LAS VEGAS — The recession’s effects on foodservice and retail segments have been undeniable the past few years. Both sides of the food industry have had similar and unique challenges to overcome.

“The first thing they scaled back was restaurant meals,” said Bob Goldin, executive vice president of Technomic Inc., a Chicago-based market

Outlook improving for retail and foodservice

Ashley Bentley

Bob Goldin, executive vice president of Chicago-based Technomic Inc., addresses a group of United Fresh Produce Association 2010 convention attendees April 22.

research firm.

Goldin spoke April 22 on “Shifting Consumer Trends at Retail and Foodservice” at the United Fresh Produce Association’s annual convention.

Many diners shifted down from restaurant industry sectors, so fine dining and steakhouse restaurants took a big hit. Consumers started cooking at home more.

“The quickness in the decline really put consumers in a funk,” Goldin said. “And we’re (foodservice) an oversupplied industry, there’s no doubt about it. The retail industry has proven a very able competitor to foodservice.”

Steve Lutz, executive vice president of The Perishables Group, West Dundee, Ill., spoke about “Consumer Trends, Price Deflation and the Impact at Retail,” April 21 at the convention. There has been a fundamental shift at retail in the way consumers perceive value and how they buy food, Lutz said.

Wal-Mart’s consistent growth through the recession points to one of the biggest trends: price deflation. As a result of Wal-Mart-style pricing, consumers expect to pay less for purchases, Lutz said.

“It got to a point where (other) retailers said we’re not going to let Wal-Mart steal our customers anymore, and they started shifting their prices,” Lutz said.

Although all consumers weren’t affected the same by the recession — only 3% of workers who would be making more than $150,000 per year are unemployed versus 31% of the bottom 10% of consumers — even the unaffected consumers changed value perceptions, Lutz said.

Overall, club stores and supercenters have been growing, mass merchandisers have been losing and grocery stores have seen flat growth, Lutz said.

Restaurant sector

The restaurant chains that have been able to weather the recession and come out on top are the ones that engage their customers, like Buffalo Wild Wings and Chipotle, Goldin said. More generally, Asian and Mexican concept restaurants are going strong, but are not going to grow. The concepts that will grow are street food, Korean, Indian, Moroccan and Peruvian, to name a few, he said.

Food trends have gone back to comfort foods, but reinvented comfort foods, like indulgent macaroni and cheeses and unique pizza crusts.

The good news is that during the recession, food costs have come down, mainly because fuel prices have backed off.

“If fuel had been $4 last year, we probably would have been in a full-blown recession situation,” Goldin said.

Goldin said consumers will change their recession food buying habits, first by going for extras at grocery stores and then by returning to restaurants, before they fix some bigger changes, like taking vacations.

“It’s too early to call this a recovery — we’re not out of the woods yet — but we can see a light at the end of the tunnel,” Goldin said.

The bottom of the recession for the produce industry at retail happened in the third quarter of 2009, when sales of every top-20 fruit and vegetable items in produce was declining.
Still, downward price pressure is strong every day at retail stores.

“Even something like a banana, which is about as flat as you can get, in retail pricing is declining,” Lutz said. “The good news is volume is up, and has gone up as prices have fallen. The challenge for restaurants and suppliers is that the volume is up, but that has not offset the decline in prices.”

When price rollbacks happen market-wide, after a few months, there is no significant change made. Consumer behavior is not affected, Lutz said.

“Value is the answer going in to 2010,” Lutz said. “Consumers are trading down, trading across and trading out. They recognize value, and will spend more because they want a specific product.”

Fresh produce is on the right track in the recovery, Goldin said. The U.S. is seeing a growth in vegetarian diets, especially with young consumers, and restaurants are already offering more fruit plates for snacking occasions.