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What's in Store in 2016?


What's in Store in 2016?

Collectively, according to Technomic’s Distributor Intelligence Report’s outlook survey data, distributors expect 2016 to be a year in which government regulations and labor issues continue to cause the most consternation.

Help Wanted. Labor, in particular, is troublesome – and increasingly so. For example, in last year’s outlook survey 75% of distributors predicted that the driver shortage would negatively affect their business this year. Now, almost all (93%) expect negative impact from the driver shortage in the year ahead. Last year, overall shortage of labor and labor costs were expected to be tough challenges by 75% and 67% of distributors, respectively. Looking ahead to 2016, 80% of distributors predict that overall labor shortages and labor costs will negatively impact their businesses.

Local Food Matters. Collectively, survey respondents don’t appear overly concerned about many of the hot-button consumer issues that continue to shape the foodservice industry. On the product front, demand for gluten-free and GMO-free items is expected to continue to have an impact in 2016, by 87% and 80% of respondents, respectively. But, despite rising consumer sentiment and operator demand that might suggest otherwise, issues such as animal welfare/humane treatment of animals and use of antibiotics aren’t seen as potentially impacting distributors’ business next year.

Demand for locally produced products, however, is getting greater attention. The current survey data shows that 60% of distributors expect the “buy local” movement to positively impact business next year and non see it as a downside. That compares to 31% who saw demand for local products as a positive in last year’s survey, and 23% who predicted it might negatively impact their business this year.

Regulation Outlook. With the threat of the mega-merger now in the rearview mirror and the industry continuing to rebound, the outlook for 2016 is largely positive. Outside of labor shortages, most of the major issues that could be seen as significant barriers to growth don’t appear to be keeping distributors up at night – except, perhaps, for government and politics.

Almost all survey respondents (92%) continue to feel that the Affordable Care Act will negatively impact their business in 2016, and two in three say tax and fee increases and political gridlock will do so as well. Nearly half, however, feel that this year’s Presidential election cycle will be good for business.

Jon Eisen, senior vice president of government relations at the International Foodservice Distributors Association (IFDA), notes that the nature of this election year is unprecedented and it’s tough to see where it’s headed but, regardless of the outcome, he says IFDA will continue to focus on a number of key regulatory issues. Top among them are provisions within the recently passed Highway Bill, hours of service rules and changes to the Compliance Safety Accountability program. In addition, the final rules for the Sanitary Food Transportation Act are expected to be published in spring. “These will be the first-ever rules that directly govern the transportation of food,” Eisen says. “It’s a huge issue for distributors and we still don’t know exactly how it’s going to work out or what the requirements are going to be.”

On the labor front, he says the Obama administration accomplished a lot this year. “They implemented the ‘ambush elections’ rule; they continue to use what’s called the Specialty Healthcare decision, which allows unions to carve out their own bargaining units, or micro-units that they think they’ll have the most success in; and one of the things we’re keeping a very close eye on is the ‘persuader rule’. It would require disclosure by companies and the legal counsel they hire for union advice. The concern is that the regulation, which has just gone to the White House for approval, would dramatically expand that disclosure requirement and curtail employers’ ability to receive third-party advice to educate their employees about collective bargaining.”

Minimum wage legislation, proposed overtime changes, predictive scheduling, and joint employer regulations are also issues on the radar and promise to impact operators and distributors, alike, according to Eisen. “The foodservice industry is very much in the crosshairs of both activists and the department of labor,” he notes. “There’s a lot of concern about these issues, and with good reason.”

For more insight into the survey, click here.

Source: Excerpts; Technomic’s Distributor Intelligence Report