, consumer-first innovations, specialty equipment, and eco- (and budget-) friendly options.

New to the gallery this year is “The Inspiration Station,” a series of four discussions designed to generate conversation around the latest equipment and supplies trends. It be led by Mike Colburn and Mary Esther Treat, founders of product design firm Ideas Well Done. These independent experts will weigh in on some of the things they’ve seen on display in the gallery and encourage questions and comments from the audience. Inspiration Station discussions will take place Feb. 10 and 11, from 11-11:30 a.m. and 2-2:30 p.m.
 
Click to learn more about The NAFEM Show or register.