Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
January 4, 2007

Regulatory Report:
Sponsored by:
Franke Foodservice Systems
Fat Fight Trans-forming Legislative Landscape
Portland Businesses Surprise Council In Support Of Chains
Oregon's Reefers Just Got Colder
It's Jan. 4: Do You Know Where Your Certified Food Manager Is?

Industry Report:
Electric Rates To Skyrocket Widely
TriMark USA Under New Ownership
Vent Master Merges With Halton
EFC Honors Enodis Companies
ASHRAE Releases New GreenGuide

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In This Section:
NRA Forecasts 2.1% Real Growth For Foodservice In 2007
Sunbelt, Mountain States Again To Lead Growth, NRA Predicts
Consumer Sentiment, Expectations, GDP Growth All Trickle Lower
NRA Index Flat In November; E&S Trends Remain Positive

This issue's Regulatory ReportSponsor: Scotsman Ice Systems/Enodis Industry Report
Economic Report Hotelex Shanghai, April 4-7, 2007

NRA Forecasts 2.1% Real Growth For Foodservice In 2007
Just about the same time you were receiving the Dec. 12 edition of FER Fortnightly, the National Restaurant Association was tearing the veil off its 2007 industry forecast, and here it is, the forecast, that is, with no further ado: The association predicts foodservice industry sales will rise to $536.9 billion in 2007, a gain of 5% over last year. Take out projected food-away-from-home inflation of 2.9%, and real growth figures to be 2.1%.

That figure compares with similar nominal growth of 5% in '06, but real growth of 1.8%, according to NRA estimates, as food-away-from-home inflation was higher last year than what's expected for '07.

Full-service restaurants are forecast to post 5.1% growth this year, 2% real. The quick-service segment is expected to grow at 5% nominal, 2.1% real. (NRA forecasts different deflators for different segments.) Segments expected to outperform the industry include a category called "snack and non-alcoholic-beverage" stores, which encompasses upscale coffee shops among other snacky ops; plus the categories of lodging foodservice, social caterers, schools and colleges and universities.

NRA credits four positive macroeconomic forces for the industry's outlook: 1) continuing growth of the general economy; 2) continuing jobs growth; 3) disposable income growth of 3.3% in real terms, higher than in '06; and 4) gasoline prices that are forecast a bit lower than the average for '06.

NRA's forecast of slightly higher industry real growth compares with that of Technomic Inc.'s, which predicts real industry growth in '07 of 1%, down 0.1 point from '06.

The complete '07 forecast, including detailed segment and state-by-state forecasts as well as a wealth of trends data, is available from NRA for a nominal fee by calling 800/482-9122 or by going to NRA's Web site,


Section sponsored by Hotelex Shanghai, April 4-7, 2007

Sunbelt, Mountain States Again To Lead Growth, NRA Predicts
States in the Sunbelt and Mountain West will again post above average foodservice sales growth in 2007, according to the National Restaurant Association's state-by-state and regional forecasts. The NRA said one positive for all regions is expected general economic, job and disposable income growth.

The forecast puts Nevada and Arizona at the top of the sales growth list again, at 8.1% and 7.6% nominal. Not far behind, Florida is projected to grow 7.1% with Texas close behind at 6.9%. Overall, the Mountain states will post growth of 6.7%, NRA projects.

The East North Central region, plagued by a troubled American auto industry and other manufacturers shedding jobs, is predicted to grow slowest, at 4%, again nominal. Still, with food-away-from-home inflation forecast at 2.9%, all states in the region should see real foodservice growth.

Section sponsored by Hotelex Shanghai, April 4-7, 2007

Consumer Sentiment, Expectations, GDP Growth All Trickle Lower
Amidst all the holiday parties, you may have missed a couple of key macroeconomic numbers that came out later in December.

First, both the Index of Consumer Sentiment and the Index of Consumer Expectations maintained by the University of Michigan Surveys of Consumers fell slightly lower in the December reading.

The Sentiment Index lost less than half a point, to 91.7 versus 92.1 in November. That Index was at 91.2 in December of 2005.

The Expectations Index, a component of the Index of Leading Economic Indicators, lost two points, to 81.2, compared with 83.2 in November and 80.2 in December of '05.

Interestingly, while Sentiment and Expectations both were slipping, the group's Index of Current Economic Conditions rose in December to 108.1 from 106 in November. It was only slightly off last year's 109.1.

Consumers' main worry is the housing market slump, from both home value and general economic impact perspectives. As a result of the housing slump and the earlier impact of gas prices, consumers noted their holiday purchases would be highly contingent on discounting, which early retail sales results appeared to bear out.

And in another sign of a cooling, as opposed to anything more severe, the Federal government revised its final number on growth for the third quarter down to 2%. It had initially been lower, then higher. Most economists expect a similar number for the just concluded fourth quarter and forecast this period of slower general economic growth to continue through the first half of '07.

Section sponsored by Hotelex Shanghai, April 4-7, 2007

NRA Index Flat In November; E&S Trends Remain Positive
The overall Restaurant Performance Index declined the minimum 0.1 point in November, according to the latest survey data from the National Restaurant Association, released Dec. 29. Four of eight components were down, four up, signaling the market was essentially static.

The overall Index, at 101.1, remained above the 100-point threshold that delineates expansion versus contraction. Both the Current Situation and Expectations Indexes also remain above 100, though the Current Situation Index, which lost 0.2 point in November, is hovering at 100.2.

The Expectations Index was flat at 102.0. Expectations for same-store sales and hiring growth during the next sixth months slipped slightly from the preceding month's survey, while the outlook for future business conditions rose a strong 0.8 point, to 101.9, up substantially from the 99.6 registered in July.

Both capital expenditures measures, purchases during the past three months, and anticipated during the next six month, rose 0.1 point.

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