Restaurant Industry Update
SUMMARY: Restaurant recovery continues through adaptation, smart pricing strategies, and embracing 3 rd party delivery. Distributors are broadening their offerings to stay relevant as Operator needs rapidly evolve.
COSTINGLESS TO DINE OUT THAN IN The price gap between restaurants and retail groceries remained at 5.5 percentage points in August, the largest in favor of restaurants in 40 years (CPI). Prices for food away from home, or restaurants, rose by 8% year-over-year in August, up from July’s 7.6%, compared to a 13.5% year-over-year increase in grocery prices. This gap is allowing restaurants to continue to take price increases. ( Nations Restaurant News, Bureau of Labor Statistics) 3RD PARTY DELIVERY VITAL TO RESTAURANT SURVIVAL DoorDash’s latest Economic Impact report, published August 30, states the company worked with 500,000 US restaurants and businesses last year. 58% of those businesses in-turn state that their revenue would have declined without DoorDash , a response that counters some negative press about delivery service fees and speaks to strengthening sentiment about the necessity of off-premise meal delivery in the restaurant industry. (NRN)
DISTRIBUTOR PRODUCT OFFERINGS GROW
Our growing/new customer base is requiring us to carry more products
Our current customers are demanding a greater assortment of products
Chains are requiring more custom brands
70% of Foodservice industry Distributors surveyed by Technomic answered they have increased the number of SKUs in their portfolio since the start of the pandemic. Operator and consumer demand are the primary catalysis of SKU additions.
Shortages in many product areas are requiring us to fill in with more SKUs in those areas
We are getting involved in more categories
LEGISLATION TO DRIVE DEMAND January 2023 will bring bans on single use plastic items across Canada, and on foodservice products made with added-PFAs in California, New York and Washington. Demand for substitute products will shift in Q4 2022 as operators and distributors prepare for the new laws to go into effect.
RESTAURANT RESILIENCE: INSIGHT FROM AN INDUSTRY CEO “Rising food prices will eventually affect consumer restaurant spending. It’s a simple supply and demand equation. However, (#1) the consumer certainly has been relatively resilient thus far. (#2) Any restaurant still around today has also proven its resilience, as it has made it through the last few years of the pandemic. And (#3) with unemployment levels still near record lows, consumers still have disposable income.”
Dante DiCicco, Founder of Zitti, a restaurant industry supply chain service
Q4 2022 Market Update
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