It's Not Over Until It's Over

Last month Federal Reserve Chairman Ben Bernanke made global headlines when he told The Brookings Institution that the recession is "very likely over." If the recession is, in fact, over, what does that mean for the foodservice industry?

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In the short term, this ray of economic hope probably does not mean much to the foodservice industry. Foodservice operators' equipment and supplies budgets are expected to decrease by 2.8 percent, on average, in 2010 according to FE&S' annual Forecast Study. In contrast, 39 percent of the operators surveyed anticipate an increase in their food and beverage expenditures, while 45 percent anticipate this budget item will remain flat. Overall, we project that foodservice equipment and supplies sales for 2010 will remain flat when compared to this year.

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Naturally, this means another year of belt tightening for the consultants, dealers, manufacturers, reps and service agents that serve the foodservice operator community. Exactly how long it will take for the industry to return to a period of real, sustainable growth remains to be seen. And unlike Bernanke's proclamation that the recession has ended, I doubt that anyone in the foodservice industry will make a similar statement announcing that the community has entered a recovery mode anytime soon. The foodservice industry's transition to an overall growth mode will likely be very gradual as it will take time to restore consumer confidence to a point where they are purchasing food prepared away from home at a greater level than they are today.

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There's no disputing that consumers have altered their purchasing habits: 58.4 percent say they are choosing less-costly restaurants in response to the down economy, according to Restaurants & Institutions' 2009 New American Diner Study. But consumers' change in purchasing habits goes beyond trading down. Consumers also are cutting back on what they order: 74.3 percent say they skip appetizers to save money. And consumers continue to scrutinize the very notion of eating out. In fact, nearly one-third say they do without away-from-home meals to make ends meet.

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For foodservice operators, the key to recovery is understanding how their core customers have altered their consumption patterns and react accordingly. As consumers watch every penny spent on food, the addition of value-menu items and limited-time offers represents a terrific short-term option. Meanwhile, it is important to balance these steps with a long-term, more strategic approach.

As their customers go through this type of evolution, foodservice equipment and supplies companies must commit to getting closer to the operator base they serve. During challenging times like these, it's easy to cut back the travel and manage the other expenses. While staying closer to the office might be dollar-wise for some companies, cutting back on customer contact can't be good for any organization.

Today we often bemoan the fact that information technology, in the form of email, cell phones and the like, has considerably sped up the pace of the business world compared to just a few short years ago, forcing us to multi-task more than ever before. While these tools have undoubtedly injected a greater sense of immediacy to the way we do business and communicate with one another, they also present you with the opportunity to remain connected with your business partners during a time when traveling to regularly meet with them might not be possible.

That way, when the recession is finally over for the foodservice industry, you and your company will be poised for immediate growth.

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