Market Information
United States

Market Brief - The Restaurant and Food Service Industry in Louisiana

November 2005 update

to the November 2004 study

The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter. Although every effort has been made to ensure that the information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein.

Please address any comments or suggestions you have on this report to: Bryan West – westb@agr.gc.ca

Post Hurricane Update

The "Market Brief – Restaurant and Food Service Industry in Louisiana" was written prior to the hurricanes that struck the Gulf Coast states in August and September of 2005. In the immediate aftermath of the events it was unclear what the make up of this sector would be or how long the recovery process would take. As more information has become available a clearer picture of the restaurant and foodservice sector and its vital importance to the recovery of this region has emerged. The following information is meant to update and supplement the existing report.

As this original report stated, New Orleans was the engine that drove the Louisiana economy. Therefore, its recovery will be vitally important to the state as a whole.

Before the hurricanes of September 2005:

• New Orleans accounted for 1/3rd of the Louisiana economy.
• The Orleans parish accounted for 44% of the states tourism income.

Financial Cost of the Storms

The magnitude of the cost in simple financial terms is overwhelming.

• The storm has resulted in US$180 billion in damage and losses in the area. This is the highest total for damage related to a hurricane. The second highest total recorded was US$32 billion after a 1990’s hurricane in Florida. To put the damage in perspective, the cost of losses and damage resulting from the 9/11 terrorist attacks was US$87 billion.
• 81,000 area businesses were affected by the storms.
• The Federal government will infuse roughly US$100 to US$250 billion into the recovery/rebuilding effort.

Population Exodus

What has become clear in the aftermath of the hurricane is that the damage to the city’s residential areas was much worse than to its commercial areas. In particular the cities lower income areas were devastated, leaving very few housing options for lower wage earners. This is expected to have a huge impact on the city’s ability to rebound. In addition, the city’s hospitals and main University, Tulane, were badly damaged forcing the city’s professionals (health care workers, doctors, nurses, lawyers and professors) out of the city in search of work. Early numbers suggest that a large number of these people will not be returning to the city.

Lower income earners will have problems returning, despite an abundance of service sector jobs due to housing shortages. In addition many have found that they have been embraced by their adopted communities and simply prefer their new situation. At the same time, healthcare professionals have quickly established themselves in new communities and will be reluctant to move again once their facilities are able to reopen.

• Tulane University was New Orleans largest private employer, but it will not reopen until January of 2006. Lower enrollment is expected and some suggest that the once popular school may be marginalized for a number of years and struggle with enrollment relying mostly on the local population.
• Healthcare was a growing sector in New Orleans; however, 2 hospitals may not reopen due to the cost to repair damage, a loss of healthcare workers and a reliance on Tulane University for students and staff.
• 4,000 healthcare workers left after the hurricane and 2,500 have not returned.
• The city’s largest public healthcare facility may not reopen, further affecting the ability and desire of lower wage earners to return to the city.
• 30,000 to 40,000 homes were left uninhabitable.
• Most estimates state that roughly 2/3rds of the original population of New Orleans will return to the city. The city will go from roughly 460,000 people to an estimated 300,000 people. The 1.3 million person metropolitan area may see similar losses.
• The population returning to New Orleans will also have a different make up. Most expect that single people and couples with no children will find it easiest to return to the city. People between the ages of 25 – 40 being most likely to risk the return.

Area businesses, like the general population, left quickly and have found new locations in Louisiana and surrounding areas more than willing to accept them. Baton Rouge, the state capital, has benefited greatly from New Orleans businesses moving 130km in land.

• Immediately after the hurricane companies began buying and leasing all available office and residential space in Baton Rouge in order to relocate their headquarters.
• Businesses may not return immediately due in part to the expense of relocating again, but also because with so many businesses and people leaving the city, many companies recognize their clients simply are no longer in New Orleans.
• 125,000 New Orleans area jobs could vanish because of relocation.

Recovery

Although New Orleans has issued a “Back in Business” statement this is only true for the areas that were least affected by the hurricanes. Fortunately for the city’s economy, the French Quarter and the downtown financial/business districts were the least affected by the storm and its aftermath.

