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Monday, December 30, 2013

Outlook 2014 - American Food Service Industry

We can expect more major weather events in 2014.  These events will have a major impact on some pieces of the food cost puzzle.  In 2013, the early South Dakota blizzard had a huge impact on beef prices during the fall.  Corn crops rebounded from the 2012 drought to record an above average harvest.

The weather was kinder to New Jersey and Long Island in 2013.  The hurricane season was relatively mild when compared to recent years.  Here in the Mid-Atlantic states, we are experiencing a cold finish to 2013.

I expect the unemployment rate to continue declining due to several factors: the trickle of early baby boomers electing early retirement; the recent budget deal approved by Congress; increasing capital projects by US corporations; and, a shift in service sector labor force composition to more part time workers and fewer full time workers.  A one percent improvement is likely.  We may see a 6% rate by early 2015.

The political battles for control of the House and Senate should help media companies.  It's incredible how much a hard fought campaign for a Senate seat costs.

Government is a major employer in my region.  Restaurants took a hit during the shutdown.  Hopefully, 2014 will have no adverse impact from a shutdown.  If uncertainty wanes, the entire country will benefit from higher confidence - both consumer confidence and corporate confidence.

As the employment picture brightens, the restaurant segment will see higher demand.  Health care coverage remains a very hot topic with restaurant owners and partners.  Demand for labor saving equipment should see excellent growth in the near term.  Increased selling prices, productivity improvements and flexible staffing will help keep margins from crashing due to the increase in health insurance costs.  Many disagree but I do not envision a crisis.

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