Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
January 5, 2006

Regulatory Report:
Sponsored by:
APW Wyott
Public Comment On Georgia's New Food Code Ends Jan. 9
ICC, IAPMO Considering Combined Codes
Leave Your Smokes At Home In Washington
New Hampshire Restaurant Association Won't Oppose Anti-Smoking Bill

Industry Report:
Sponsored by:
MUFES '06,
Feb. 11-13, 2006

Where The Gas Is Always Greener
State By State, Restaurants Are Great
SMUD Studies 'Leftovers To Light'

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In This Section:
For Those Who Missed Our Forecasts...
NRA Forecasts Higher Growth For Operators in 2006
Price Outlooks: Lower For Steels, Higher For Natural Gas, Plastics And Aluminum
NRA Performance Index Holds Steady In November But Both Capital Expenditure Indices Off Slightly
Consumer Confidence Almost Back To Pre-Katrina Levels

This issue's Regulatory ReportSponsor: APW Wyott Innovations Industry ReportSponsor: MUFES '06, Feb. 11-13, 2006

Economic Report Atlas Metal Industries Inc.

For Those Who Missed Our Forecasts...
If you missed our hard-number, two-part 2006 forecast of the equipment and supplies market in the past two issues of FER Fortnightly, including details on the operator outlook, materials and price forecasts and the macroeconomic forecast, don't hurl yourself off the bridge just yet:

The E&S forecast, including a downloadable file of the numbers, is available at

The operator, commodity and macroeconomic forecasts are at


Section sponsored by Atlas Metal Industries Inc.

NRA Forecasts Higher Growth For Operators in 2006
Business is looking up, according to the National Restaurant Association's 2006 forecast.

NRA predicts continuing real growth of 2.5% real, 5.1% in nominal terms, for operators in '06. That's up more than half a point from the organization's estimate of 1.9% growth in '05. The association also forecasts total industry sales will pass the half-trillion-dollar mark this year, reaching $511.1 billion.

The projections come as part of NRA's extensive operator forecast released Dec. 15, just hours after deadline for our last FER Fortnightly. The 44-page package includes a variety of detailed market and forecast information including sections on overall foodservice trends; segment, state and regional forecasts; public policy issues and a wealth of other information on the industry.

As Hudson Riehle, NRA senior v.p. of research and information services, told FER Fortnightly just before release of the hard numbers, NRA anticipates a rise in disposable income, gradually moderating energy and food prices and several other factors helping operators continue to grow in real terms both top and bottom lines.

Underlying the predicted higher rate of growth in '06 is an assumption operators probably won't get hit with the precipitous gasoline price increases and weather-related impacts they faced last year.

Among the key segments, NRA forecasts full-service will grow 2.5% real while quick service real growth will slow a bit to 2.3%. NRA's inflation forecast is 2.6% compared with 3.1% in '05.

FER Fortnightly will report on NRA's regional and state forecasts, overall trends analysis and other information in future issues. The NRA forecast is available in print and electronic formats from NRA for $49.95, $24.95 for members, at

Section sponsored by Atlas Metal Industries Inc.

Price Outlooks: Lower For Steels, Higher For Natural Gas, Plastics And Aluminum
The upward pressure on stainless and other steels used in foodservice equipment and supplies will finally moderate gradually in 2006, according to the latest quarterly forecasts of transaction prices from Purchasing magazine.

But the upward movement of prices for natural gas, plastics and other materials made from or formed with natural gas will continue into '06. Aluminum sheet will remain at historically very high levels while the price of copper sheet will begin to moderate.

More important for operator and other end-user purchasers, the magazine's Executive Editor Tom Stundza, citing the Federal Reserve and leading economists, believes this may be the year many manufacturers across a range of industries and markets will be able to recover some of the dramatic run-ups in materials prices they've absorbed during the past two years. The reason: Capacity utilization is approaching 80%.

Purchasing's market basket of 100 commodities and materials rose a whopping 24% in '05, and that was on top of big increases in '04.

Whether this environment translates directly to foodservice E&S remains to be seen. But a number of manufacturers have told us they are seeking price increases in the 4% to 6% range early this year.

Purchasing forecasts and transaction pricing data for 100 key commodities and materials are available for purchase at

Section sponsored by Atlas Metal Industries Inc.

NRA Performance Index Holds Steady In November But Both Capital Expenditure Indices Off Slightly
The monthly Restaurant Performance Index maintained by the National Restaurant Association remained unchanged at 101.5 in November. The reading was an improvement over the period just after Katrina, when the industry took a hit from high gas prices and other factors.

The four-component Current Situation Index also remained unchanged, though same-store sales and traffic both showed slight improvements. The four-component Expectations Index was up 0.1 point, but only because of a big jump, 0.8 point, in the reading for future business conditions. NRA Senior V.P. Hudson Riehle said in the release accompanying the new data that this bodes well for the industry in the coming year.

Both capital expenditure indices, one for purchases during the past three months and one for purchases expected during the next six, were slightly lower in November. But it is not unusual to see these indicators trend lower late in the year, as the first quarter is often the slowest one for many restaurateurs.

Seven of the eight components of the overall Index remain above the 100 tipping point signaling expansion. Only the current labor component is below the line.

Section sponsored by Atlas Metal Industries Inc.

Consumer Confidence Almost Back To Pre-Katrina Levels
In another positive development for foodservice, The University of Michigan Surveys of Consumers reports that consumer sentiment and expectations are almost back to the levels seen over summer 2005, before hurricanes and a second round of gas price hikes sent them reeling.

The Sentiment Index rose almost 10 points for the second month in a row, a phenomenon Director Richard Curtin attributed almost entirely to falling gasoline prices and their impact on consumer psychology. The December Sentiment reading was 91.5.

The Expectations Index rose even more, 10.6 points, to 80.2. But Curtin also pointed out that both indices are six to 10 points lower than they were a year earlier.

Consumer confidence and expectations are key indicators of restaurant and foodservice prospects.

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