US Food Service Industry Outlook

Outlook 2015 - US Food Service Industry - By Joe Dunbar

Our industry has absorbed the impact of the supply chain adding health insurance coverage. Most distributors now have complied with the ACA provisions. The food distributors have passed these increases on to restaurant owners and caterers. The record drought in 2013 and the related poor corn crop had a major impact on protein prices during the first 3 quarters of 2014.

Dunbar Associates Our industry has absorbed the impact of the supply chain adding health insurance coverage.  Most distributors now have complied with the ACA provisions.  The food distributors have passed these increases on to restaurant owners and caterers.  The record drought in 2013 and the related poor corn crop had a major impact on protein prices during the first 3 quarters of 2014.

Fortunately, the corn crop in 2014 was robust and we can all expect a positive impact on protein prices in 2015.

Given the high 2014 food prices, current low grain prices and the supply chain's early compliance with the ACA requirements, I expect low or negative food cost inflation in 2015.

Minimum wage legislation at the state and municipal level has raised labor costs for many operators.  Health care expenses are on the rise as companies offer minimal coverage to previously uninsured employees (skinny plans and low cost HMOs).  Labor costs will rise in 2015 in dollar terms.

The current oil glut has had a major impact on transportation costs.  Distributors will pass along energy savings to restaurant operators.  Delivery concepts will benefit from lower prices for gas.  Customers will have more disposable income.  The drop in energy prices will provide a needed boost to our industry in 2015.

As the unemployment rate continues to fall, consumer confidence rises.  I expect modest improvement in the employment market with a drop to 5.5% for the unemployment rate.  

Americans are slowly experiencing growth in wages.  The new college graduates will enjoy a better job market.  Previous graduates have adapted to their rough start by staying single in higher numbers.  Take-out, delivery, fast casual and bakery cafes will continue to see plenty of sales growth.

In January, I resolved to lose 12 pounds during the year.  My success in accomplishing this goal came at the expense of beef consumption.  Personally, I did not go out to have a steak dinner in a restaurant during 2014.  Even at home, my family has opted for seafood for most celebrations.

Many of my fellow baby boom generation are increasing their consumption of vegetables.  Locally sourced, organic vegetables will continue to attract diners in 2015.

Joe Dunbar
(800) 949-3295
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www.foodcostwiz.com

www.joedunbar.com



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