Friday, December 3, 2010

Restaurant chains face a confluence of obstacles for growth in Q 1 2011.

While 2010 is winding down restaurant chains have been all smiles with frequency of visits on the rise and sales rebounding. Public restaurant chain stock prices have been on fire and there is hope in our beleaguered industry once again. All of us want this tend to continue.

Three issues could put a damper on those smiles. First unemployment continues to remain high and in fact ticked up again today. There is a direct correlation between unemployment numbers and restaurant growth/sales.

Secondly the retail price of gasoline is expected to reach $ 3.00 per gallon by the end of this year and could well stay there during Q1. The correlation between gasoline price and restaurant sales is direct and this up trend is not positive for restaurants either.

Last but not least is increased competition in the ready-to-eat and ready to heat prepared food niche. Companies the ilk of 7 Eleven are rolling out fresh prepared food. The convenience store sector led the foodservice industry in growth in 2009 and 2010 in large part because of new fresh food sales that drove consumer frequency.

Food manufacturers have been focused and working with Drug store and grocery chains on new fresh food products and portion packaging. In each case they are focused on new consumers and building loyalty for low-cost prepared food ready-to-eat and ready-to-heat options.

NPD group’s Ann Hanson said: “The frequency of meal planning is an indication that many purchase decisions are made prior to grocery shopping. Retailers and manufacturers who can help consumers address meal planning challenges have the potential to become ingrained in the family meal planning and shopping cycle.”

These new avenues of distribution combined with new meal bundling and low cost options provide a window of opportunity for those prepared and focused on the consumer. Restaurateurs will need to be prepared with a competitive set of options entering 2011 in order to maintain current momentum.

Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. For more on Steven A. Johnson and Foodservice Solutions® visit or on Facebook at Steven Johnson, BING / GOOGLE: Steven Johnson Grocerants or

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