Technomic reduces restaurant industry growth projections

Nov. 29, 2016 - by Monica Watrous

Technomic has reduced its restaurant growth projections for 2016 and 2017 based on recent declines in consumer traffic.

CHICAGO — Restaurant industry tracker Technomic has reduced its growth projections for 2016 and 2017 based on recent declines in consumer traffic.

In the limited-service sector, Technomic has lowered its nominal projections to 4.5% and 4.9% for 2016 and 2017, respectively, down from the original forecast of 5.5% and 5.7%. The downgrades reflect a slowdown in fast-casual restaurants, Technomic said.

Erik Thoresen, Technomic principal

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

Still, Technomic noted, fast-casual remains among the fast-growing sectors of food service.

On the full-service side, nominal growth is expected to be 3.5% for 2016 and 2017, down from 4.9% and 4.3%, respectively, as projected in Technomic’s restaurant industry forecast released this past May. Given inflation is expected to be 2.7% in both years, real growth is estimated at 0.8%, Technomic said.

Joe Pawlak, Technomic managing principal

“Major full-service chains, especially in the casual dining sector of the market, are really struggling,” said Joe Pawlak, Technomic managing principal.  “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.”

The hotel food service segment also has taken a hit, with growth projections reduced to 5.3% for 2016 and 5.1% for 2017 from 7.3% and 6.8%, respectively.