In their latest quarterly Economic Report, the International Foodservice Distributors Association (IFDA) projects that the US Real GDP and US Industrial Production growth will slow throughout 2022 and into the middle of 2023.
According to IFDA, “Slowing growth is not something to fear, but it is something to plan for. If you take steps to prepare your business for the lower growth rates of 2022/23, in both the overall economy and most markets, you will find yourself ahead of the competition.”
IFDA breaks the business cycle into 4 Phases:
- A – Recovery
- B – Accelerating Growth
- C – Slowing Growth
- D – Recession
The projected deceleration of growth means that we are heading toward Phase C, which is a cautionary phase in the business cycle. However, many segments of the economy will avoid outright contraction and IFDA does NOT believe any segment will reach the recession phase.
IFDA encourages foodservice distributors to scrupulously evaluate your supply chain to ensure you are as prepared as possible for rising activity in many sectors next year.
Let’s take a look at how some of these segments are positioned currently and trending into 2022:
US Food Services and Drinking Places Retail Sales to US Total Retail Sales
Currently in Phase B
Overall, US consumers are in good financial position to drive growth. However, the rate-of-rise will be lower in 2022-23.
US Personal Consumption Expenditures at Restaurants and Drinking Places
Currently in Phase B
The forecast for this segment is improving but Phase C is imminent. Labor and supply shortages may hinder the volume of consumption and breed inflation in this area.
US Fast Food Establishments Retail Sales
Currently in Phase B
Phase C is expected in this segment more quickly than others. This will bring the annual growth rate back down to more a more typical range. Labor shortages have forced some fast food establishments to limit hours of operation or shut down dining rooms. If the labor shortage persists, it will affect this outlook throughout 2022.
US Food and Beverage Stores Retail Sales
Currently in Phase C
With more consumers returning to restaurants this year, food and beverage stores have seen declining growth, placing them in Phase C. While annual Retail Sales will rise through at least 2023, the annual growth rate will generally decline into the middle of 2023, keeping this segment in Phase C.
In future posts, we’ll walk through how technology can help support your foodservice distribution business through these changes in the year ahead.
In the meantime, see how Prime FoodService Software helps your peers with this on-demand demo.