IPA SBRB Study: Food Service Companies Cautiously Optimistic About Economy, But Most Still Looking for Revenue Increases

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Costs for health care and taxes along with expenses for energy and fuel considered leading concerns.

Small and medium-sized food service companies are cautiously optimistic about their prospects for the coming months and are the least confident about the near term than any other industry segment measured, according to the results of an International Profit Associates Small Business Research Board (IPA SBRB) survey released here today. http://www.ipasbrb.com

The IPA SBRB Food Service Industry Confidence Index was established at 38.8 for the first IPA SBRB food service industry poll. By contrast, the aggregated IPA SBRB Small Business Confidence Index (SBCI) for all small and medium-size businesses participating in the survey was 42.7. The confidence index for other industries included the transportation sector at 45.7, the manufacturing sector at 43.2 and the construction and contracting sector at 42.04.

The IPA SBRB has been tracking the attitudes of small businesses since July 2004. In 2006, the IPA SBRB began issuing reports for specialized industries, the first two of which measured the attitudes of construction and contracting companies and manufacturing firms. This was the first time that the food service and transportation industries were individually studied. The key ingredients for determining the confidence index are attitudes about the direction of the economy, revenue predictions and hiring plans.

Additional industries will be added during 2007.

The level of optimism in the food service category was defined by the 36% who believe the economy is improving, the 41.6% who are not forecasting a change, and the 22.4% who believe the economy is worsening. As a result, 50.3% of the respondents believe their revenues will increase through next winter. The report showed that 17.2% believe their business will grow by up to 10% and another 33.1% that are expecting revenues to grow by more than 10%.    

Slightly more than 36% of the respondents believe their revenue will remain the same for most of 2007 while 13.4% are projecting lower revenues.

In addition, 30% of the food service category respondents predict they will increase hiring during the same period.

The report indicated that about 40% will try to sustain the current workforce level with about 9% looking to decrease hiring and 21% uncertain about their plans.

Health care expenses and taxes were the top two leading concerns among the food service companies. Energy and fuel costs, concern about the general economy and the cost for materials rounded out the top five.

Like nearly every other segment, increased revenues are the priority for 2007, followed by plans to decrease expenses and improvements in productivity which tied for second. Facilities improvements was fourth.

"The success of food service operations demands that owners and managers do more than just keep a keen eye on presentation and taste. It is imperative that they focus on maintaining control on those costs that they have a direct ability to influence," said Gregg Steinberg, President of International Profit Associates, the largest privately-held provider of management consulting and professional services to small and medium-size businesses in North America.

"Food service industry operators will be much more satisfied with the longevity of their businesses and the flavor of their efforts if they both have controls in place and use them to keep a strict grip on daily food and beverage costs," Steinberg added.

The International Profit Associates Small Business Research Board ascertains and reports the opinions of small business owners and managers on a wide variety of topics related to their own businesses as well as national and international issues that may impact their operations.

Participants in the poll provide feedback on significant issues and allow for real-time insight into the state of small businesses nationwide. The universe of participants is developed from among small businesses across the United States. More than 550 small business owners and senior managers participated in this IPA SBRB poll. The IPA SBRB study is a voluntary survey conducted via phone and email. The poll was structured and supervised through an independent resource.

The latest information about the IPA Small Business Research Board can be found at http://www.ipasbrb.com. Comprehensive details about the study can be found at http://www.ipasbrb.com or at http://www.biznus.net.

International Profit Associates, Inc. (IPA) is the largest privately-held provider of management consulting services to small and medium-size businesses in North America. IPA and its more than 1,800 professionals offer a wide range of proven and innovative methodologies to help businesses grow and prosper regardless of the economic cycle. IPA either provides directly or through its affiliated companies a comprehensive array of business advisory services, tax and estate planning services or merger, acquisition and other financial advisory services in the United States and Canada. More information about IPA can be found at http://www.ipa-iba.com.

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Raymond Minkus
IPA SBRB
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