Technomic Trims US Restaurant Business Growth Projections

As consumer traffic declines, it appears that both 2016 and 2017 will not be as positive as first anticipated, based on Technomic’s United States restaurant industry forecast released in May of this year. In particular, full service restaurant growth has been shaved by 1.4 and 0.8 points for 2016 and 2017, respectively, to where total segment nominal growth for each year is expected to be 3.5%. With inflation expected to be 2.7% in both years, real growth will only be 0.8%.

“Major full service chains, especially in the casual dining sector of the market, are really struggling,” said Technomic’s Joe Pawlak. “Consumer economic uncertainty, value issues, and undifferentiated positions are putting strains on many full service chains. However, independents seem to be holding their own as consumers are gravitating to these establishments due to their unique offerings, local orientation and strong value propositions.”

technomic logo 2In the limited service sector, the Chicago, Illinois-based management consulting company’s nominal projections have been reduced to 4.5% and 4.9% for 2016 and 2017, respectively (from 5.5% and 5.7%). In particular, a slowdown in the fast casual sub-segment is driving these downgrades.

“Menu prices at some fast casual restaurants have risen to a level where the perceived value for a typical consumer has eroded,” said Technomic’s Erik Thoresen. “Add to that the struggles of Chipotle, which represents a sizeable share of the fast casual industry, and it was evident that forecast revisions in for 2016 and 2017 were necessary.”

Despite these changes, fast casual still remains among the fast growing sectors of foodservice.

In addition to restaurant industry revisions, Technomic also reduced its growth projections for the hotel foodservice segment, taking down 2016 growth from 7.3% to 5.3%, and its 2017 forecast from 6.8% to 5.1%.