Current

• There were 3,078 licensed retail food establishments in New Orleans prior to September 2005, 1,193 have been certified to reopen.
• The Louisiana State Health Department requires that all restaurants be inspected prior to opening. Businesses are reporting delays in getting all of the necessary inspections.
• As of September 20, 2005 the areas largest foodservice distributor resumed operations after sustaining manageable damage.
• Many restaurants have set a December target for reopening, with the hardest hit businesses confidently stating that they should be up and running within 6 months (March 2006).
• Restaurants which are currently open have seen their business double and triple, despite staff issues and curfew restrictions. As of October 20th, 2005 the New Orleans curfew was still in effect.
• While the foodservice sector is rebounding it is being hindered by a lack of service sector employees. Low paying jobs are abundant, but the traditional labour pool for these positions has abandoned the city out of necessity and cannot return. Most restaurants are hiring daily, regardless of skill or qualifications.

In order to return as many jobs to the area as quickly as possible the State has pushed ahead with infrastructure projects which were planned prior to the hurricanes.

• US$90 million roadway/highway project will go ahead.
• The surrounding areas’ reliance on the local seaway and river system will force a return to normalcy in the New Orleans port system which should bring back 10,000 jobs.
• The city hopes rebuilding money can be used to create a light rail system connecting New Orleans to Baton Rouge. This will connect the economies and allow for a means of evacuation in the future.

The Future

Tourism

It is widely believed that, with the temporary closure of Tulane University and severe infrastructure and personnel losses in the health care sector, the tourism sector is the one sector which can legitimately lead the city’s recovery.

• Tourism was the city’s second largest private employer in 2004.
• Visitors to New Orleans spent US$4.9 billion in 2004.

In addition to fully reopening the very popular French Quarter as well as the port system for the return of the cruise line industry, the city is looking to gambling for much needed revenue. While the current allowance for gambling in the city has met with mixed success future plans revolve around a Las Vegas or Atlantic City type gaming experience to compliment the traditional New Orleans experience.

Supporters of this idea view this as the natural compliment to the city’s existing international reputation while others feel it is a bandage solution that will do more harm socially speaking than good. The state has long been reluctant to allow large scale gambling in New Orleans, but given the importance of the city to the state’s economy there may be few other options.

• There is currently 1 casino in New Orleans and it is not associated with a hotel. It has met with limited success.
• The city is planning to let the major hotels (500 plus rooms) in the downtown core add casinos to their property.
• The plan would involve the 5 to 7 hotels which are located in a “U” shape around the city’s French Quarter, but not inside the French Quarter.

This is most certainly the perfect time to allow full scale gambling in the city. Unfortunately for neighboring Mississippi, their loss may be New Orleans’ gain. The casino river boats of Mississippi were devastated by the Hurricanes with all 13 riverboats being destroyed. The loss of casino’s in Mississippi is costing the state US$550,000 per day in revenue in a state badly in need of money to rebuild after its own devastating experience with the same hurricanes.

If past experiences are any indicator, it is quite apparent that US citizens are quick to rally around devastated or depleted cities or regions within the country. This outpouring is a necessary injection of economic activity and undivided patronage that can carry a region from its current collapse to recovery.

New Orleans

Most agree this city will never be the same, but few can agree if it will be rebuilt for the worse or for the better. Many view this as an opportunity to fix the traditional problems of the city while improving what made the city great. Opponents of this view believe that the storms washed away what made the city great and what little remains will be irrevocably changed for the benefit of a bottom line.

The city’s poverty levels prior to the storms were always an issue, and with many of the city’s poor abandoning the area some believe that the city may finally be able to solve some of the lingering social problems. On the other hand many see this as exactly what will ruin New Orleans. The city will abandon the people and culture that made it so unique for a fast recovery through corporate imaging.

Given the realties of housing shortages, damaged businesses and the need to rebuild the future of the French Quarter is even in doubt. How will anyone, other than corporations be able to afford to operate in the area? Many see corporate restaurants and condominiums as the future of the area that made New Orleans famous.

With the introduction of gambling and a more corporate French Quarter some believe that the New Orleans of tomorrow will be little more than a weekend play ground or a “theme park city” for people from surrounding areas, namely Houston.

There are moves by the city’s more famous residents/citizens to ensure that the city maintains at least some of its independent spirit and a compromise between the old and a more corporate French Quarter is likely.

Clearly with a focus on tourism, regardless of future direction, this city will hold opportunities for Canadian exporters. The losses of average consumers due to a smaller population and the loss of buyers in the healthcare and university sectors will negatively affect the market, but continued growth in the cruise industry, the return of a strong French Quarter and the introduction of casino gambling at major hotels may be able to offset those losses. Uncertainty surrounds the future of the city, but currently there is a strong focus on the tourist industry and that must be viewed as an opportunity for Canadian producers.

