QSR Interview | By Blair Chancey
As the foremost expert on industry packaging, John Burke, president of the Foodservice & Packaging Institute, watched as the global recession affected an unusual aspect of the industry. As investors felt money slip through their fingertips when banks stopped lending and operators watched as competitors participated in a $5 arms race, Burke witnessed, well, nothing. That’s because the recession slowed the packing industry and brought innovation to its knees.
Though the nation’s trading down to quick serves meant a steady stream of demand for foodservice packaging, areas like packaging technology and sustainable packaging were set aside for better days. But with the economy slowly recovering and operators looking to 2010, Burke shares with QSR what he sees for the industry in the immediate future.
How has the recession affected the packaging industry? Quite frankly I haven’t really seen any innovations this year that have made me take pause. That happens particularly when you’re in a recessionary period. When you get into a slow sales time your end user or operators are only thinking about where they can save the next penny. They’re not thinking about innovation and new ideas.
What happens when that occurs is it all flows upstream. The quick-serve operator says he’s fine with the basic packaging that he’s got. But when there’s an innovation in the industry, companies want to charge a premium for that. And right now, people don’t even want to hear the P word.
So my sense is that the packaging people are still working out ideas and trying to figure out if they have something that can gain teeth in the market.
Does that mean there’s no more interest in green packaging? As a trend we’re continuing to see operators who are interested in that type of packaging. Once again, if they discover that they might be required to pay some sort of a premium, though, they’re not as interested. Take a typical quick serve: If they’re running a value menu, there’s not much room in the margin for packaging. They’re saying, “Come back and see me when we’re back to our regular strategy.”
This all is particularly true with biodegradables and compostable packaging. If you take a look at products made out of PLA [polylactide], it’s still a fairly pricey material because we’re still in the beginning of it. Although, more of it is coming into the marketplace.
I read today that New York says by 2012 it will have 1 million pounds of PLA out on the marketplace. With that much out there, you’ll start to see some price softening. All of this commodities packaging is extremely price sensitive. Even for environmental packaging materials.