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Technomic raises outlook for foodservice sales

Technomic Inc. has revised upward its forecast for U.S. foodservice industry sales this year, citing such factors as increased consumer spending and job creation.

The Chicago-based research firm said this week that it now expects foodservice sales in 2010 to grow 0.6 percent on a nominal basis, which assumes an inflation rate of 1.5 percent. Technomic had earlier projected industry sales to fall 1.6 percent.

In 2009, the industry’s sales contracted 3.5 percent in nominal terms, with an assumed inflation rate of 2.5 percent, according to Technomic.

Joe Pawlak, vice president for Technomic, said in an interview Tuesday that the revised outlook was based on several factors, including improved spending among consumers with incomes of $100,000 or more a year.

“There’s more consumer spending, especially at the high end of the market,” he said. “They have started a turnaround in terms of the viewpoint of what is happening in the economy, feeling more confident and spending more."

Pawlak pointed to sales improvements illustrated by surveys and public restaurant company reports, especially in the fine-dining segment of the restaurant industry. Other areas of hospitality, including hotel room sales, also are showing positive signs, Pawlak said, which indicates business and recreational travelers are loosening the purse strings.

He also cited increases in job creation and gross domestic product along with improving revenues at entertainment businesses like theaters and clubs.

Technomic’s original forecast last September of a 0.8-percent decline in industrywide sales this year, which it revised downward to a 1.6-percent dip in January, if realized, would have marked the first time that the foodservice industry recorded two consecutive years of sales contraction.

The revised forecast instead projects that total foodservice sales will rise from about $501.3 billion in 2009 to $504.3 billion in 2010, figures from Technomic indicate.

Pawlak said the revised forecast suggests that the restaurant industry has hit the bottom of its recessionary plunge, but he cautioned that “the recovery will be slow going forward.”

On a segment basis, limited-service, or quick-service, restaurants are expected to see 2010 sales grow 1.0 percent on a nominal basis, compared with a 0.5-percent decline in 2009. Full-service restaurants, meanwhile, are projected to grow sales 0.5 percent, compared with a 6.0-percent dive last year, Technomic said.

Click here to see the full breakdown of Technomic's foodservice sales projections.

Contact Alan J. Liddle at [email protected] and Ron Ruggless at [email protected].

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