Which Restaurants Are Going To Succeed Despite A Possible Recession?
By Cooking Panda
Although some experts believe a possible upcoming recession might be the “worst ever” for the restaurant industry, surprisingly, pizza joints seem to be faring pretty well.
After 15 out of 16 restaurant chains reported decreasing sales or slowed growth in grim second-quarter earnings, some restaurant analysts believed the industry may be at the brink of a “restaurant recession,” according to Bloomberg.
“A prospective 2017 U.S. recession could be the worst ever for restaurants,” according to Stifel analyst Paul Westra, as reported by Market Watch.
“In the June 2016 Tracking Survey, only 12 percent of restaurant operators said they expect economic conditions to improve in six months, while 25 percent said they think conditions will worsen,” said Bruce Grindy, National Restaurant Association chief economist, Pizza Marketplace reports.
Although restaurant owners are concerned about the economy, Grindy believes it has not quite reached the point that would result in a recession for the industry.
“While the recent outlook has certainly been a mixed bag, it is not quite bearish enough to signal that a recession is on the horizon,” Grindy explained.
Despite the figures being higher than what is typical before a recession, changes in the restaurant industry have often predicted changes in the overall economy.
“Restaurant operators are on the front line of the U.S. economy, and are often the first to notice any changes in consumer behavior or economic conditions,” Grindy added. “With that in mind, operators’ current level of concern about the economy does not suggest that a recession is imminent.”
However, Westra predicts the restaurant industry is about to endure at least a couple years of problems.
“The catalyst for the current weak pre-recessionary restaurant spending trend is likely multifaceted — U.S. politics, terrorism, social unrest, global geopolitics, economic uncertainty — but, if history is a guide, we warn investors that restaurant-industry sales tend to be the ‘canary that lays the recessionary egg,'” Westra explained.
Despite the issues that may affect much of the rest of the industry, pizza restaurants have been experiencing consistent growth. Not only do pizzas provide a substantial amount of food for a relatively low price, restaurants have also adapted quickly to developing technologies.
According to Bloomberg Intelligence Analyst Michael Halen, pizza chains excel with their value proposition. It’s difficult to make a family meal out of $7.99, but that’s the cost of a large, three-topping pizza at Domino’s.decrease, Pizza, recession, restaurant industry, sales growth