Survey Shows Improving Mood Among Restaurateurs

Livestock futures were buoyed in recent weeks by reports of tight supplies and hopes that meat demand has begun to recover from recession-inflicted damage. In pork’s case, it also helps that the fear-mongering talk of global pandemics has passed.

April 9, 2010

2 Min Read
Beef logo in a gray background | Beef

Livestock futures were buoyed in recent weeks by reports of tight supplies and hopes that meat demand has begun to recover from recession-inflicted damage. In pork’s case, it also helps that the fear-mongering talk of global pandemics has passed. Overall, end users appear to be in a notably better mood than they were a year ago, reports the CME Group.

While plenty of challenges remain, a sense of normality appears to be returning in the marketplace, with retailers and foodservice operators preparing for warmer weather and the return of grilling season. For some, however, there’s also sticker shock given higher protein prices across the board and the outlook for even higher prices going into the high demand time of year.

One indicator of the improving mood in the market is a recent National Restaurant Association (NRA) survey. Its monthly tracking index currently stands at the highest point since September 2007 and well off the bottom established during the fall of 2008. While the industry remains in contraction mode, the restaurant performance index has steadily improved the last 12 months. The March 2010 survey covered some 484 respondents across several segments of the industry and, for the most part, they expect same-store sales to improve in the coming months.

According to the survey, 44% of the respondents expect that six months from now same-store sales will be higher than the previous year. The expectation for higher sales can be seen across the board, with most of the gains coming from sectors hit especially hard by the recession, such as the fine dining concept.

This is an important component, especially for beef prices. Cattle prices struggled for much of 2009 in part because packers weren’t able to put more money on middle meats (steak cuts). The improvement in fine dining sales should be a good barometer as to how middle meat prices fare in the coming months.

While the recent NRA survey likely adds to all the bullish sentiment in the market, it also provides some sobering insights. The overall index may be improving but the customer traffic indicator declined for the third consecutive month. This could be due to short term weather events but it also reflects the realities of 9.7% unemployment rate. It is that number which should temper some of the high flying expectations for the U.S. restaurant industry (and protein prices) in 2010.
-- CME Group’s Daily Livestock Report

Subscribe to Our Newsletters
BEEF Magazine is the source for beef production, management and market news.

You May Also Like