Based on this update, it is clear that the information and the overall industry and its trends detailed in the following report remain valid. It is impossible to accurately predict, but with current efforts to rebuild and reignite this industry, it could regain some or all of the characteristics outlined in the following report.

Market Brief - The Restaurant and Food Service Industry in Louisiana

November 2004 study

Prepared by Laura Aune
International Trade Canada
Canadian Consulate General-Dallas
Email laura.aune@international.gc.ca 
Web site www.dfait-maeci.gc.ca/dallas/ 

The restaurant and food service sector in Louisiana is very dynamic. With a high population density and a large and varied hotel and restaurant sector this burgeoning tourist hub could provide a number of opportunities for Canadian food exporters.

With a population of over 35.9 million people, and a population density of roughly 57.1 people/square mile the South Central US Region is an excellent market that is well situated for sales to nearly every other region of the US as well as Mexico.

Lying in the southeast corner of the South Central US region Louisiana is one of the most diverse markets in the US and its proximity to Florida, Texas and the Gulf of Mexico make it a key starting point for commerce in North America.

New Orleans is located within the South Central Region of the US, which consists of the states of Arkansas, Kansas, Louisiana, New Mexico, Oklahoma and Texas. Based on the size and dominance of New Orleans in the Louisiana economy new Canadian food exporters can consider the two to be virtually synonymous.

Quick facts

Economy

The South Central region of the United States is a relatively large market, containing over 60 Fortune 500 companies. This region is involved in many different industries, with the agricultural sector being a key contributor to the economies of each of the states in this region.

Market Highlights

• Louisiana is by far the most densely populated state in the region
• There are roughly 46 million people that live within a 500-mile radius of New Orleans with a collective household income of US$ 1 trillion
• New Orleans gets 12 million tourist visitors a year.
• There are over 3,200 restaurants in New Orleans
• New Orleans has blossomed as a port of call for the cruise industry, with a 1000% increase in passenger visits over the last 10 years.

Opportunities

• 30% of all the restaurants in Louisiana are located in New Orleans
• Roughly 47% of all food dollars spent in New Orleans go towards food service
• The appeal of Creole and Cajun within the region make the Seafood market a particularly strong and growing market
• New Orleans represents an opportunity to branch into other markets due to the regions location and the over 12 million visitors each year
• Many opportunities exist in New Orleans' burgeoning cruise industry
• As the eight largest cruise embarkation port in the US there is a flourishing market for sales to these visitors. In 2003 a 2,000 passenger ship with 950 crew members spent about US$240,000 per US port of call. With the size of the cruise industry in New Orleans this represents a significant market.
• The New Orleans cruise industry has seen a 1000% increase in the number of passengers who either embarked from or made port in New Orleans from 1993 to 2003.

Key Players

Grocery and Foodservice Suppliers in the Louisiana and New Orleans area

• Wal-Mart - currently America's largest grocery retailer,
• Sysco - North America's largest foodservice supplier,
• Fleming - America's 2nd largest grocery distributor
• HEB Stores and Central Market - America's 11th largest supermarket chain, but one of the fastest growing and a dominant factor in Texas and northern Mexico,
• Whole Foods - America's largest retailer of organic and natural foods

Major Food Distibuters in Louisiana

• Sysco
• Doerle
• US Food Services
• PFG - Caro Foods

Cruise Lines

• Carnival Cruises (NOLA = 2nd largest port for Carnival)
• Royal Caribbean Cruises
• Delta Queen Steam Boat Company

Market Entry Considerations

• The relative maturity and intense competition within the U.S. food market has led to customers having come to expect significant after-sales service and incentives
• Customer loyalty may not be strong if similar products can be found with added benefits, such as lower costs
• Canadian exporters are strongly encouraged to hire a certified customs broker to manage border procedures
• Goods should be properly packed and marked for shipment, to reduce both the risk of damage and pilferage. Properly packaged and labelled goods will also help to expedite customs examination.
• Food samples (not for resale) are exempt from labelling requirements, but must be marked as samples and shipped in compliance with U.S. import regulations
• Manufacturers of organic and natural foods should put a greater emphasis on packaging materials. Many consumers of these products base a portion of their decision on what influence packaging materials may have both on the product itself and on the environment.
• More information can be found at: ats.agr.gc.ca/ 

