Foodservice Industry
Q3 2024 Market Update
SUMMARY: Backlash to high menu prices is slowing growth, but hiring and optimism are strong
Technomic’s Long Term Forecast published in May, predicts that for at least the next 18 months, the Restaurant industry will deal with slowdowns in response to high menu prices. Limited-Service Restaurants promise better longer-term performance expectations, better than other segments, however, because limited service has been very aggressive at implementing price increases, it’s not any longer seen as the default trade-down option for price-conscious consumers. Full-Service Restaurant rate of growth is expected to decline in 2024 as that sector deals with the same dilemma as LSRs, ultimately returning to tempered growth moving forward next year. Growth rates between chains and independents will not be greatly dissimilar. 2024 will bring another 1,500-plus net closures to the restaurants and bars sector. Although LSRs are expected to add some 2,800 to their total in 2024, FSRs will show a net decline of almost 4,800 — the most since 2021. Slow traffic, high rents and resumption of rent payments are all reasons for this aggressive closure rate forecast. A third of the Top 500 restaurant chains declined in number of locations in 2023, more than seen in 2021 and 2022 and the pace of retrenchment has continued in the first half of 2024. (Nation's Restaurant News)
Restaurant hiring continues to outpace pre- pandemic numbers with nearly 69,000 (0.6%) more than February 2020. The full- service segment continues to lag in full recovery from deep pandemic cuts, however, with FSR employment levels in April 2024 4% below February 2020 levels. 937,000 job openings remain in the accommodation and food services sector. (National Restaurant Association) 90% of 500 restaurant operators surveyed by Technomic earlier this year are confident their business will survive the next six months. This figure is up from 74% when the survey was conducted last November. (Technomic)
CONSUMER PRICE INDICES 12-MONTH CHANGE
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2023 2024
Food at Home
Food Away from Home
Technomic
Driven largely by backlash over meal price inflation and the resulting decline in restaurant traffic, in early June Technomic lowered its January 2024 foodservice industry growth forecasts for FSRs from 4.4% to 2%, and for LSRs from 5.9% to 4.9%, for the remainder of the year. This despite steady decline in away-from-home meal pricing over the past year – operators surveyed still feel prices are too high for most patrons.
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