A Look Ahead

It’s hard to believe this calendar year is about to come to a close. The foodservice industry got off to a fast start in 2013 thanks in part to The NAFEM Show in February and generally improving economic conditions.

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The momentum continued through the National Restaurant Association’s exhibition in May, through the summer months and deep into the fall. While growth was hard to come by for some, the industry featured pockets of success and, collectively, the foodservice community took a step forward. This happened despite the fact that the country’s leaders continue to project clouds of doubt over our nation’s economy.

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In the foodservice industry, operators will welcome 2014 with cautious optimism. While the generally improving economy brings cause for hope, operators will remain wary of a number of factors that could impact their business, according to FE&S2014 Forecast Study. These concerns include: Will food costs continue to increase? How will healthcare costs affect the operators’ businesses and the general economy? Is the economic recovery sustainable and will it become uniform geographically? Will there be mandatory minimum wage increases? And much more.

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For the moment, operators plan to modestly increase their foodservice equipment and supplies budgets, according to our study. This is due, in large part, to the fact that so many held off on replacing their equipment for so long. Much like their customers, operators remain in a very cost-conscious mode due to the list of factors mentioned in the paragraph above. This trend is even more prevalent in the non-commercial segment, where operators fear changes in the economic environment will impact their foodservice equipment and supplies budgets. Equipment and supply items that support sustainability initiatives will be nice to have but operators will place a premium on those items that will help them control or even reduce costs.

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Few observers project a breakout year for the foodservice community in 2014 but the industry will hold its ground and not give up any of the hard-fought gains it achieved the past two years. That means many operators will find themselves in a take-share environment, where in order to grow they have to lure customers from the competition.

Like their operator customers, the dealer community will enter the New Year cautiously optimistic. While 80 percent of dealers project higher sales in 2014, only 46 percent report an increase in booked business compared to the same time last year. Dealers also remain wary of a variety of factors that could impact their businesses and margins, such as increases in freight and shipping charges. Dealers also report continued margin erosion due to their competitors’ willingness to sacrifice profit in exchange for large-volume projects.

So what does 2014 hold for the foodservice industry? Well, the industry seems prepared to deal with some turbulence but exactly how much it can take remains to be seen. But those companies that keep building their business on value as defined by their customers should be well-positioned for anything the market throws their way.

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