Improvement in Employment Will Signal Foodservice Recovery

Looking for an economic indicator that the foodservice industry is about to enter a fiscal recovery period? On a national regional level one of the first indicators foodservice professionals should monitor is unemployment.

“The majority of the industry’s challenges are related to unemployment, which isn’t expected to improve quickly,” says Bonnie Riggs, NPD restaurant industry analyst and author of the What to Expect When Economic Recovery Begins report. “If you’re unemployed, you’re not going to be picking up a quick breakfast on the way to work or eating out at lunch. Dining out, overall, is a luxury you can’t afford.”

One way foodservice professionals can keep tabs on the national and regional unemployment statistics is through the U.S. Department of Labor’s Unemployment Insurance Weekly Claims report. Released every Thursday, this report outlines the overall number of people filing for unemployment insurance the previous week, among various other helpful statistics.

So long as job security remains top of mind for consumers, though, price and value options will remain a priority for them regardless of their employment status. Data from NPD’s most recent CREST study supports this notion.

When NPD asked consumers, who claimed that they have cut back on restaurant visits, what would entice them to visit restaurants more often, here’s what they listed:

Price Discount on Regular Menu Items – 31 percent
Coupon for Free Item, No Purchase Necessary -  24 percent
Dollar/99 cent offerings – 23 percent
Variety of price offerings – 17 percent
Smaller portions at lower price – 10 percent

The good news is that it appears as if foodservice operators are paying attention to their customers’ needs. In FE&S’ 2010 Forecast Study, 71 percent of operators surveyed said they have adjusted their menu strategies to include value items. And 34 percent of operators said they have adjusted portions as a response to the challenging economy. That ability to adapt to the market conditions bodes well for the long-term health of the foodservice industry, even if the near-term outlook is not as cheerful as we would like.

“It’s going to be awhile before the industry can move away from deals and other customer incentives,” says Riggs. “But the industry has been in this place before, and always finds innovative and creative ways to bring itself out of it.”