Total Canadian exports & Agri-Food exports Louisiana

• From January to August 2004 Louisiana ranked as Canada's 58th largest export market at just over $682.93 million dollars, representing roughly .25% of all Canadian exports
• Canadian exports to Louisiana increased by roughly 1.45% from the same period in 2003 to 2004
• Canada's Agri-food exports to Louisiana from January to August 2004 were totalled at $49,950,047
• Canada's top five Agri-food exports to Louisiana in 2004 were: Animal/vegetable fats & oils, margarine; beverages spirits and vinegar; meat and edible meat offal; preparations of grains, pasta; and edible vegetables and certain roots and tubers, pulses
• While 2004 agri-food exports to Louisiana are expected to be roughly the same as 2003
• 2003 exports declined drastically from 2002, largely due to the cessation of beef exports to this market. This combined with Wheat exports which dropped from over $33.5 million in 2002 to just over $3.5 million in 2003
• Chicken, soups and broths, rape/colza seed oil-cake, mineral and aerated waters, and canola and colza oil all did substantially better in 2003 than in 2002, however this was not enough to off set other declines.
• 2004 imports from Louisiana (January to August) were valued at $28,562,560 - if exports continue at the same rate for the final four months of the year this will represent roughly 60% of 2003 totals, which in turn were down by $10 million from 2002
• Canada's top five Agri-food imports from Louisiana in 2004 were: preparations of grains, pasta; miscellaneous edible preparations; edible vegetables and certain roots and tubers, pulses; sugars and sugar confectionery; and beverages, spirits and vinegar
• Louisiana is Canada's 45th largest import market representing roughly 0.48% of all Canadian imports from January to August 2004

Major Hotel Chains Louisiana

• Crowne Plaza
• Best Western
• Sheraton
• Hilton
• Holiday Inn
• Hyatt Regency
• Clarion Collection Hotels

Major restaurant Chains and Institutional Food Service

• Louisiana and New Orleans represent a fairly typical American market. Most restaurants found commonly in the United States have a presence in this market as well. New Orleans however has a large variety of café-style local restaurants. These restaurants cater more towards the local preferences having menus that offer a variety of Creole, Cajun and other Seafood dishes.

Canadian Contacts

Canadian Embassy in the United States of America
501 Pennsylvania Ave., NW,
Washington, D.C., 20001-2111, USA
Tel.: (202) 682-1740
Fax: (202) 682-7795/7619
E-mail: wshdc.infocentre@international.gc.ca 
Internet: www.canadianembassy.org 
Contacts:
Ms. Sandra Shaddick, Trade Commissioner
Ms. Cynthia Stevenson, Business Development Officer
Mr. Ron Krystynak
Counsellor (Agriculture) : Grains, oilseeds, crops
Economic and Trade Policy
Email: ron.krystynak@international.gc.ca 
Mr. Fred Gorrell
Counsellor (Agriculture): Meat, Poultry, Dairy
Economic and Trade Policy
Email: fred.gorrell@international.gc.ca 

Agriculture and Agri-Food Canada (AAFC)
International Markets Bureau
930 Carling Ave.
Ottawa, ON K1A OC5
Contact: Brent Wilson, Senior International Market Development Officer
Tel.: (613) 694-2394
Fax: (613) 759-7506
E-mail: wilsonb@agr.gc.ca 
Internet: www.agr.gc.ca 

Market Research Centre (TMR)
Contact: Jennifer Gowan, International Market Analyst
Tel.: (613) 996-1835
Fax: (613) 943-1103
E-mail: jennifer.gowan@dfait-maeci.gc.ca 

Canadian Food Inspection Agency
59 Camelot Dr.
Ottawa, ON K1A 0Y9
Tel.: (613) 225-2342
Fax: (613) 228-6125
E-mail: cfiamaster@inspection.gc.ca 
Internet: www.inspection.gc.ca 

Food and Consumer Products Manufacturers of Canada
885 Don Mills Rd, Suite 301
Toronto, ON M3C 1V9
Tel.: (416) 510-8024
Fax: (416) 510-8043
E-mail: info@fcpmc.com 
Internet: www.fcpmc.com 

International Trade Canada
125 Sussex Dr
Ottawa, ON K1A 0G2
Internet: www.itcan-cican.gc.ca 

