CHICAGO -- At a special session for its Foodservice Planning Program clients in mid-May, Technomic shared its latest expectations for foodservice industry performance, by segment, through 2014. Since releasing its last forecast in January 2013, the firm has seen slight slippage in 2013 growth expectations for the overall industry, from a nominal 3.9% (in January) to 3.8% (current projections). But some improvement is expected over the longer term, with 2014 industry growth forecasted at 4.1%.
"In general, foodservice is still facing headwinds that are tempering consumers' willingness to eat out," said Joe Pawlak, Technomic vice president. "Slow employment gains and stagnant disposable personal income are a drag on growth. Coupled with the January tax holiday expiration and pending government spending cuts from sequestration, consumers are more cautious about their own discretionary spending."
Pawlak noted that better foodservice growth is anticipated in 2014, but consumer uncertainty surrounding their share of costs resulting from implementation of the Affordable Care Act are expected to moderate industry results.
There are also several bright spots in the industry, according to Technomic. Looking at various foodservice segments, Pawlak said that sales growth for independent restaurants has been outpacing chains. College and university, hospital, senior living, lodging and supermarket foodservice are all expected to outperform restaurants and bars this year and in 2014.
Click here to view a summary of the latest industry figures.
Meanwhile, recent research by Chicago-based Technomic shows that group purchasing organizations (GPOs) in the foodservice channel continue to grow in size, scope and influence. From 2009 to 2012, foodservice operator purchases made through GPOs significantly outpaced the broader industry growth rate. Last year alone, restaurants and other foodservice operators made $19.7 billion worth of food, beverage and related purchases through these groups.
Defined as third-party organizations that negotiate discounts and aggregate purchases for operators in various foodservice segments, GPOs have benefited from the profitability challenges facing operators, who express strong satisfaction with the significant cost saving they are able to achieve via GPOs.
"While operators are definitely satisfied, we see mixed opinions among manufacturers and distributors serving the foodservice industry," said David Henkes, a vice president at Technomic and one of the study's authors. "For foodservice operators, compliance remains the biggest challenge, especially among independents where the preference is to make their own supplier and brand choices. While we clearly identified manufacturers and distributors that have been successful in growing with GPOs, other companies note that GPOs present challenges that require strategic solutions."
Gary Karp, executive vice president at Technomic and the study's co-author, said, "Best practices for manufacturers and distributors suggest that GPO participation should be viewed in light of a company's priorities and strategies. Not all manufacturers' or distributors' business models work with GPOs, but it is possible to grow and succeed with them if sound business practices are used."
GPOs have their roots in the healthcare foodservice segments, but have rapidly expanded into other markets including educational venues, lodging, recreation, and, more recently, independent restaurants. Among these segments, GPOs control 21% of purchases. Going forward, the growth in purchases controlled by GPOs is expected to outpace overall industry growth and could reach 23% to 25% of relevant purchases within three years.
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