E&S Extra

Editorial Director Joe Carbonara provides insights and commentary on the state of the foodservice equipment and supplies marketplace.


Growth in Spurts

When trying to assess the health of an industry, many people look to the macroeconomic factors that often impact performance. Two factors regularly linked to the foodservice industry include national employment levels and personal disposable income, among others.

Why does the foodservice industry often look to those factors when assessing its current and future health? It’s simple, really. As B. Hudson Riehle, senior vice president of research for the National Restaurant Association, often reminds me, those two factors drive consumers’ need for the convenience that restaurants and other foodservice operators provide.

What happens when those factors send mixed messages? That appears to be the case for the industry both today and tomorrow. National employment levels remain very stable, yet consumers’ disposable personal income remains under pressure as they deal with rising costs in the form of healthcare, transportation and other necessary living expenses.

As a result, the restaurant industry will experience real growth at a rate of 1.7 percent in 2017, per NRA projections (Click to see full FE&S Forecast 2018). If this scenario rings of déjà vu it should. Over the past eight years the industry has experienced similar moderate but real growth, the NRA reminds us. And it would seem that 2018 will bring more of the same. In other words, expect steady, if unspectacular, overall growth punctuated by strong regional variances for the coming year.

Given the tight operating environment for restaurants throughout the U.S., it comes as no surprise that many of the national chains continue to struggle to post consistently positive same-store sales, long considered another indicator of industry health. Like other members of the foodservice industry, chains face strong headwinds in the form of rising labor costs and other operating expenses.

In addition, the competition chains face remains more diverse than ever. Consumers appear intrigued with customer-direct platforms. Meal kits and third-party delivery options feed consumers’ desire for a chef-driven experience in the comfort of their own homes.

Microrestaurant chains represent another group growing its influence within the restaurant industry. These concepts continue to win over consumers because of their ability to deliver on the traits today’s customers value most, namely: bold flavors, simple ingredients, authentic menu items, food transparency, customization and corporate responsibility.

We introduce you to seven microchains in this issue hitting on all of these trends. Although given their appetite for growth and the way customers crave their menu offerings, it’s a good bet many of these concepts won’t be microchains for long.

A you start planning for 2018, don’t let the foodservice industry’s slower growth rates lull you into a false sense of security. Fueled by a consumer whose favorite menu item is change and operators’ insatiable competitive drive, expect the pace of change to keep accelerating.