Foodservice Strategies for Rising Food Prices

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					    Foodservice Strategies for
       Rising Food Prices


                  Mark S. Allen
                President & CEO

International Foodservice Distributors Association




 • IFDA is the foodservice distribution
   industry’s trade association based in
   McLean, Virginia

 • IFDA represents:
      – 170 broadline and systems
       foodservice distributors
      – Over 700 distribution centers
      – $100 billion in annual revenue




                                                     1
                                          Today’s Discussion




         Foodservice                          Industry       Restaurants      Vendor’s
           Today                             Challenges       Respond           Role




             The Foodservice Industry Today

                                                                     $558.3
                   Restaurant Sales Since 1970
                   Billions of Current Dollars                                 945,000
                                                                              Locations
                                                            $379.0


                                                   $239.3


                                          $119.6

                       $43.8


                        1970               1980     1990     2000    2008*

Source: National Restaurant Association




                                                                                          2
             The Foodservice Industry Today
                      Industry Sales Projection, 2008 ($558B)

                                                        Billion $

           Eating Places                                 376.7      67%
           Drinking Places                                 16.5     3%
           Managed Services                                38.3     7%
           Hotel/Motel Restaurants                         27.6     5%
           Retail, Vending, Recreation, Mobile             51.4     9%
           Other                                           47.8     9%
           Total:                                       $558.3

Source: National Restaurant Association




             The Foodservice Industry Today




Source: National Restaurant Association




                                                                          3
  Growth Fueled by Fundamental Shifts
                                      By the Year 2010




                   Aging            Rising Income      Ethnicity           Working
                   Population       30 percent of      Higher per capita   Women
                   +50 million      households over    foodservice         Continued though
                   people over 50   $50,000 (vs. 23%   spending among      slowing growth
                                    in 2003)           growing ethnic
                                                       groups




Source: IFDA 2010 Report




                              Opportunity Exists for
                               Foodservice Growth

  While Share of
  Food Dollars
     spent is
   approaching
     50/50…




                                              …Share of Meals Is Not
Source: Technomic; NPD FoodWorld




                                                                                              4
        FAFH: Convenience, Offering, Fun
                    How restaurant food compares to food
                               made at home:




Source: Technomic




         Foodservice         Industry    Restaurants   Vendor’s
           Today            Challenges    Respond        Role




                                                                  5
                           Today’s Challenges
      • Consumer confidence/spending
      • Supermarket as competition
      • Chain restaurant saturation
      • Consumers eating healthier
      • Legislation/regulation:
                    – Nutritional disclosure
                    – Immigration reform
      • Costs: labor, healthcare, other
      • Food inflation




                     Operator Critical Concerns

                                % in Top “5” Concerns


                          Food costs                               78%


   Consumer spending is down                                 59%

                          Labor costs                    52%

               Other operating costs                   45%


                Finding skilled labor            32%

               Keeping skilled labor           25%


Source: Technomic




                                                                         6
7
Foodservice       Industry    Restaurants   Vendor’s
  Today          Challenges    Respond        Role




          Restaurants Respond
• Cost management/cost reduction opportunities
• Selective price increases
• More value options
• Limited time promotions
• Food costing
• Reformulating recipes
• Recipe/culinary development




                                                       8
             Restaurants Respond
• Expand Day parts
• Innovation
• Reduce portion sizes
• Remove unprofitable menu items
• Catering
• Takeout




Foodservice      Industry    Restaurants   Vendor’s
  Today         Challenges    Respond        Role




                                                      9
                    Interest in Vendor Support

                              % Indicating would like help


                              Food costs                         88%

        Consumer spending is down                          53%

                    Other operating costs                46%

                             Labor costs          34%

                     Finding skilled labor         37%

                    Keeping skilled labor          35%

Source: Technomic




                                  Vendor’s Role
      • Prime Vendor relationships
      • Modified service levels
      • New products
      • Menu evaluation, engineering and profitability
        analysis
      • Industry and consumer trends
      • Marketing best practices
      • Operations consultation




                                                                       10
Thank You!




             11