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April 10th, 2014

by Total Food Service

Unintended Consequences & the Shrinking Senior Market


“Unintended consequence” is a term of recent vintage. Simply put, it means being impacted by an action, invariably in the negative, directed at someone else. The following observations are, to me, classic and damaging examples of this term. It is sometimes called collateral damage.


Of all the various segments encompassing the consumer market, the seniors were the most reliable, predictable, and consistent group. Year round they filled up tour buses, trains, and ships, as well as their cars to travel the country and the world.

In the process they pumped billions (that’s with a b) of dollars into the economy.

They were, and continue to be, an important part of the food service audience. This is changing, however, and here is why. An editorial in The New York Times contained the following comment: “If you’re a retiree who relies on interest income, you know that the tap is running dry. In fact, many investors in certificates of deposits, savings accounts, and money market accounts are losing money once taxes and inflation are subtracted from today’s extremely low yields.” This is compounded by the fact that there was no increase in Social Security payments in 2010 or 2011. In other words, what was to some degree a fixed income plus any invested income, is becoming a diminishing income, with no upside in sight.

The editorial went on to say: “Less well known is that the measly savings yields are central to the government’s effort to buy time for banks to earn their way back to health. But more attention must be paid to the collateral damage from that effort.” And that, dear readers, is a classic example of unintended consequences.

It should also be noted that many retirees saw their investments seriously impacted by the economic upheaval. In addition, many retirees who had found new employment while retired, were also downsized along with millions of others.

Most consumers are being careful and selective with their spending; remember, 90 to 92 percent of our workforce is still employed. Despite this, they are putting more money away and reducing their credit debt at record numbers. Fear of the unknown is playing a big role in this turnaround. Seniors are also exercising the same caution and it is showing up in all levels of food service.

I recently had lunch at a facility that has a strong senior base of patrons. There are two large 55+ communities within three miles of the operation. On such a lovely Friday afternoon, normally the place would have been full; this day there were two other parties. Management told me they are somewhat off in the numbers, and he, too, was surprised at the drop and its sputtering effort to return. I spoke with another knowledgeable industry person who finds that some operators are adjusting portion sizes (since most seniors are not eating like they did ten years ago), or giving seniors the option of half portions. While many operators hesitate to change longstanding policies such as portion sizes and sharing options, the fact is that the market is changing and competition has never been as fierce. It is apparent to many restaurant patrons that the status quo is now outdated.

I know most of you are aware of the casual dining chains’ specials, “one appetizer, two entrees,” and “one appetizer, two entrees, and dessert,” designed to drive traffic. Well, a recent report states that they are working. I’m not suggesting you duplicate this, only that you consider a plan or program to drive traffic to your door.

One last observation. While I no longer operate a food service establishment or act as an industry spokesman, I’m getting very tired of having legislators at every level, utter, when introducing a bill that will financially impact the food service industry, that the industry can tolerate it by “just raising their prices.” I have news for them. Whenever a restaurant meal gets too expensive, consumers have a choice and that is, they eat at home, which more and more of them have been doing.

We should not be surprised when a government official says, “Just raise your prices.” After all, that is their answer when they can’t live within budget; they raise prices—only, they call them taxes—and the consumer has two choices: pay them or go to jail.


Article by Fred Sampson, The New York State Restaurant Association's President Emeritus

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