If you’re a baker supplying the foodservice industry, be prepared for things to go from bad to worse, says Dan Malovany, editor.

If you’re a baker supplying the foodservice industry, be prepared for things to go from bad to worse.
    At least, that’s the case in many segments in the restaurant industry. For wholesale bakers who service these segments, the food industry is anything but recession proof. This point is especially true for producers of breads and rolls, desserts and even snacks for upscale coffee chains.
    In fact, Chicago-based Technomic expects 2009 to be “the worst year for foodservice” since it began tracking its performance in 1972.
    Specifically, this year’s foodservice sales are expected to decline 2.2%, according to the firm’s revised figures. Last year, the industry’s sales grew a paltry 0.3%.
    Full-service restaurants will take the biggest hit with sales tumbling 6% compared with a modest decline of 2.5% in 2008. During the past six months, the casual dining and fine dining establishments reported softening sales while fast food restaurants continue to do well as economically challenged consumers spend less when they go out. However, limited-service restaurants, which include sub shops and quick-service chains, won’t see any growth this year.
    The travel and leisure segment, specifically hotels, also are getting hammered by what appears to be a prolonged and painful recession. In fact, this segment’s 2009 sales are forecasted to tumble 5.1% as consumers stay closer to home and businesses eliminate anything but necessary travel expenses. In resort destinations such as Las Vegas, Hawaii and Florida, thousands of hotel and restaurant employees have been laid off as business, in some cases, has slid upward of 25% compared with this same time last year.
    Wholesale baking companies that supply these channels report that business has tumbled since September. More recently, several bakers have noted that sales have dive bombed since the beginning of January.
    Here’s the bad news. The worsening unemployment picture, coupled with salary cuts and reductions in business expenses, only means more nasty times ahead.
    Yes, conventional wisdom says the food industry is recession proof because people have to eat, but they don’t have to go out to eat.
    See www.technomic.com for more information.

Dan Malovany, editor