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    Foodservice Sales On the Rise

    But a new study forecasts that the outlook for next year isn't as promising.

    Total foodservice sales will rise 5.2 percent to $483.5 billion for 2005, though increasing costs are expected to dampen the outlook for continued vitality in 2006, according to a new study highlighted in a report by Nation's Restaurant News .

    Technomic Inc., the research and consulting firm whose study was commissioned by the International Foodservice Manufacturers Association, forecasts that higher interest rates and higher inflation, driven by fuel costs, are likely to have a negative impact.

    Foodservice sales will decrease their growth rate in 2006 and rise by a nominal 4.6 percent, according to Technomic's predictions.

    Foodservice at "retail hosts," including convenience stores, supermarkets and other retailers, would rise by an unadjusted 3.5 percent for all of 2005 to $42.2 billion and grow another 3.2 percent in 2006, the foodservice research and consulting firm said.

    Total sales for 2005 at restaurants and bars are forecast to climb 5.9 percent in nominal terms to $311.5 billion. Technomic expects sales at limited-service restaurants to increase 6 percent to $164.2 billion. Sales are expected to grow by 5.9 percent, to $145.5 billion, at full-service restaurants and by 2.5 percent to $1.9 billion at bars and taverns. Inflation would account for 3.2 percent of the increases, Technomic said.

    For 2006, sales would increase 5.8 percent at limited-service restaurants, 4.6 percent at full-service establishments and 2.5 percent at bars and taverns, Technomic predicted.

    Of the forecast total for 2005, restaurant and bar sales account for 64 percent of the projected foodservice dollars, the firm indicated.

    Six "beyond restaurants" categories -- retail hosts, travel and leisure, business and industry, education, health care and all other -- would see their total foodservice sales grow this year by an average of 3.8 percent to $171.9 million.

    According to a survey taken by Technomic in August, 55 percent of restaurant operators raised menu prices in the past six months by an average of 5 percent. Sixty-three percent of operators said they expect to see their sales rise this year, down from 72 percent who had the same expectation a year ago. Only 56 percent of this year's respondents forecast profit growth for 2005, but that’s up from the 52 percent that had such expectations in Technomic's August 2004 survey.

    For its survey, Technomic polled 532 operators, representing the restaurant, hotel, business and industry, college, and health-care sectors.

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