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Publisher's Viewpoint - Robin Ashton

Publisher's Viewpoint - Robin AshtonFounding partner Robin Ashton, president and publisher, is a true industry veteran in spite of is boyish appearance, he's covered foodservice since 1978, and E&S exclusively since 1982, as an editor and publisher at several magazines.


See all of Robin's blogs and comments


E&S Market Clearly Recovering, But…

May 02, 2011

It’s springtime on the calendar, and for the foodservice equipment and supplies market too. We’ll soon have numbers on first-quarter 2011 from the public E&S companies and from the Business Barometer produced by the Manufacturers’ Agents Association for the Foodservice Industry. In the meantime, though, we already know the seven publics we track have seen blended sales increases ever since the second quarter of ’10, and the MAFSI Barometer was up 5% in fourth-quarter ’10 vs. the year-earlier period.

A number of other measures chart the improvement, too. A clear indicator comes from Prime Advantage, the manufacturers’ purchasing organization that includes many E&S manufacturers. According to Louise O’Sullivan, the group’s president, January and February purchases through the group were up 27% and 29% respectively vs. year-earlier periods. In addition, the group’s third annual CFO Survey shows the manufacturers’ financial folks quite a bit more optimistic about prospects this year.

Another positive milestone was also passed in February. The National Restaurant Association reported in its monthly Restaurant Performance Index release that, for the first time in 40 months, a majority of operators (52%) plan to buy equipment and/or make other capital improvements during the next six months. When times were good back in ’06 and ’07, the percentages were in the 60s. Through much of the Great Foodservice Recession, they bumped along in the 30s and low 40s.

We’ve seen a number of reports recently indicating that many chain organizations are starting again to build new stores and launching significant renovation programs. A real estate services firm, ChainLinks Retail Advisors, released a report, the National Retailer and Restaurant Expansion Guide, that names 19 chains with plans for 100 or more domestic new units in ’11, and another six looking at 50 to 100 (chainlinks.com/pages/home).  Lots of big chains, many on the casual dining side, have announced major reno programs including OSI and Darden. Many operators held off such re-dos over the past three years, and everyone knows stores have to be renewed every few years or sales start to slip. And there is plenty of pent-up demand from operators who have limped along with equipment and supplies that really need replacing. Now that sales are finally improving, it’s time.

Of course, in any market there are always downside risks. The big ones right now are sharp run-ups in gasoline and food prices and the potential impact on consumer spending, including spending on foodservice. Higher food prices also cut operator cash flow and margins, and that affects cap-ex spending. Consumer-confidence measures have been plummeting as prices continue to rise. It looks like $4-a-gallon gas through the summer. And the operator outlook for business conditions during the next six months fell sharply in the latest NRA RPI survey.

Still, right now the positives are outweighing the negatives. I expect that will continue to be true in the coming months.

Cheers,

Robin Ashton

Robin Ashton

Publisher

 

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