Market Support Division (TMM)
Contact: Clément Côté, Trade Commissioner
Tel.: (613) 995-1773
Fax: (613) 943-1103
E-mail: clement.cote@dfait-maeci.gc.ca 

Canadian Food Exporters Association
885 Don Mills Rd, Suite 301
Don Mills, ON M3C 1V9
Tel.: (888) 227-8848 or (416) 445-3747
Fax: (416) 510-8044/8043
E-mail: info@cfea.com 
Internet: www.cfea.com 

International Business Opportunities Centre (IBOC)
Tel. : (613) 944-6000
Fax: (613) 996-2635
E-mail: iboc@dfait-maeci.gc.ca 
Internet: www.iboc.gc.ca 

Export Development Canada (EDC)
151 O'Connor St.
Ottawa, ON K1A 1K3
Tel.: (800) 850-9626 or (613) 598-2500
Fax: (613) 237-2690
E-mail: export@edc4.edc.ca 
Internet: www.edc.ca 

United States Business Development Division (NUB)
Contact: Dan Mrkich, Trade Commissioner
Tel.: (613) 995-0759
Fax: (613) 944-9119
E-mail: dan.mrkich@dfait-maeci.gc.ca 

Local Contacts

Consulate General of Canada in Dallas
Street Address:
750 North St. Paul Street Suite 1700,
Dallas, Texas, 75201, United States of America
Tel.: (214) 922-9806
Fax: (214) 922-9815
E-mail: dalas-td@international.gc.ca 
Internet: www.can-am.gc.ca/dallas 

Ms. Laura Aune
Business Development Officer
Agriculture, Food and Beverages, Arts and Cultural Industries, Building Products
Email: laura.aune@international.gc.ca 

Embassy of the United States of America
490 Sussex Dr.
Ottawa, ON K1N 1G8
Tel.: (613) 238-5335
Fax: (613) 688-3082
Internet: www.usembassycanada.gov 

Commercial Service
Tel.: (613) 688-5217
Fax: (613) 238-5999
E-mail: ottawa.office.box@mail.doc.gov 
Internet: www.buyusa.gov/canada/en 

Food Marketing Institute
655 15th Street NW
Washington, DC 20005
Tel.: (202) 452-8444
Fax: (202) 429-4519
E-mail: fmi@fmi.org 
Internet: www.fmi.org 

Grocery Manufacturers of America (recently merged with the Association of Sales and Marketing Companies [ASMC])
2401 Pennsylvania Avenue NW, 2nd Floor
Washington, DC 20037
Tel.: (202) 337-9400
Fax: (202) 337-4508
E-mail: info@gmabrands.com 
Internet: www.asmc.org 

ASMC International
58 Meadowbrook Lane, #100
Unionville, ON L3R 2N9
Tel.: (905) 477-4644
Fax: (905) 477-9580

National Restaurant Association
1200 17th Street NW
Washington, DC 20036
Tel.: (202) 331-5900
Fax: (202) 331-2429
Internet: www.restaurant.org 

Organic Trade Association
60 Wells Street
Greenfield, MA 01301
Tel.: (413) 774-7511
Fax: (413) 774-6432
E-mail: info@ota.com 
Internet: www.ota.com 

Private Label Manufacturers Association
369 Lexington Avenue
New York, NY 10017
Tel.: (212) 972-3131
Fax: (212) 983-1382
E-mail: info@plma.com 
Internet: www.plma.com 

Food Safety and Inspection Service (FSIS)
Tel.: (202) 720-7025
Fax: (202) 205-0158
Internet: www.fsis.usda.gov 

U.S. Department of Agriculture (USDA)
14th Street and Independence Avenue SW
Washington, DC 20250
Tel.: (202) 720-2791
Internet: www.usda.gov 
Note: All USDA offices are accessible from the main telephone number.

U.S. Food and Drug Administration (FDA)
Dallas District Office
4040 North Central Expressway, Suite 300
Dallas, TX 75204-3145
Contact: Maria Velasco, Public Affairs Specialist
Tel.: (214) 253-5205
Fax: (214) 253-5318
Email: mvelasco@ora.fda.gov 
Internet: www.fda.gov 

Useful Internet Sites

• US Census Bureau
  www.census.gov/main/www/cen2000.html 
• Strategis
  strategis.gc.ca 
• InfoExport
  www.infoexport.gc.ca/ie-en/Office.jsp?oid=261 
• Consulate General of Canada - Dallas
  www.dfait-maeci.gc.ca/dallas/