(1888PressRelease)
March 27, 2008 - Raleigh, NC: Orrick Nepomuceno, CPC, managing partner of KAON Consulting, Inc., announces their predictions for the restaurant industry in 2008. The start of 2008 has already set an unsettling tone for the remainder of the year. Economic downturn and recession are often discussed in the media, leading KAON Consulting to predict that:
1. Sluggish sales growth will continue for 2008. The restaurant industry overall will see very conservative growth across all segments (casual, quick casual, quick service and fine dining). According to National Restaurant Association (NRA) estimations, the industry will see only a 0.9% sales growth for 2008. Although more Americans are spending a higher percentage of their disposable income allocated for food then ever before, most households will be less likely to eat out several times a week. Most likely, they will eat at home and save instead. Even if the President's economic stimulus package does pass and Americans see a few extra spending dollars, many economists believe that most households are barely making ends meet. Bottom Line: Americans will have more disposable income in their wallets, but will probably consider saving instead of spending.
2. Increased energy and wholesale food costs will have a negative effect. With the price fluctuations in crude oil, lower and mid level-income households will feel a tighter pinch on spending disposable income on dining out as they will inevitably be hit hard with increased gasoline prices. Studies have shown a direct correlation to slumping restaurant sales and the increase in gasoline prices. Additionally, 2007 saw a nearly 8% increase in wholesale products. Much of this cost was eventually passed on to the consumer in higher menu prices. Most estimations see wholesale food costs to remain high for 2008, as well. Bottom Line: Households will get a double hit with transportation and dining expenses.
3. Technology will continue to advance even more rapidly than in previous years. Companies will look to the Internet for connecting with customers in more ways than before. Traditional print and television mediums will drive consumers to websites for offerings and coupons. Online ordering will become more robust as mobile handheld devices, such as the iPhone, have web browsing capabilities similar to their desktop versions. Also, a “Facebook” and “MySpace” type of social networking will become more prevalent with company sites where consumers can create online profiles. Bottom Line: The restaurant industry has a long way to go before it catches up with other industries in terms of technology, but there will be noticeable growth.
4. Recruitment and retention will be of a lesser concern. The restaurant industry has always been a labor-intensive industry with recruitment and retention typically being the biggest concern among most hiring managers. But for 2008, according to NRA predictions, the industry will see a relatively small increase (0.9%) in the employment rate. Coupled with a slowing economy, job creation will be less than in 2007. Bottom Line: Many operators' concerns will be moving towards cost reduction in order to stay competitive.
5. The industry will be bullish on coffee bars. One segment, although relatively small, the Snack & Non-Alcoholic Beverage Bars (Coffee and Dessert bars), will see higher than normal growth compared to other segments. Bottom Line: Companies will look to find niche segments where there is little or no saturation.
6. Global cuisine will be on the rise. At a recent conference of Executive Chefs across America, most commented on smaller sized portions and the introduction of ingredients from different parts of the world. Ethnic cuisines moved away from the traditional one found in the US to regions such as Latin America, the Mediterranean, Middle East and Southeast Asia. These chefs also commented on utilizing more local produce, sustainable seafood and grass fed beef and poultry. Bottom Line: American diners are becoming more savvy and demanding more exotic flavors when they go out.
7. Fat is not in. Americans are demanding healthier foods. Look for menu offerings at current concepts to reflect this trend, but also expect new concepts such as Seasons 52, to emerge and fully embrace this. With obesity in America on the verge of becoming an epidemic and local municipalities looking to stiff arm the industry into removing trans-fats and other harmful foods, look for the restaurant industry to try and get ahead of the curve on the food it serves. Bottom Line: Expect local municipalities to continue to embark campaigns to reduce the consumption of trans-fats.
“Although I firmly believe that the restaurant industry is strong and has been through this before,” stated Nepomuceno, “there are external factors that will ultimately effect the food service and restaurant industries, such as the troubled real estate market and increasing fuel prices. It will be interesting to see how things unfold this year with the shaky economy. I look forward to seeing how businesses adapt and the innovation that will come from it.”
About KAON Consulting, Inc:
KAON Consulting is an executive recruiting firm focused on securing talent in the food services sector. The firm understands the importance of helping companies build great teams to become successful in today’s changing marketplace, which Orrick Nepomuceno, CPC, managing partner of KAON Consulting explores in his book, Hitchhiker in the Corner Office. With more than 15 years experience in the food and hospitality industry as a pastry chef, award-winning entrepreneur and consultant, Nepomuceno has developed professional relationships with many executives in the industry. For more information about KAON Consulting, please visit
www.kaonconsultinginc.com.
Related links:
www.kaonconsultinginc.com
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