Experts say economy, financial conditions are going to look familiar in the New Year.
Get ready for more of the same.
Financial analysts, consultants and restaurant operators alike seem to agree that 2012 is shaping up to look a lot like its predecessor year.
The U.S. economy is likely to grow modestly—about 2 percent—with jobs being added at an anemic pace. And, barring any major surprises, commodity prices will move higher, although perhaps not at the same rate as in of 2011.
Meanwhile, the credit freeze remaining from the Great Recession of 2008 will continue to thaw, but money is likely to be tight for all but the best risks.
“You are going to see 2012 being very much like 2011,” says Dennis Lombardi, executive vice president, foodservice strategies for WD Partners, a suburban Columbus, Ohio-based design and consulting company.
“Traffic will be relatively flat, and price taking (hikes) will be just enough to cover commodity costs that will likely move slightly higher,” he adds.
Bonnie Riggs, restaurant analyst in Chicago for the market research company NPD Group, says the industry is “not going to see much movement” in 2012. Sales and check totals will tick ahead marginally from 2011, but traffic should be slightly lower.
“It’s not a very positive forecast for the restaurant industry,” she acknowledges, pointing out that consumers remain nervous. “It’s all about consumer confidence. There’s a very close relationship between the trend for consumer confidence and restaurant traffic.”
Lombardi believes the best economic indicator for the restaurant industry is the total sum of people working – particularly full time.
“We are still way under the number of jobs that there were before the recession, and we are not seeing any real substantial growth to keep up with the number of people joining the workforce,” he says. “Unless there is a miracle, that is not likely to change in 2012.”
The stubborn jobless numbers are part of an overall economic malaise that has dampened consumer and business confidence, according to veteran economist Ken Mayland of suburban Cleveland-based ClearView Economics.
“It’s something I haven’t seen before, and I’ve been around a long time,” he says. “We are in a recovery of sorts, but a recovery where very few businesses want to commit to the future in a meaningful way – either in hiring or making long-term capital expenditures.”