I've yet to see a company that hasn't been in the doldrums because of the economy. But it's a Wednesday in the middle of the summer, so there's an air of optimism as we ride down the backside of the workweek.
Who didn't jump for joy when gas prices recently dropped below $4 a gallon? For some regions of the United States, these prices are down nearly 20 cents from a month ago. This is great news for families who may have refrained from their weekly restaurant trip or curtailed a seafood splurge to throw on the barbecue.
Gas prices may have fallen, but economists say this doesn't necessarily mean the economy will make a fast turnaround. We still have to deal with sluggish growth and price increases, such as food, which don't go up and down like prices at the pump. Wholesale prices have increased 9.2 percent in the past year, the largest increase in 27 years.
There's no doubt that retailers and restaurants will be forced to increase prices even more to make margins. Quick-service restaurants have the opportunity to attract penny-pinching customers by offering deep discount programs. But casual-dining and other full-service formats are having to increase menu prices across the board, while some focus on increasing plate coverage with more inexpensive non-protein "fillers" like pasta.
While many food-industry analysts said the retail sector would likely benefit from consumers' desire to decrease gas use and eat at home, supermarkets will not be unscathed by economic pressures. Respondents to SeaFood Business' biannual retail seafood survey cited rising wholesale prices, rising energy costs and consumer price resistance as their top three challenges. (Look for complete survey results in the September issue). When a loaf of wheat bread is on special for $3.50, supermarket shoppers will be forced to make cuts in discretionary spending.
What did I say about being optimistic? Did I mention gas prices are falling and the weekend is in sight?
