Higher beef prices, mobile ordering on the menu for 2014
The greatest thing about writing a prediction piece is that there is no downside. The writer appears important and on-trend, a true "pundit." If you are right, you reinforce your punditry and if you are wrong, no one remembers ... so here goes.
Moderate sales growth
Outside of Wall Street, which had a great year, most Americans had a moderate 2013. There has been some improvement in the economy, but not the type of robust recovery economists expect at this point in the business cycle. Millions are still out of work or under-employed. Interests rate are beginning to rise and of course, the rollout of Obamacare has many feeling uncertain of their healthcare costs for the New Year. Technomic predicts a moderate 4.1 growth rate for 2014. Not bad, but, ingredient and labor costs are rising faster.
Beef prices continue their run
Although food prices fell 4.4 percent in 2013, beef prices rose over 13 percent. The cycle for beef cattle is long as birth to maturity takes several seasons. The drought of 2012, spiked corn prices and other feed stock so ranchers cut back. Now with an improved economy, beef consumption has risen while supplies remain low. The USDA predicts beef prices to increase an additional 3.5 percent in 2014.
Chicken to the rescue
In response to beef costs, many large foodservice chains are promoting chicken to offset food cost. Restaurants will pay 5 to 10 % less for chicken next year, said David Maloni, the President of the American Restaurant Association Inc. The decline may be curbed by rising demand as consumers seek a cheaper alternative to beef and as restaurants add more chicken to their menus. McDonald's rolled out chicken wings in October. By any measure, the promotion was a dismal failure; but don't count McDonald's out of the chicken wars.
Do one thing and do it really well. As consumers' attention spans have gotten shorter, some foodservice operators have capitalized on entering the market with a single item to gain a reputation and buzz. Macaroni and Cheese, Grilled Cheese Sandwiches, Dumplings, French Fries and of course, Cupcakes. Look for this trend to continue and for savvy operators to duplicate through in-store promotion of single entrée items.
What may have begun as a West Coast-elitist trend has spread throughout the land. Consumers are increasingly aware that the personal is political — that their choices and those of the restaurants they patronize regarding food, treatment of animals, sustainability, and the environment has real consequences. Find one or two elements of your purchasing that embrace green or sustainable and promote it so your base sees you are on trend.
Fed up with waiting in line, consumers use their mobile devices to seek and order food. Operators who think this is a fad will suffer the consequences of their old-school opinions as their competition outpaces them. Research online and mobile solutions and implement.
There is much to sort out for 2014, but what seems apparent from the beginning is that the consumer is very much in charge of what they want to buy, how they want to buy it and that costs continue to rise in an uncertain environment. Success is 2014 will come for restaurant operators that listen closely and keep their inventories tight but ready to react to quick jumps in sales. Best of luck for a bright New Year.
Ed Zimmerman Ed Zimmerman is a pizza industry veteran and President of The Food Connector. His almost four decades of foodservice experience includes food manufacturing and distribution leadership, food industry technology, marketing services and restaurant and grocery operations management.