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FROM THE FIELD
February 2007
Perfect Storm for 2007 and Beyond
Life is full of challenges. Yawn. You get used to it. Good
sites get more expensive, and you need to make things more
compact. Labor is always an issue. Food safety is always at the
top of the list. Flexibility and throughput are always
important.
But for equipment spec/purchasers, 2007 will be a big one,
and it might even be the big one. A bunch of trends are
coming together simultaneously, and they’re going to intensify
just about everything you do for a long time to come.
You can make your own list, long or short, but a few storm
fronts in particular should be priorities on your radar because
they’ve suddenly mushroomed. Brace yourself, and if you’re a
nautical type, turn your bow into the wind:
Labor,
always a looming topic, is suddenly about to become much more
imposing. Talk of raising the federal minimum wage is loud and
animated. More than a dozen states in the past couple years have
raised their own standards. The federal government may have done
the same by the time you read this. And even if it stands pat on
its 10-year-old standard, the states won’t.
Regardless of your own philosophical stance on the minimum
wage, if you believe in one at all, it’s hard to argue against a
hike. In 1970, when I was a high schooler working at the local
grocery store, the minimum wage was $1.60/hr. Today, according
to a handy calculator on the Bureau of Labor Statistics Web
site, the equivalent would be $8.31. Do the math, and you have
to ask yourself why a minimum wage worker today should be buying
goods in a consumer market with 38% less real purchasing power
than 37 years ago.
At any rate, you need to start calculating how many of your
store-level workers are typically at minimum wage or below a new
minimum wage, and what the new costs will be. That will
be new incentive for equipment efficiency.
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"This year,
more than any in recent memory, specific events
are reshaping what you do."
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Food safety,
urgent as it has always been, is now doubly so. After some years
of positive data, the bottom fell out last year. Multiple deaths
and hundreds of illnesses dominated headlines from coast to
coast. E. coli sickened people in dozens of states
from California to Minnesota and the Northeast. Noroviruses
infected people in Wisconsin and California, among others.
Salmonella-tainted tomatoes turned up in the news. The list is
too long to detail here. But all these events dealt with produce
that doesn’t get cooked and/or handwashing issues at store
level.
So who’s responsible? Suppliers are getting the spotlight,
but let’s face it: No single system is infallible. Why bet your
customers’ health and your own business reputation on somebody
else’s systems? You have to improve store-level measures. Yes,
suppliers can irradiate. But you still need to look at produce
handling at the store level. You’ve got to enforce proper
handwashing with a zero-tolerance program. And you need to look
into ionizing sanitation tanks, agitating water baths with
sanitizers, something. Capital cost and floors pace? Sure.
What’s your alternative?
Utility costs are going up too, all across the
country, and there’s no quick fix on the horizon. Deregulation,
infrastructure needs and simple supply-demand balance are
contributors. The electric side is seeing the big jumps right
now. In Baltimore, for example, electric rates will reportedly
rise as much as a staggering 72% over the next few years.
Illinois is looking at rate hikes as high as 55% this year,
while the huge Chicago market is looking at a ballpark number of
22%. In Connecticut, residential electric rates rose as much as
27% last year, and were expected to grow as much as 50% more
this month. Utility efficiency will have to rise even higher on
your list.
And let’s not forget materials pricing. For that one, see
Robin’s column.
Does all this translate to equipment pressure? You bet.
Brian Ward
Chief Editor
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