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The Onsite Outlook for 2014

The Onsite Outlook for 2014

Onsite segment growth will be some of the best in foodservice, but segment-specific issues will complicate the year ahead.

The year just past—2013—was in the end a good one by recent standards, if not without its share of economic ups and downs. Foodservice markets benefited as consumers grew more optimistic about the economy, received lower energy bills and benefited from the Fed’s continuing low interest rate policies.

Most economists expect 2014 to be even better for most businesses, although investors know the stock market boom is getting old in the tooth. But a significant market correction, should it come, won’t have a major impact on food sales away from home so long as consumer income, expectations and employment remain on their current trajectories. In many ways a correction would even be healthy, re-setting the market’s balance point while the economy is still on the grow.


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In terms of a national “dashboard,” forecasts call for domestic 2014 GDP growth of 2.5-2.7 percent and perhaps even better. Housing and manufacturing continue to benefit from the recession’s pent-up demand.

Unemployment continues to decline slowly; as it edges closer to 6.5 percent, the Fed’s implementation of its long-awaited easy-money “tapering” will pick up, but not aggressively. Inflation will likely increase a bit in 2014, but still remain under two percent.

On the consumer front, spending is on the rise and will help boost foodservice sales 3.6 percent according to Technomic’s forecast. Onsite segments will continue to turn in some of the best results, especially in healthcare and higher education; in many cases their growth will exceed that of the commercial sector. Some other general trends:

Moderating feed costs and a bumper crop of corn this past summer are keeping a lid on chicken and pork prices (they may even drop in the second half of the year), but beef’s longer production cycle means it will remain pricey in the year ahead.

The Farm Bill was still making its tortured way through Congress when this article was written. Final decisions about agricultural subsidies could significantly affect feed, grain and dairy prices for years into the future. Farm Bill decisions will also measure Congressional sentiment—and level of support—for programs ranging from WIC and food stamp funding to grain category plantings and  food import protections.

GPO use will continue to expand as will a trend toward so-called “extendibility” of program pricing among segments, predicts Technomic’s Joe Pawlak. Meanwhile consolidation continues among traditional GPOs and corporate procurement entities, with some new players acting as secondary re-sellers of these programs.

For background information on these and other trends, go to ... FM FYI: Further Readings on General Trends Affecting Onsite Foodservice in 2014. 

As the Affordable Care Act rolls out, operators across the industry are keeping an eye out for unintended conseqences. Among those that some are predicting:

• a flood of early retirements by long-tenured staff who may now have affordable insurance options where none existed previously;

• a potential erosion of the longstanding benefit advantage institutional operations have had in recruiting culinary and other talent.

• a move by employers to no longer offer health insurance benefits to part-time employees or to spouses with other insurance options. With UPS making that leap, others—including some institutions and service providers—could follow as a way of reducing insurance costs.

• the potential growth of the part-time component of the national workforce at the expense of the full-time cohort

• efforts by employers to move from defined-benefit to defined-contribution healthcare insurance benefit programs, much as they have already done with traditional pensions.

Any or all of these consequences could have a significant impact on employee dining behavior, labor costs and availability, disposable consumer income and other factors that affect onsite dining programs.

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