'Foodservice' recession appears to be over: expert
December 3, 2010
by Meat&Poultry Staff
WICHITA, Kan. – As more people return to dining at restaurants, and even though many are opting for hamburgers and cheaper cuts of steak on the menu, the recession in the foodservice industry appears to be over, an industry expert said on Dec. 2 at the Kansas Livestock Association convention. Keith Blanks, foodservice vice president for Cargill, told attendees he anticipates modest growth to continue with food costs expected to increase, according to The Associated Press.
Industry is starting to see that turnaround this year, after 2008 and 2009 were extremely depressing for restaurants, Blanks said. He added about 20% of consumers surveyed in 2008 said they would eat out less, and that number totaled 35% by 2009.
The hamburger is the hottest trend now in the US foodservice industry; eight out of 10 restaurants serve them. Less-expensive steaks, such as sirloin or flat iron cuts rather than the rib eye steaks traditionally served in restaurants, are also trend-setting.
More people are once again taking customers to steakhouses. Approximately 47% of the food dollars are spent in the foodservice industry, versus 53% spent on food eaten at home, he said.
Steve Kuntz, director of meat and seafood at Dillons, a division of the Kroger grocery chain, said beef is the No. 1 commodity sold in grocery stores, accounting for the biggest sales volume. According to recent statistics, 40% of Americans still do not know at 4 p.m. what they will be having for dinner that same evening, he said. Supermarkets are marketing beef to their customers with cuts such as flat iron steaks, putting pop-up timers in beef roasts and targeting the fast-growing number of Hispanic consumers in the US with meat products, such as offal –which in the past was primarily an export product, Kuntz said.
Improvement in the foodservice industry coupled with a 20% increase in exports have helped the livestock industry after suffering through three of the worst years in modern cattle-feeding history, said Randy Blach, CattleFax executive vice president. During that time, industry was losing between $200 and $300 a head, he added. Cattle are making money coming through roughly 10 months of sustained profitability after three years of terrible losses, Blach said.
Blach expects feeder cattle prices to be at a record high in 2011, along with higher calf prices in the spring. This comes at a time when demand is growing while beef supplies are down. The per capita net beef supply is the smallest it has been since 1992. It is forecast at 59.6 lbs. per person this year and projected to be down to 57.9 lbs. per person in 2011, he said.
The biggest unknown in the market remains the price of corn, a basic feed crop for livestock. The US now uses 37% of its total corn crop in the ethanol industry. Within several years, the ethanol industry could become the largest user of the US corn crop, Blach predicted.