Huge financial sector write-offs and gloomy consumer sentiments. A slumping stock market and stalling growth of the GDP.

It’s in times like these that onsite foodservice, long one of the most stable parts of the consumer economy, is a welcome safe haven in an otherwise turbulent and uncertain economic storm.

Even as industry prognosticator Technomic, Inc. hurried to issue a revised-downward market forecast in mid-January, its onsite segment growth estimates—with the notable exception of those for dining in business and industry—remained upbeat (Figs. 1 & 2).

While the commercial restaurant sector is hunkering down for a tough 2008, Schools, Colleges, Senior Living and other onsite segments should see sales growth ranging from 4-8 percent.

Figure 1
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This article offers a sampling of the trends affecting business opportunities in these segments. Still, it’s a community that comprises a broad market with many subtleties; for more information, readers are referred to the source reports listed at the end of this article. First, a few “big picture” observations.

Cost pressures are top of mind for most operators. While economists may quibble over technical aspects of the consumer price index, the inflation rate and “core inflation” (which excludes food and energy costs), onsite directors don’t have that luxury. Most saw unexpectedly large food cost increases in 2007 and struggled to more accurately budget food costs for this year.

Wholesale food prices, forecast to increase less than one percent in 2007, rose over seven (Fig. 3) and many internationally-traded commodities, like corn and other grains, have soared in price. The full impact of this has yet to make its way through supply channels, but it has many food manufacturers worried.

Figure 2
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Rice futures are at a 20-year high. U.S. wheat stocks are at their lowest level in 60 years and corn prices have set new records. The effects of minimum wage initiatives have been aggravated by rising energy costs, putting additional pressure on wage demands. At the consumer level, the CPI is up significantly, and as the Fed tries to fend off a recession by lowering interest rates, a clear danger is that further inflation in the short term may be unavoidable.

On the frontlines, foodservice is facing price increase resistance as operators try to compensate with menu adjustments. The battle to make foodservice menu price increases stick will continue through 2008..

Figure 3
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A consumer-led, vs. a business-led slowdown. One difference between the current climate and the recession in 2000-01 is that “this looks like it may be more of a consumer-led, vs. a business-led downturn,” says Joe Pawlak, vice president of Technomic. “Given that foodservice is driven by consumer spending, there may be more of an impact.” If the past is a guide, “some customers will tend to trade-down to quickservice,” he believes.

Pawlak cautions onsite operators “to not stop innovating. In down markets, there is a tendency to focus on cutting costs and being more efficient. People sometimes forget to keep an eye on the top line. Consumers still want fresh and new menu options.”