ROSEMONT ILL. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Seeing no relief in sight for the housing market, Paul Kasriel, director of economic research for Chicago-based Northern Trust Global Economic Research, predicted that consumers’ excessive credit card debt and their auto loan obligations and defaults would be among a range of increasing problems that would further suppress discretionary spending. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
“Households have been spending beyond their means since the late ‘90s,” Kasriel told attendees of the 7th annual Technomic Information Services Restaurants 2008 Trends & Directions Conference. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
However, he also predicted that consumer overspending will decline in a major way over the next five years, though perhaps some of that would reflect lower incomes instead of newfound fiscal prudence. Kasriel forecast that the unemployment rate, which was 5.5 percent in May, would rise to 6 percent by the end of 2008. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
On the positive side, he foresees some moderation in energy prices in the near future. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Technomic Inc. president Ron Paul, in remarks that launched the conference, cited restaurant-specific implications of broader economic indicators. He pointed out that the foodservice industry will end the current year with its lowest rate of growth since 1991, 2.1 percent. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Paul said the November elections, no matter their outcome, would exert only minor effects on the economy, compared with other factors. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Addressing the far-reaching impacts of inflation and margin erosion, Bill Lapp, founder of Advanced Economic Solutions, said that “hopefully, this is the worst of the pain we are going to feel” in the wake of a doubling of commodity prices, the worst housing situation since World War II, lagging employment growth and sharp declines in consumer confidence. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Still, he predicted that food inflation could rise an average of 7.5 percent during the next five years, marking the highest climb since its acceleration by 8.7 percent between 1972 and 1981. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
He cautioned that beef, pork, poultry and dairy prices are yet to see their peaks, due to increasing world demand for corn for livestock feed and ethanol, and because crop yields are expected to fall by about 10 percent this year following the massive flooding of corn fields in the Midwest. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
“There is no risk management strategy you can employ,” Lapp said. “Weather and government policy are uncertain, but higher food inflation is imminent.” —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Lapp credited the National Restaurant Association and the Grocery Manufacturers Association with making headway in their “smear campaign” against the use of corn for ethanol, and he expressed hope that a new Congress in 2009 will act on their demands for a revised biofuel policy. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
In a conference session on consumer price sensitivity and pricing strategies, Technomic researchers Kevin Higar and Heather Miller outlined implications of menu price inflation and said opportunities exist to increase prices, though operators need to evaluate their potentially detrimental effects on sales. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Before raising prices, operators need to understand what food and nonfood factors create their concepts’ specific consumer expectations and whether the concept’s value equation will support the increase, Higar and Miller stressed. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
They advised avoiding infrequent or significant price increases, saying that smaller, more frequent increases will be more transparent and less jarring for most consumers. Price-sensitive consumers may cut back on their number of restaurant visits or use takeout to hold the line on spending. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Higar also led a session on the changing face of takeout, noting that it can work in all restaurant segments if made to fit consumers’ lifestyles and provide solutions to their needs. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Technomic researchers said consumers the Chicago firm had surveyed last year had stated the preferences for specific takeout food categories, in the following order of preference: pizza, burgers/sandwiches, Chinese, Mexican, breakfast foods, Italian, seafood/fish, other Asian, and steak. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Although quick-service restaurants are most used for takeout, the food-to-go option is increasing in the fast-casual, family and casual-dining segments, conference presenters said. They noted that consumers are more likely to choose casual-dining takeout on weekends. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
The increasing practice of eating takeout food in the car is influencing product development and packaging, Higar explained. For instance, packaging increasingly is being designed to fit into a car’s cup holders. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
“Faulty packaging can ruin a takeout meal,” he observed. “Think about how you can make your takeout customer feel special, like they do in full-service.” —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Higar cited examples of special touches some chains are employing to please takeout customers: Pei Wei Asian Diner may offer free beverages to customers waiting for takeout orders; Chili’s guarantees order accuracy; MooYah Burgers & Fries labels each item with a number that matches one on the attached receipt; and In-N-Out Burger provides a lap mat. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Wade Hanson, a senior Technomic manager, warned attendees of the growing threat from “retail meal solutions,” or RMS—grocers that provide more ready-to-eat or ready-to-heat foods. Supermarkets increasingly are offering RMS, usually positioning those menus against offerings from the limited-service restaurant segment, but also targeting customers at the high end of the price spectrum, he said. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
Some RMS leaders are boosting the convenience factor by providing separate entrances, drive-thrus and walk-up windows as well as separate express check-out lines, and some are even providing designated parking and offering delivery, Hanson said. —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.
RMS, he warned, “is a viable threat that shouldn’t be underestimated.” —Prominent economic researchers and forecasters gathered here this month to warn restaurant operators they should prepare for the likelihood that the U.S. economy will stay in a recession through the end of 2008 and probably into 2009.