“Ten years ago, we had Johnny Cash, Bob Hope and Steve Jobs,” goes a piece of Internet humor that circulated widely a few months ago. “Now we've got No Cash, No Hope and No Jobs.”
GRAVEYARD HUMOR ASIDE, that bit of ironic sarcasm did capture the experience of many households as they struggled with the housing crisis, a deep recession and high unemployment. While onsite foodservice was less affected than commercial restaurants, it still felt the impact of reduced workforce populations and consumer spending and efforts by institutions to reduce labor and operating costs.
The good news is that interviews with operators across the onsite community suggest a widespread if cautious optimism that business will be noticeably better in the year ahead.
“Last year the industry hit bottom,” says Darren Tristano executive vice president of the Technomic forecasting firm. “In 2012 foodservice will probably see modest real growth beyond inflation.” He notes that fast casual continues to show the best results and that brands seen as having less relevance could see declines.
Tristano underscores that inflation has affected food at home more than dining. “It is a better value to eat out today; it's still not cheaper to do so, but it's a better value than it was five years ago.”
In onsite, Technomic predicts that growth will be led by foodservice in hospitals (+5.1%), colleges (+4.5 percent), senior living (+3.5 percent) and K-12 schools (+2.0 percent).
There are other positive signs in the economy at large: manufacturing is in a modest resurgence, we're in the midst of an energy production boom, unemployment is coming down. Housing starts and construction numbers are up and many say the housing bust hangover could be wearing off by midyear.
Food price inflation was marked in 2011. Although food prices will likely increase 3-4 percent in 2012, some of last year's volatility will moderate. USDA forecasts that grocery store food prices will go up 3-4 percent, while food-away-from-home prices increase at a more modest 2-3 percent rate.
Tight grain stocks worldwide fueled last year's jump in egg, dairy, beef and pork prices. and grain supplies will likely remain tight this year. Also, farmers have been increasing their capacity to silo grain to gain pricing power with large corporate buyers. Commodity price declines are forecast in beef, dairy, coffee and cereal/bakery categories.
International forces will have much to do with commodity trends in 2012, partly because of growing global demand for protein and because the Fed's weak dollar policy encourages exports, believes John Barone, president of Market Vision Inc., a commodity analysis firm.
While food price inflation is always problematic, “at least it's something you can document to an administrator and can be partially dealt with via portion control and alternate menu options,” says one FSD. Harder to manage are increases in labor costs, which seem inexorable to many. Some operators are also concerned about continuing efforts to pass so-called “card check” bills and recent actions by the National Labor Relations Board (NLRB) that will make it easier for unions to organize and structure bargaining units.
Wellness concerns are becoming a real driver in almost every onsite operation, whether because of increased regulation, corporate efforts to restrain insurance costs, institutional initiatives or customer lifestyle choices. Meanwhile, the USDA, FDA and the U.S. Dept. of Health and Human Services are partnering on multi-year, sodium reduction initiatives.
Many organizations are implementing policies that increase health insurance rates for employees who smoke, exceed certain BMI (body mass index) standards or don't meet established cholesterol or lipid test scores.
The increased attention means more voices are weighing in on wellness policies, complicating the design of programs once left largely to foodservice departments. Operators in higher education, K-12, healthcare and business dining are frequently finding it necessary to deal with multiple committees and constituencies, often with contradictory views on the best way to improve the food choices of customers.
Food trends remain on the same course they've been on, with the latest NRA/ACF “What's Hot” survey of chefs predicting a continuing emphasis on locally-produced and sustainable foods, farm/region-branded items, international street food, small plate grazing and nutrition-inspired trends. (Download the full survey report here: http://tiny.cc/c7szz).
Here's a look at some major individual segment trends: