Technomic cuts '03 restaurant growth forecast

June 12, 2003

CHICAGO -- Restaurant industry research firm Technomic, Inc., has cut its 2003 foodservice sales forecast from 3 percent nominal growth to 1.3 percent, less than half the gain it originally anticipated.

According to the ID Management Report, the growth rate is the lowest rate of increase in 30 years of tracking the industry and below last year's nominal growth rate of 2.4 percent.

"We are in a period of industry maturity," Bob Goldin, Technomic executive vice president, told ID. "We have seen increased evidence of consumer burn-out -- the same old menus and venues, especially in quick-serve."

The industry is stable and resilient, he pointed out, but its growth rate has been decelerating for years. "Lifestyle and demographics still favor it -- but 3 to 4 percent growth is what's realistic at this point, for the long term."

The quick-service segment -- which Goldin said accounts for 33 percent of the entire restaurant industry -- has taken a 1 percent hit this year.

The limited-service sector is expected to suffer as well. Technomic cut its 2003 forecast for its growth from 3 percent to 1.5 percent. Growth for full-service restaurants was scaled back from 4.5 percent to 3 percent.

Meanwhile, the ID report said the Washington, D.C.-based National Restaurant Association sees better times ahead. According to its monthly Restaurant Performance Index, restaurant owners "remain optimistic about the direction of the domestic economy." The RPI improved 1.7 percent in March and 0.7 percent in April, which together are the highest levels achieved since October of 2002.

Additionally, Port Washington, N.Y.-based NPD Group, a market information company, said its consumer spending survey for the week of April 29-May 6 shows people are "less cautious" about eating out than prior to the war with Iraq. Fourteen percent say they plan to spend more at full-service restaurants in the next three months; 12 percent say they would spend more on fast food.

However, "economic anxieties" still exist. Some 49 percent of consumers say they would spend about the same at full-service restaurants and 37 percent indicate they plan to spend less on these occasions.

Topics: NAPICS , Operations Management

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