News

Key themes for '15: Food quality, customization, customer-facing technology

December 18, 2014

Fitch Ratings released its 2015 Outlook for the US Restaurant industry, predicting an improvement in sales trends, the easing of commodities pressures and growing cash flow. However, the potential for event risk will remain in the New Year, according to a news release.

Fitch predicts same-store sales to average 2-3 percent as a result of 2-2.5-percent price/mix, and 0-0.5 percent traffic, an improvement versus 2014.

Higher average hourly wages and a possible sustained decline in gas prices should result in increased disposable income and an uptick in food-away-from-home spending, particularly for low- to middle-income consumers.

However, multinational chains will be negatively affected by economic weakness in Europe and slower growth in China and other parts of Asia.

The key themes expected in 2015 include food quality, customization and the increase of customer-facing technology. Consumers will also remain focused on value.

Fitch pointed specifically to Starbucks to outperform industry trends because of an increasing demand for coffee and tea. The global rating agency also expects an improvement at McDonald's due to its comprehensive efforts to turn the business around.

Risks to Fitch's outlook include weaker than expected FAFH spending caused by shifts in consumer spending or widespread concerns about food safety and quality, persistent declines in restaurant margins and a material increase in units repurchased by franchisors, though not anticipated. Potential leveraging events, such as acquisitions, divestitures or sales/leaseback transactions, are not factored into ratings.