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Diving certificate:
- The International Foodservice Manufacturers Association forecasts for the entire restaurant segment Growth of 0.5% compared to 0.8% in the previous year in terms of operators’ dollar purchases, the organization said in a news release Tuesday. The growth is being driven by continued demand from higher-income consumers for restaurant dining.
- Growth of 0.7% is expected for quick service restaurants, while growth of 1.3% is expected for fast-casual restaurants. This represents an upward revision of the 0.9% growth forecast for fast-casual restaurants published by the organization in February.
- The IFMA lowered its inflation forecast for 2024 to 3.8% from 5% in February.
Diving insight:
The IFMA acknowledged that one of the biggest challenges facing restaurants is the recent decline in customer traffic. Low-income households continue to limit their spending on food services, which has prompted many quick-service restaurants to offer value-based platforms, such as the $5 meal deals offered by McDonald’s and Burger King.
However, early results from McDonald’s Value Platform have not yet shown a measurable impact on comparable-store sales, despite the slight increase in customer traffic. Last quarter, McDonald’s U.S. comparable-store sales fell 0.7% – the first decline in this key metric since 2020.
Despite the push for more affordability, fast casual, which doesn’t focus as much on value, will still outperform QSRs, as we saw last year. Chains like Wingstop and Chipotle continue to outperform the entire industry in terms of comparable-store sales. Wingstop saw comparable-store sales increase nearly 30% year over year in the second quarter.
Mid-priced chains are expected to decline 0.7%, while the casual dining segment will be flat as consumers shift to cheaper offerings, the organization predicted. Customer traffic has declined across the casual dining segment, with BJ’s, Denny’s and Outback among the chains that reported negative comparable-store sales in the second quarter.
Bright spots in the restaurant industry are the onsite segments, including colleges and universities, and lodging, which are expected to grow 2% and 2.8%, respectively. IFMA said these growth rates are largely higher because the sectors recovered more slowly from 2020. However, these non-traditional locations have attracted interest from various chains such as Focus Brands and A&W, which have opened locations at colleges and universities. TGI Fridays plans to open more restaurants in hotels.
IFMA worked with Datassential, a foodservice research firm, to create its forecast models. The models were also reviewed by operators from five IFMA Foodservice Leadership Councils.
