Recent Posts
- Baja Fresh debuts, Landry's just got cheaper
- Fewer customers, fewer undocumented aliens
- Will the bailout help your restaurants?
- The Bailout: A view from abroad
- Tell me: Is it always caveat emptor?
- Your $700 billion at work
- Where to eat on Sunday morning
- Tell me: About your Web site
- Optimism after yesterday's free-fall
- Expect the worst
Recent Comments
- Matthew on Tell me: Is it always caveat emptor?
- bob on Tell me: Is it always caveat emptor?
- chksng19 on Tell me: Is it always caveat emptor?
- Jeff Sinelli, Founder of WHICH WICH on Tell me: What's your favorite sandwich?
- layla on Tell me: Is it always caveat emptor?
Most Commented On
- Micatrotto: 'LIke a very large restaurant.' (27)
- McDonald's "gay support" issue (26)
- Making Servers Pay: Cold-Hearted or cost-effective? (18)
- Same old, same old integrity (10)
- Tell me: Is it always caveat emptor? (8)
Archives
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- January 2006
Blog
The Decline in Disposable Income May or May Not Hamper Restaurants
September 26, 2007
The title of the conference call sounded ominous: “Risk of a Restaurant Spending Recession.” It was the third in a recent series of foodservice-related sessions hosted by UBS Restaurant & Packaged Food Analyst David Palmer.
Palmer’s guest, UBS colleague and economist James O’Sullivan, put the risk of a recession at 40 percent. Nominal disposable income, he allowed, will most certainly decline about 1.2 percent, to 4.1 percent, in ’08.
But that’s scarcely the whole story, as O’Sullivan’s slides demonstrated. Yes, subprime mortgages have wreaked havoc on the all-important housing market, which is plunging. That certainly will help to dampen spending.
Yet there has been no significant surge in consumer delinquency rates. In fact, the latest numbers from the Federal Reserve Board suggest individual net worth remains at record levels.
“I know I’m going, ‘On the one hand, but on the other,’” O’Sullivan said, “but we will have to wait for the employment report, which is due out next week.”
Palmer, however, was much less equivocal. He pointed to a problem already dire among restaurants: a collapsing dinner daypart.
“This is fairly dismal dinner environment,” Palmer lamented. Citing CREST numbers, he added that dinner traffic in ’07 has been down by nearly 3 percent through July. “There’s been a resounding lack of growth.
Palmer, who didn’t specify a reason for the plunge, said the problem isn’t a “trade down issue,” because fast-feeders also experienced declines. However, the QSR segment is in a better position to weather such declines given limited dinner exposure. Dinner accounts for roughly two-thirds of a casual-dining chain’s business.
Palmer, alas, didn’t have much in the way of advice for casual-dining chains: “Dinner’s weakness underscores the fact that you’d better have other dayparts working for you.”
Like what…lunch?
Posted by David Farkas on September 26, 2007 | Comments (0)